TRANSFORMATION OF THE LIQUIDATION INDUSTRY

Khashane Manamela

“Marked change in nature , form or appearance”. This is how the Oxford Dictionary explains the word "transformation". I understand that to mean that the change envisaged by transformation has to be either a complete change or striking change in appearance or nature. In other words it can never be a segmental change or an establishment of a tea-time committee managed by a black person, a woman and Oom Henk, whom the company or organisation has recalled from retirement.

It is for that matter that, although I have accepted the privilege to address this vital and challenging topic, I feel the most suitable choice for the topic, would have been someone who had been in the profession for a long time, not someone like me, who is constantly told that standards had to be dropped in order for me to be allowed to practise as an insolvency practitioner. Every day I ask, give me the rules book to determine for myself how low, or how many levels down, did the standards have to drop to allow my entry, but I receive nothing. There are no standards in the liquidation industry for entry.

The problem is that transformation is regarded as a political and to some extent government-imposed topic. It is not what most of us want to talk about. That is why you will find a thirtysomething year old like Khashane Manamela being a speaker of the day on this very crucial topic. Many of my fellow South Africans have not seen the need to embrace the issue and to tackle its challenges. Often you hear, let us forget the past and move on. But in the words of our Honourable President Thabo Mbeki, some of us do not want to forget the past, but would rather use the past to change the future. Background Like most things in our country, the liquidation industry started changing only in the late nineties. Few black liquidators were on the panels of the Masters of the High Court countrywide and the number trickled over a hundred recently. Most of these are black practitioners who have only hired out their

names to use, without having any real interest in practising as insolvency practitioners. AABIP, (the Association for the Advancement of Black Insolvency Practitioners) was formed in 1999, to represent the views of the new black entrants to the industry. Although it boasts achievements like the introduction of the Guidelines for Appointment of Discretionary Provisional Liquidators/Trustees/Judicial Managers (“the guidelines”) and the formation of IPSSA, the Insolvency Practitioners Association of South Africa, a joint body formed with AIPSA, it could only achieve so much, as a voluntary association. The guidelines led to the countrywide establishment of a panel by Masters of the High Court for previously disadvantaged individuals, including white women. This is the only panel to date in the industry, through which black insolvency practitioners have to earn a living. Continued on page 2

IN THIS ISSUE Transformation of the Liquidation Industry ..... Pg 1 Editors Note ................. Pg 2 The Tide has Turned .... Pg 4 Comments on the Prescription Period in Insolvencies / Liquidations ................ Pg 5

Are Mortgage Bonds in Danger of losing their Priority Status? ......................... Pg 7 Sections 197 & 197A: More Questions than Answers ............... Pg 8 Intelligence Base Liquidations: Turning Sponge cake into Icing ..................... Pg 10

A Witness does not have a right to a list of Questions prior to Section 417 Hearing ................ Pg 11 Liquidators Logon ....... Pg 12 Reversionary Interest and the Insolvent ............... Pg 12

The Pitfalls of Winding-Up a Close Corporation on Just and Equitable Grounds ....... Pg 14 Spouse’s Money .......... Pg 15 The Final Account ....... Pg 16

DECEMBER 2003

It is a kind of change that should affect every part and every one in any establishment. In other words you can`t do it part-time or only for chasing the statistics required by the Employment Equity Act or the Financial Charter. It requires a change of culture, attitudes and the way we relate to each other as a nation and as role-players in the industry.

Continued from page 1 I am not aware of another anywhere else, including at financial institutions like banks and I say this as the chairperson of AABIP and cochairperson of IPSSA and as a presently disadvantaged individual (the correct meaning of PDI). Entry and Exit into the profession Due to the absence of statutory guidelines, there are no uniform criteria for appointment of insolvency practitioners to the panels of the Master of the High Court, to practise as insolvency practitioners. This means that the same person may find him/herself qualified for admission to one Master`s panel and unqualified for another. In order to alleviate the situation, some Masters, in particular the Pretoria

Master, have introduced an interview panel consisting of officials from the Master`s office and representatives of both AABIP and AIPSA to process applications for prospective entrants to the market. Unregulated, the modest intentions of those that introduced the guidelines, led to the promotion of most of my brothers and sisters from being messengers and garden “boys”, (which, I concede, is a very distasteful reference) into liquidators; and the influx of white secretaries into the industry. Due to lack of statutory regulation and the existence of only voluntary organisations like AABIP and AIPSA, errant insolvency practitioners also seem to be immune from discipline. AABIP and AIPSA do not determine the exit from the market due to misbehaviour. What needs to happen here

is statutory regulation to prescribe qualifications for entry and proscribe bad behaviour by practitioners.

• the probing of shady empowerment structures frustrating the modest intention of the guidelines of empowering PDIs.

Transfer of Skills One of the typical excuses for denial of economic empowerment by the capital market, is the reference to lack of the requisite skills and knowledge on the part of PDIs. Yet virtually no steps are taken to transfer skills and to economically empower the PDIs. AABIP jointly with AIPSA have recently proposed the following: • the filing of reports by PDIs and experienced joint liquidators on the involvement of PDIs; • the tutoring of PDIs by experienced liquidators on a continuous basis;

We however need more participants than AABIP and AIPSA to ensure effective transfer of skills. We need the banks, for example, to get serious about transformation and have systems in place for support of black liquidators. The restaurant-like “first come, first served” slogan, has no credible or logical basis in the insolvency industry. Real Black Economic Empowerment This will only begin once everybody realises that real transformation is necessary, in order to achieve real economic empowerment of black people. Continued on page 3

EDITORS NOTE: “FISH, CHIPS AND GRAVY” My congratulations to those newly elected AIPSA Councillors, and my thanks to those who have given so many hours of their time to the organization. Stephen Gore has left the Council after 14 years, and Brian Smith, famed for his Vintage Wine musings, has retired from practice. Change, and regeneration on Council. Adam Harris

Re-Election. At least this time I voted for myself. A great show of my confidence in my own ability. Which does mean that this publication will continue in more or less its present format for the time being.

