Insolvency & Debt Restructuring


In a normal dynamic economy, the financial positions of businesses and individuals regularly change, sometimes for the worse and unfortunately sometimes even to the extent of bankruptcy.

In addition to the above, the current economic climate is placing enormous strain on businesses and individuals alike and many are finding themselves in a position of financial distress.

South African Law provides a Legal Framework which governs not only the fates of ailing and failing businesses and individual persons who find themselves in financial distress, but also those that are affected by the financial distress of others.

In addition to providing for situations where companies or individuals are liquidated or sequestrated respectively, our law fortunately provides for certain mechanisms through which they may find some financial relief which may avert liquidation or sequestration - such as Business Rescue and Debt Counselling.

Some of these mechanisms include:

• In the case of over-indebted individuals - the provisions of the National Credit Act providing for Debt Counselling which affords some reprieve (through the formulation of a payment plan to creditors) for over-indebted consumers in respect of credit agreements.
• In the case of companies - our law providing for business rescue, which allows for a business rescue plan to be formulated with the aim of the restoration of the ailing company to financial well-being.

Should other measures fail, a company or individual or its creditors may apply for its Liquidation or Sequestration (as the case may be) whereupon the estate will be wound up.

We at Campbell Attorneys are equipped to assist businesses and individuals alike navigate through their darkest financial times.

Contact Jason Clemens
031 564 6494

The Legal Framework

In South Africa the law of insolvency is governed by several statutes including the Insolvency Act 24 of 1936, the Companies Act 61 of 1973 and 71 of 2008, the Close Corporations Act 69 of 1984 and the Cross-border Insolvency Act 42 of 2000.

In addition to the above, common-law and related legislation allow for the evolution of law in this field and for alternatives to the over-indebted - an interplay to which parties should pay careful attention.

Business Rescue

The Companies Act (as amended) introduced some relief for financially distressed companies through the creation of the facility of Business Rescue.

The new legislation provides an opportunity for companies to be restored to financial health by inter-alia:
• The appointment of a Business Rescue practitioner who will implement a business rescue plan which will in turn:
o allow for a strategy to achieve that end;
o provide for the temporary administration of the financially distressed company;
o should restoration be impossible, provide for such steps so as to ensure maximum yield for stakeholders in the event of insolvency.
• Allowing for the suspension of litigation, which companies under Business Rescue may be facing, as well as certain contractual obligations.

Campbell Attorneys are able to guide businesses through this process to ensure successful restoration (or at least minimum prejudice) by providing services including:
• Advice on the viability of business rescue.
• Advice to creditors, investors, shareholders or employees of companies in Business Rescue.

Liquidations and Sequestrations

Campbell Attorneys assists businesses and individuals by helping them to navigate the challenges related to financial distress through the provision of services relating to Liquidations and Sequestrations inclusive of:
• Advice on:   o possible measures to avert liquidation or sequestration;
o debt restructuring;
o minimising of risk due to deemed reckless trading or inadvertent acts of insolvency;
o the viability of instituting or defending liquidation/sequestration proceedings;
o further consequences of liquidations - including but not limited to those related to employment related issues and contractual obligations.
• Launching and defending insolvency applications; and
• Providing assistance in the conduct of insolvency enquiries