Transformation is often necessary. There have however been some rather woolly concepts offered recently to transform the way that matters are dealt with. I trust that the process which has taken place of late has been one of consultation and not simply information. However, there are serious

flaws in the proposals to rescue companies within the confines of an existing provisional winding-up. This does not mean that corporate rescue is a bad idea – quite the contrary. Hopefully, if government listens to what all the role players in the insolvency industry appear to want and to need, transforming the profession through statutory regulation and a new act will become a reality sooner rather than later. Whether the insolvency practitioners will enter the new era with open enthusiasm or "kicking and screaming", to quote the phrase used by a senior government official, depends upon the long term objectives

and the implementation of the process. Cleaning up the industry is of course supported – both to stop the petty "fish and chips" donations to staff of the Master's offices which we have read about in the press, and also the gravy train of excessive appointments to certain individuals only. ADAM HARRIS JAN S DE VILLIERS ATTORNEYS CAPE TOWN

Continued from page 2 This is not a government requirement, but what our country needs for real development. If we do not do it, we are merely passing the buck to the next generation, which may actually translate into doom for this country. The unemployed cannot wait any longer in the unemployment lines and the have-nots can no longer sit around waiting for hand-outs. What we need is to ensure real economic empowerment of all participants. Not a select few, who may seem to have the right connections, to get that elusive political recognition in the corridors of power. We owe this to ourselves. We owe this to one another.

We owe this to our children. To their children. We owe this as a real assumption of our Proudly South African identity. We cannot import models from elsewhere or remind each other of an aged President of a neighbouring country. We have problems here at home and we have to make everything work.

immediately after appointment, is very common. The culture is perpetuated by creditors, particularly banks, who often consider cuttingoff the life lines to be the only solution. This is very selfish and to some extent smacks of the inability to realise the national challenges, like unemployment.

Positive contribution to reduction of unemployment and growth of the economy

We need a legislative framework that will not only facilitate business rescue, but which will make it mandatory.

As liquidators, we have often been blamed for not doing much to save companies and therefore to save jobs. To some extent, the above is true. The prevailing system only encourages the liquidator to dispose of property and the culture of locking the gates by the provisional liquidator,

Conclusion We need real transformation and to achieve it, we need real commitment to it. We need to see it happening all around us and it should happen in our lives and in our lifetime. This means that transformation affects us all

and is not a topic to be relegated to a very small and less influential committee of our organisations. We all have a part to play or there would be no part to be played anywhere. Let us make real transformation happen in the national interest and for the sake of our beloved South Africa. KHASHANE MANAMELA BA(LAW), LLB, LLM(TAX LAW), LLM(CORPORATE LAW) MANAMELA INCORPORATED, PRETORIA DIRECTOR & INSOLVENCY PRACTITIONER MDM SOLVENCY INSTITUTE CHAIRPERSON: ASSOCIATION FOR THE ADVANCEMENT OF BLACK INSOLVENCY PRACTITIONERS

THE TIDE HAS TURNED

It is commonly held that liquidation levels are in ‘healthy’ territory. This is based on the fact that despite prime increasingly from 13% in January 2002 to 17% by September, that company and CC liquidations actually fell during 2002 to 3,911 from 4,156 the previous year. Similarly, individual sequestrations declined to 2,870 from 2001’s 3,886. Furthermore official company failures in the first seven months of 2003 are 4.1% lower than in the same period last year. That however is where the good news ends in my opinion. The momentum is now firmly with an uptrend in closures. The latest three-month period to end-July 2003 saw 12.7% more liquidations than in the previous quarter (FebruaryApril 2003). This has all to do with the lagged effect of high interest rates, a volatile Rand and a slowing economy. Admittedly personal sequestrations are 51.5% lower in the first half of this year compared to the same period last year while the figure for the three months to end June was 3.7% lower than in the first quarter of the year. This is most surprising given that personal sequestrations are meant to be a leading indicator, yet the economy has been slowing for over a year now. What we do have to take into account however is that the last two years have seen record amounts of personal income tax relief.

It must also be borne in mind that the costs involved in liquidating a business concern or sequestrating a person and/or partnership may often outweigh the likelihood of any salvage. Banks may thus prefer terminating facilities to such firms and individuals rather than taking the legal approach. In much the same way, the distinction between compulsory and voluntary liquidations has also become blurred. When a business gets into difficulties, management, bankers and suppliers may all sit around a table and discuss the best course of action. The owners of the business could decide to call it quits or the bank/major supplier could place the order. While it may be a joint decision, the theoretical distinction and implication that it has for economic analysis are significant and it does render the quoted statistics less reliable. Civil debt statistics make for interesting if confusing reading. Civil summonses issued for debt in the first six months of 2003 are 5.8% higher – fine. The number of default judgments is up 21.6% over the same period, largely on the back of a 22.9% increase in those against private persons. Whew! But overall values of consent judgments are down 10%. Yes I can understand that there were a couple of large corporate judgments last year, but have individuals cleaned up their financial affairs to that extent? The average judgment against individuals is down to R6,285 from R7,982. If this is indeed the case it also explains to

some extent the fall off in sequestrations and modest deterioration in corporate failures. Why is our prognosis less than rosy when considering the next twelve months? Firstly real rates in South Africa have been and are excessively high. In fact we went so far as to argue last September that the SA Reserve bank needed to be cutting rates then, not hiking them (the Repo rate was raised to 13.5% from 12.5%). Reference to the table below, constructed using figures from The Economist, provides sufficient evidence hereof. [Note that short-term rates are 3-month money market rates.]

seen. Growth prospects this year have been irretrievably harmed, with the Beeld consensus at 2.26% versus the Ministry of Finances’ 3.3%. The Beeld consensus expectation for 2004 is 3.14% while Finance is hoping for 3.7%. I expect a sub-3% outcome. The strength in the Rand is held to be behind the SARB’s latest cut, hampering as it has growth and with an election looming in six months, job prospects need to be bolstered. From 25.7% in 1998, exports as a share of output (GDP) had risen to 33.9% by last year. However this fell to 29.6% in the first quarter of 2003. This is where

Short-term interest rate South Africa India Malaysia Czech Republic Euro area USA

10.5% 4.74% 3.1% 2.07% 2.16% 1.04%

Consumer prices 5.2% 4.2% 1.0% -0.1% 2.1% 2.1%

Real rate 5.3% 0.2% 2.1% 2.17% 0.06% -1.06%

Source: The Economist, 6 September 2003 Moreover, the lag between the peak in interest rates and the impact on liquidations is anything from six to eighteen months. So any extended period of high relative real rates must surely have an adverse impact down the road and it is our contention that it is this that is about to be felt. Thankfully the SA Reserve bank saw fit to have an unscheduled meeting and cut rates by 1% on 10 September although whether this will be sufficient to make up for them having been behind the curve so to speak, remains to be

the argument of high relative real rates comes to the fore once again. It is increasingly becoming apparent that it is often not so much the high absolute level of interest rates or value of the rand that causes problems, but the rate of change. In other words volatility wrecks havoc with company planning and strategies for survival. I also hold that South African exporters have not used price advantages in the past to secure market share. They Continued on page 5

Continued from page 4 have not been prepared to give away some margin in order to cement relationships and sustainable orders. So in the frenzy to satisfy orders from abroad in the aftermath of the rand’s slump, local overheads got out of hand and

now when the wheel turneth, cutting such cost bases proves difficult. Moreover, if price is the only thing we can compete on, then by implication we can’t compete on quality. The sluggish recovery in the economy, especially in manufacturing and high real interest rates implies more

insolvencies in my mind in the months ahead. In strictly numerical terms, liquidations could increase some 5% this year and by a similar amount in 2004. This all while prime appears set to fall another 200 bpts (prime to 11.5% at best). This is not catastrophic but nevertheless unwelcome

at this juncture. LUKE DOIG SENIOR ECONOMIST CREDIT GUARANTEE INSURANCE CORP

COMMENTS ON THE PRESCRIPTION PERIOD IN INSOLVENCIES / LIQUIDATIONS

Roy Reynolds

The Law Commission has recently invited comments on the different prescription periods and in particular the harmonisation of different periods. In the circumstances, this is an ideal opportunity to rectify the impractical interpretation the Court has given to section 13 (1)(g) and (i) of The Prescription Act No. 68 of 1969, in the matter of Leipsig v Bankorp Ltd 1994 (2) SA 128(A). In the above Appellate Division case Eksteen J A said: “In the ordinary course of events it is highly unlikely that the creditor will receive any more from the Company in liquidation than has been accorded him in the final account, and the finality attendant on such a determination would, in my view, remove any impediment to the further running of

prescription, the creditor would then be able to compel payment of the dividend by the liquidator and to proceed against any sureties for the balance of his claim without let or hindrance, whether for reasons of fairness or otherwise. The debt is no longer ‘the object of a claim filed against a company in liquidation’, but has crystallised into a dividend due and payable by the liquidator to the creditor. It follows that in terms of Section 13(1) of the Act extinctive prescription had run its course on the effluxion of one year from the date of the confirmation of the final account…” Leading up to the above impractical conclusion that extinctive prescription had run its course on the effluxion of one year from date of confirmation of the final account, Eksteen J A said: “When …. The Master has confirmed the final liquidation and distribution account there is a measure of finality. Section 408 of the Companies Act provides that such confirmation ‘shall have the effect of a final judgement’… this does not mean that the account will have the quality of a judgement of a Court of law. It does however mean that ‘once the Master has confirmed an account, after

objections if any have been dealt with, his confirmation of that account is final and it cannot be reopened save where a Court authorises the reopening’”. The passage quoted appears in the judgement in KilroeDaley v Barclays National Bank Limited 1984 S A 609 (A) . Without dwelling on the latter mentioned statement, it appears that this statement should be qualified in light of cases such as Standard Bank of South Africa Limited v Master of the Supreme Court and Others 1997(3) SA 178 (C), in which it was said that a liquidator could rectify an error in a previously confirmed account in a further account, lodged subsequently. Apart from the fact that it makes no practical sense to have creditors’ claims prescribe before rehabilitation/dissolution, it makes better sense for prescription to come into operation once the notional duties of the trustee/liquidator as provided for in Section 25 of the Insolvency Act, come to an end. This will prevent creditors from being unduly prejudiced and it would make the Prescription Act read together with the Insolvency Act much

more creditor friendly. The present state of affairs prevents the implementation of the provisions of section 25 of the Insolvency Act to the full and creditors are unfairly prejudiced by having their claims regarded as extinct before rehabilitation/dissolution. As is known, it is not uncommon for assets to accrue to the estate after confirmation of the so-called final account, and in the present circumstances, should a year have passed since such confirmation, the proved claims will have prescribed due to the extinctive prescription. As mentioned, this is an ideal opportunity for the Law Commission to recommend a solution to remedy the present unsatisfactory state of affairs, and to this end, I suggest the amendment of section 13(1)(g) and (i), so that prescription would be completed on date of rehabilitation/dissolution, and not before, as debts are discharged on this date in any event. ROY REYNOLDS ASSISTANT MASTER (INSOLVENCIES) GRAHAMSTOWN, EASTERN CAPE

ARE MORTGAGE BONDS IN DANGER OF LOSING THEIR PRIORITY STATUS? The unreported judgment of Du Plessis J in the Transvaal Provincial Division delivered on 23 March 2003 of Summer Symphony Properties 13 CC and Boe Bank Limited v City of Tshwane Metropolitan Municipality and the Registrar of Deeds and the Sheriff Wonderboom, although not directly insolvency related will have, in my respectful submission, a vital bearing on how and how far back in time municipalities can enforce claims of arrear rates, taxes and services ancillary thereto. All at the expense of financial institutions ability to recover mortgage debt. The case dealt with Section 118(3) of the Local Governments Municipal Systems Act, No. 32 of 2000 (the Act), which states that: “an amount due for municipal service fees, property rates and other municipal taxes, levies and duties is a charge upon the property in connection with which the amount is owing and enjoys preference over any mortgage bond registered against the property”. The section became operative on 1 March 2001. Boe Bank ("the Bank") held a first mortgage bond over a property, Erf 958 Wonderboom Extension 3, Registration Division JR Gauteng. On 5 June 2001, the Bank obtained a judgment against the then owners of the property. Thereafter, the property was declared executable and then sold in execution on 7 December 2001. Summer Symphony Properties 13 CC ("Summer

Symphony") purchased the property for R725 000.00 The conveyancers entrusted with the transfer of the property into Summer Symphony's name, obtained from Tshwane Municipality ("the Municipality"), in whose area the property was situated, a certificate in terms of Section 118(2) of the Act. The Municipality certified that an amount of R287 909.29 was owing in respect of municipal debts (ie. Municipal service fees, surcharges on fees, property rates and other municipal taxes, levies and duties), that became due in the two years preceding the date of application for the certificate (ie. Since October 1999). The Municipality advised the conveyancers that an additional amount of R655 273.83 was owing in respect of earlier municipal debts (ie. those debts that were in existence from before October 1999). Summer Symphony paid the amount of the certificate and the property was thereafter transferred into its name. The Sheriff of Wonderboom then had to distribute the proceeds of the sale in execution. It was this that gave rise to the application and counter application for declaratory orders apropos the correct interpretation of Section 118(3). The Bank contended that in the distribution, its mortgage bond over the property ranked prior to the sum of R655,273.83 due to the Municipality in respect of those municipal debts that were incurred before October 1999

(ie. the old municipal debts). In terms of the counter application, the Municipality sought a declaratory order to the effect that the old municipal debts constitute a charge over the property and enjoy preference over the Bank's mortgage bond in the distribution of the proceeds of the sale in execution. It is trite to mention that neither the Sheriff nor the Registrar of Deeds took any active part in the application. The Sheriff was only cited as Third Respondent by virtue of the fact that it was incumbent upon him to distribute the sale proceeds. Section 118(1) clearly stated that the certificate by the relevant Municipality concerned municipal debts that became due in the two years preceding the date of application for the certificate. Section 118(3) was to the effect that, ¤an amount due¤ for municipal debts, is a charge upon the property, and enjoys preference over any mortgage bond registered against the property. The Bank's application succeeded. The Court therefore held that the amount due to the Municipality for municipal fees, surcharges on fees, property rates and other municipal taxes, levies and duties on the property for the period preceding October 1999 was a charge upon the property and enjoyed preference over the Bank's mortgage bond in distribution of the proceeds of the sale in execution of the property on 7 December 2001. I would respectfully submit that the

judgment is an unsatisfactory one. It thus appears necessary for not only the Banking Council, but indeed financial institutions adversely affected by the judgment to urgently seek legislative intervention to amend Section 118(3). The effect of which would be to limit municipal service fees, property rates and other municipal taxes, levies and duties to a period within two years of the date of applying for a clearance certificate. Failure by the said institutions to take heed could result in a critical area of their business being lost forever (ie. the advancing of monies to customers who wish to purchase property on the basis of obtaining security and thereby securing their position by taking a mortgage bond on the property). In conclusion, it is vitally important to ascertain whether municipal authorities will seek to invoke the relevant provisions of the Act in insolvency related situations where fixed property is sold and requires to be transferred. Section 89(4) of the Insolvency Act limits municipal debts on the basis aforementioned to a two year period preceding the date of application for the clearance certificate. It is important that municipal authorities do not seek to invoke Section 118 of the Act, in priority to Section 89 of the Insolvency Act.

HENRY MAYO CREDIT MANAGEMENT SOLUTIONS (PTY) LTD JOHANNESBURG, GAUTENG

SECTIONS 197 AND 197A: MORE QUESTIONS THAN ANSWERS ‘There are more questions than answers’, someone said along the way. This jumps to mind immediately whenever one considers section 197 and 197A of the Labour Relations Act. The purpose of this article is not to provide, or even to attempt to provide the answers. However, the old adage applies – if at least one appreciates that there is a question one could seek advice on the answer. Sections 197 and 197A in their current form came in effect on 1 August 2002. Previously only one section, namely 197, dealt with the consequences of the transfer of a business as a going concern on contracts of employment between employer and employees. Section 197 now deals with such consequences in cases where the employer is not insolvent, and section 197A with cases where the employer is insolvent. Curiously (and on a lighter note), the legislator did not seem to appreciate that a person could be insolvent but not necessarily sequestrated or liquidated! Jokes aside, when taken as a whole it is quite clear that the legislator only intended the provisions to apply in the event of sequestration or liquidation. The purpose of the new sections was seemingly to cure defects and uncertainties in the previous section 197. The question is-was this achieved? The intended effect, apparently, of both the

previous section 197 and the present sections 197 and 197A was to promote continuity of employment in the event of the transfer of a business. However, in the matter of NEHAWU v UCT (2002) 4 BLLR 311 (LAC) the Labour Appeal Court upheld the judgment of the court a quo, namely that section 197 (in its previous form) simply meant that in the event of the seller and purchaser agreeing that the workforce would be transferred as part of the sale as a going concern of the business, the employees were bound and were effectively deprived of their common law right not to have their employment contracts transferred without their consent. The matter then went to the Constitutional Court, who felt otherwise and found the where a business was transferred as a going concern, the employment contracts were transferred by operation of law regardless of whether the seller and purchaser had so agreed or not. By the time the Constitutional Court gave its ruling, section 197 had been amended. Section 197 now provides that in the event of the transfer of a business the new employer is automatically substituted in place of the old employer in respect of all contracts of employment in existence immediately before the date of transfer, unless otherwise agreed between the old or new employer or both of them on the one hand and the employees or bargaining parties representing them on the other hand. A transfer is

specifically defined as being a transfer of the whole or part of any business, trade, undertaking or service as a going concern. As previously, the legislator chose not to define the term ‘as a going concern’. Therefore the NEHAWU cases remain relevant with regard to the notion of a business as a going concern, and therein is the nub. In the Labour Appeal Court, the majority held that the transfer of a business as a going concern only occurs if the workforce is transferred as part of the transaction. Delightful in his choice of language, Acting Judge of Appeal Van Dijkhorst said that ‘to say that there can be a sale of a business as a going concern without all or most of the employees going over is to equate a bleached skeleton with a vibrant horse’. In the event, the question of whether a business is sold as a going concern or not is an objective one of fact. It would appear that the last word has not yet been spoken on this question. Practitioners may well ask-so what? The so what is quite extensive. Section 197A provides, similarly to section 197, that in the event of the transfer of a business as a going concern the new employer is automatically substituted in place of the old employer in all employment contracts in existence immediately before the old employer’s provisional winding up or sequestration, unless otherwise agreed.

Consequently, if a liquidator or trustee sells a business he must either sell it with the employment contracts, or negotiate with the bargaining parties that the employment contracts not be transferred. Experience so far since the enactment of section 197A has shown that purchasers of business are loathe to take over the employment contracts. There is nothing sinister in this- frequently a high salary or wage bill contributed to the demise of the business, and by extension the insolvent, in the first place and a purchaser does not want to run the same risk from the outset. Employees, on the other hand, are loathe to contract out of section 197 – why should they? Judge Van Dijkhorst: ‘to say that there can be a sale of a business as a going concern without all or most of the employees going over is to equate a bleached skeleton with a vibrant horse’. Needless to say, if the liquidator or trustee is not able to sell the business with employment contracts intact, or contract out of the provisions of section 197A with the employees, the assets of the insolvent estate must sold piece-meal which is frequently less advantageous to the creditors. A spate of other questions comes to mind. If assets are sold to a single purchaser, whether by private treaty or on auction, can this sale notionally be regarded as a sale of a going concern,

entitling the employees to insist to be employed by the purchaser? If a business has ceased operation shortly before provisional liquidation or sequestration but has been reopened by the liquidator or trustee and sold thereafter, may this sale be regarded as a sale of a going concern? Does section 197 and 197A extend to the contracts of employment of executive directors? Maybe the most important issue concerns the employment, by a liquidator or trustee, of former or new staff on fixed term contracts to assist the liquidator or trustee in running the business after sequestration or liquidation. This happens very frequently. The question then arises whether section 197 (as opposed to section 197A) applies in respect of those

employees’ contracts if the business is subsequently sold. This is not merely an academic question from practitioners’ point of view because there are fundamental differences between section 197 and 197A. Section 197 (but not section 197A), for instance, provides that the old employer must agree with the new employer on the amounts payable to employees in respect of accrued leave pay, severance pay that would have been payable to the transferred employees of the old employer if they were dismissed for operational reasons and other accrued but unpaid amounts to which the employees are entitled. If the old employer does not do so, he or she remains liable jointly and severally with the

new employer for a period of twelve months to any employee who becomes entitled to any of the aforegoing payments as a result of such employee’s dismissal (presumably by the new employer) for operational reasons or the sequestration of liquidation of such employer. As a parting thought, consider the issue of VAT. One of the attractions to the purchaser of acquiring a business as a going concern, is the fact that the sale is zero-rated for VAT. Practitioners are well versed in the provisions of section 11(1)(e) of the Value-Added Tax Act, which prescribes that a sale will not be zero-rated unless (amongst other things) the seller and purchaser have agreed in writing that the sale

is one as a going concern. A seller and purchaser are going to be hard-pressed to argue that a sale is one of a going concern for VAT purposes but not for the purposes of section 197 or 197A. Evidently many practitioners have by now been faced with some of the issues raised above, and may have taken advice and opinions. Practitioners are urged to share their experiences and advice with others, to the benefit of creditors and employees alike. DESIMA BEUKES VAN DER SPUY & PARTNERS BELLVILLE, CAPE

ADVERTISEMENT Att: INSOLVENCY PRACTITIONERS AND AUCTIONEERS Notice is hereby given that the South African Revenue Service (SARS) is reviewing its Panel of Liquidators and Auctioneers. Liquidators and Auctioneers are invited to make application to be selected to SARS Panel. Applications must be accompanied by the following information: 1. 2. 3. 4. 5.

A brief summary of the applicant’s / company’s profile; Copies of relevant qualifications; A brief summary of the applicant’s / company’s insolvency experience; A brief summary of applicable tax law experience if any; Proof that applicants / company’s are in a position to lodge security to the Master’s Office for the proper performance of duties; and 6. A valid tax clearance certificate. Please note that your application is not an automatic appointment to SARS’ panel and that your application will be considered only if the above criteria are met. Furthermore, SARS is committed to the implementation and promotion of Black Economic Empowerment and preference will, therefore, be given to Historically Disadvantaged Individuals.

Applications should be forwarded for the attention of “The Selection Committee (Liquidators)” SARS, Private Bag X923, Pretoria, 001. Fax: (012) 422 6740. Or e-mail your applications to [email protected]. Enquiries may be directed to Desiree Palmer, tel (012) 422 4457. Closing date for applications: 16 January 2004. Successful applicants will be notified by no later than 13 February 2004 of their appointment to the respective panels.

INTELLIGENCE BASED LIQUIDATIONS: TURNING SPONGE CAKE INTO ICING Paul meets John and enquires how his business is going. “Not well” says John. “Last week we had a fire in the warehouse and lost all our stock. “That’s terrible,” says Peter “how will you survive?” “Fortunately I had insurance and they paid out,” replies John “And tell me Peter, how's business your side?” “Bad, Bad” says Peter “Last week we had a flood, destroyed the whole warehouse, stock and all” “Tell me Peter,” says John “How do you make a flood?” If a liquidator knows the abovementioned facts he has

2 options .Should he proceed to an inquiry or simply have Peter and all those involved arrested ? A good liquidator / investigator would have Peter begging for mercy within a very short space of time. From behind the bars of the local police station Peter will, in most cases make the most favorable settlement. Together with a plea bargain under section 105 A of the criminal procedure act 51 of 1977 (as amended) this matter could be put to bed within the shortest imaginable time frame. If the liquidator chooses and gets support for an inquiry then the creditors could be waiting for years to establish the facts already

don’t believe that the process set out to aid them is effective against the growing number of fraudsters and chances.

known. During all this time Peter will dissipate the assets with little or nothing being left to creditors. The greater the delay in recovery the less successful the recovery will be. Recently the liquidation industry has come under the spotlight again. This fuels perceptions that the industry is corrupt in nature as well as the fact that creditors simply

Reports of corruption at the masters office in the appointment of liquidators as well as the less than efficient liquidation recovery process means that creditors really have very little to gain, by liquidating a debtor. A typical liquidation today reminds me of my daughters 4th birthday party where my wife baked an outstanding cake. The beautifully bedecked chocolate cake got Continued on page 11

Continued from page 10 brought to the table. With mouths watering the eager horde of kids sang a loud “happy birthday to you.” As soon as the singing was over 40 hands descended on the cake scooping mouthfuls of icing up as they laid the cake to rest. No sooner had it started than they were off to the next activity leaving in their wake the sponge cake, empty and bear. So to the liquidation process today. It's all too easy and convenient to collect the icing. However 80% of the cake is sponge. This is the nitty gritty recovery that needs to take place in order to ensure that creditors get the maximum possible out of the process. How many practitioners are investigating the sponge? How many are effectively recovering from the sponge? The answer is simple. Not many. Maybe for good reason, it takes time, money and a huge effort, the laws an ass and the type of resources needed are not readily available to liquidators. However, this cannot be

accepted as normal if liquidators want to gain the trust of creditors. What has happened to the strategic approach to liquidations, the interrogation of those involved, a site visit and an in-depth investigation all done prior to the holding of an enquiry ? How often are liquidators made aware of fraud, reckless trading and negligence on the part of directors prior to liquidation and not acted on this information. The latter issues are all too common. One possible solution would be an investigation coupled with the liquidation. I believe this should be made mandatory and completed before a decision is made to proceed to an enquiry. The problem of costs does not go away nor does the problem of a lack of competent investigators both from the SAPS and the private sector with knowledge to handle complex legal and accounting matters. However there are good people and companies who can do great, comprehensive and effective investigations. Suitable

arrangements could be made between investigators and liquidators in order to cushion the costs and create a framework to work in. Proper project scooping and costing with a list of deliverables will be far easier to sell to aggrieved creditors than a “fishing expedition – enquiry” approach. After this is done creditors will have a comprehensive investigative report which would seek to confirm or dismiss all the hearsay evidence, as well as updating the creditors as best as possible on the debtors asset base and the likelihood of recovery. This process could be summed up as “Intelligence based liquidations “and “Intelligence Based Debt Recovery”. Creditors have and will make money available if they believe that this process will be undertaken in a professional strategic way with particular deliverables stated. This would then allow everyone to proceed to an enquiry with specific goals in mind. Creative thinking and strategic analysis is what is needed if

creditors are ever going to get their pound of flesh. With fraud on the increase and the sophistication of the criminals never ending creditors have to know that their interests are being looked out for. They need to be assured that no stone is left unturned especially if they are paying for the process. And therein may lie the challenge. The process by itself has not delivered the results needed. It is time consuming, expensive and does not necessarily give the best results. More is called for. An investigation (not necessarily a forensic audit) coupled with a vigorous interrogation of those involved would all pave the way for a more successful recovery in any liquidation. If a multi disciplinary approach is taken, defined and well strategised, the situation can be rectified. Only then will it be possible to turn sponge cake into icing. DAVID COHEN BA, LLB (WITS) ASSOCIATED CREDIT MANAGEMENT PTY LTD

A WITNESS DOES NOT HAVE A RIGHT TO A LIST OF QUESTIONS PRIOR TO SECTION 417 HEARING In the recent decision of the Durban and Coast Local Division of the High Court in Lategan and others v Lategan N.O. and others, Case No. 1487/2003 (June 2003), Judge Magid held, inter alia, that:It is not necessary for a witness to prepare for an

enquiry as though in preparation for an academic examination. An opportunity should be given to the witness to consult documents and consider a reply in certain circumstances. Where one of the witnesses has been present during most of the enquiry and another

had been directly or indirectly represented by counsel, the witnesses would be assumed to have had knowledge of the commission's terms of reference and there was no legal obligation on the Master of the High Court to give clarity as to the topics upon which witnesses will be examined.

This case clarifies the position vis-à-vis witnesses at Section 417 enquiries who require prior notice of the questions which will be put to them at such enquiries.

LIQUIDATOR’S LOGON: THE WEB WATCH FOR INSOLVENCY PRACTITIONERS To start with, I mention a site that will prove useful for tracing legal resources here as well as in foreign jurisdictions. For a “comprehensive resource of the information available on the internet concerning law and the legal profession”, visit the Internet Legal Resource Guide at www.ilrg.com. Although the site specifically concentrates on the USA, there are links to legal resources in 238 nations, including South Africa, in the “Law Runner Legal Resource Tool” section of the site. The main section boasts 1.750 legal forms, links to law firms and academic institutions.

available on subscription. www.lexis.com provides comprehensive information on USA law generally.

For access to a wide range of Court decisions from the UK, Commonwealth, European Community and USA, go to the Lexis Nexis sites http://web.lexisnexis.com/professional/ and www.quicklaw.com. The latter is a Canadian site with free access to Canadian decisions, the other areas are

Before your next overseas trip in search of estate assets, check out the local news at your destination via www.newspaperlinks.com it has links to newspapers around the world, with news, classified, sport etc. Images of newspaper front pages are to be seen at www.newseum.org, which

www.bizland.co.za offers a multitude of business applications, services and information for the businessman, including news articles, bank calculators, and a large selection of government forms (including the dreaded CGT 1). I mentioned a few tips for fighting spam in a previous issue. If your cellphone is being inundated with SMS spam, report it at www.smscode.co.za.

also has links to the papers in question. For weather forecasts, go to www.weather.com, which provides forecasts for cities around the globe, including all our own big centers – the hourly forecasts should be of particular value to the golfers. If you need to learn the local language before your trip, www.unilang.org has links to free online language courses, and will provide general help with foreign languages. If you need to catch up with the opposition by having your own website, you will probably do well to get it professionally made. If however you are brave enough to have a stab at doing it yourself, use the website builder at www.hostcity.co.za. To register your domain name (and check that it hasn’t already been hijacked by some internet pirate) go to www.names.co.za.

With official sources acting coy about providing crime statistics, it may help to visit www.crimestats.co.za before venturing into any unknown areas in pursuit of hidden assets – the site is building a database of the levels and types of crime around South Africa, which can be sorted by city and suburb. Finally, if voting for candidates for your new National AIPSA Council has whetted your appetite for participation in the democratic process, you will want to vote in the next national or local government elections. A surf to www.elections.org.za will tell you whether or not you are currently on the voters’ roll; and, if not, how to get onto it (with downloadable forms). CONTRIBUTIONS TO THIS COLUMN PLEASE TO ME JACK CROOK AT: [email protected] OR FAX (021) 683-6247.

REVERSIONARY INTEREST AND THE INSOLVENT The judgment in VOGET v KLEYNHANS, 2003(2)SA148(C) illustrates the principles that an Insolvent: (i) does have a reversionary interest in his or her estate; (ii) can bring an action against a third party for compensation

or for any loss or damage suffered by him, whether before or after the sequestration of his estate.

breach of his mandate, failed to perform legal services in a proper and professional manner.

In this case, Voget (the Insolvent) brought an action against Kleynhans on the grounds that Kleynhans in acting negligently and in

Voget alleged that Kleynhans had acted for him and his wife in an action instituted against them (ie. Voget and his wife) by a third party. As a result

of the failure by Kleynhans to perform his duties properly, a judgment had been taken against Voget and his wife which they had been unable to satisfy. Consequently, their joint estate had been sequestrated and they had suffered Continued on page 13

Continued from page 12 damages in an amount of R970,000. Voget instituted the action in the Cape of Good Hope Provincial Division against Kleynhans. Kleynhans raised an exception against the claim on the basis that because Voget was an unrehabilitated insolvent, he (Voget) was not entitled to bring an action against Kleynhans in respect of a cause of action which arose before sequestration. Voget’s cause of action against Kleynhans arose before the sequestration and all the facts giving rise to his (ie. Voget’s) claim were in existence prior

to date of sequestration. The exception was dismissed and the Court held that an insolvent person is entitled to bring an action against a party against whom a claim is considered to exist as long as the cause of action on which the Insolvent sues has arisen by that time. The claim brought by Voget was founded on the harmful consequences that the actions of Kleynhans were alleged to have had on his (ie. Voget’s) estate and thus did have an effect on the insolvent estate. To conclude, I would respectfully submit that this

case exemplified the provisions of both Sections 23(6) and 23(8) of the Insolvency Act, No. 24 of 1936, whereby: (i) An insolvent person can sue in his own name without reference to his Trustee (ii) The Insolvent may, for his own benefit, recover any compensation for any loss or damage suffered by him whether before or after the sequestration of his estate by reason of defamation or personal injury. It can be argued that the term “personal injury” is wide enough to include “injury” in the context in which it was

applied here (ie. Injury suffered by Voget and his wife) arising from the negligence of Kleynhans in not properly performing his mandate which resulted in the sequestration of Voget and his wife flowing from the judgment that had been taken against both of them. I would similarly argue that a case can be made out for application of the causation test here, ie. but for the negligence of Kleynhans, Voget and his wife would not have a judgment taken against them and would not then have gone insolvent. HENRY MAYO CREDIT MANAGEMENT SOLUTIONS (PTY) LTD JOHANNESBURG, GAUTENG

INSOL INTERNATIONAL

Dear Reader, The INSOL Academic’s group will be meeting in Cape Town 2-4 April 2004. The meeting will also be open to non-academics, and will be the first such gathering on the African continent. The Programme (subject to change) • Employment issues and insolvency, with particular reference to the rescue of businesses. Pros and cons of according super-priority to employees’ claims. • Tax issues and insolvency. • Priorities and preferences – changing attitudes in an age of reform. • Environmental issues on insolvency. • The treatment of corporate groups. • Ethical issues, duties and accountability of Insolvency Practitioners. • The “fresh start” for individual debtors: social, moral and practical issues. Sponsored by: Further details regarding registration for this meeting can be obtained from Penny Robertson at the INSOL Secretariat. Tel: +44 207 929 6679 Fax: +44 207 929 6678 Email: [email protected]

THE PITFALLS OF WINDING-UP A CLOSE CORPORATION ON JUST AND EQUITABLE GROUNDS

Henry Mayo

KANAKIA v RITZSHELF 1004 CC, 2003(2)SA 39(D) illustrates the pitfalls of bringing an application to wind up a Close Corporation on just and equitable grounds. Circumstances may appropriately make the determination of such application dependant on the success or otherwise of a counter application in terms of Sections 36(1)(c) and 49(1) of the Close Corporations Act, No. 69 of 1984 (“the Act”). This case exemplified how a counter application cannot succeed if it fails to substantiate its allegations with credible evidence. The facts here were that in 2000, “Kanakia” and the Second Respondent formed a Close Corporation known as Ritzshelf 1004 CC (“Ritzshelf”), and became the sole members of it. “Ritzshelf” was formed for the purpose of conducting business as a restaurant, with trading having commenced in December 2000.

The success of the venture was short lived and within three (3) months, “Kanakia” and the Second Respondent had fallen into disagreement and the business was running into difficulties. At a meeting of the members, it was agreed that the business relationship between “Kanakia” and the Second Respondent would be terminated and “Kanakia” would purchase the interest of the Second Respondent in “Ritzshelf” and loan account for R300,000. These terms were reduced to a written agreement which was never signed. In April 2001, the Second Respondent attempted to continue trading the business. Further meetings were held between “Kanakia” and the Second Respondent, together with their attorneys. An auditor was appointed to audit the books of “Ritzshelf” and the Second Respondent’s loan account therein. The parties were unable to agree on how the agreement should be implemented. “Kanakia” then brought an application to wind-up “Ritzshelf” on the grounds that a deadlock existed between the members and it would be just and equitable for “Ritzshelf” to be woundup. The Second Respondent filed a counter application in terms of Sections 36 and 49 of the Act, wherein he claimed an order that:

(i) “Kanakia” cease to be a member of “Ritzshelf”; (ii) “Kanakia’s” interest in “Ritzshelf” be transferred to him (ie. the Second Respondent); (iii) He (ie. the Second Respondent) purchase “Kanakia’s” interest and loan account in “Ritzshelf”. The Court stated that although Section 68(d) of the Act outlines five (5) circumstances which may be construed as “just and equitable” for winding up a Close Corporation, there may exist other circumstances which go beyond those there listed. It was apparent that a deadlock existed between the two (2) members (ie. “Kanakia” and the Second Respondent), but this by itself was an insufficient reason for winding-up “Ritzshelf”. An approach to the application would be to make its success dependant on the success of the counter application. If however the counter application were to fail, then it was inevitable that the winding-up of the Close Corporation should follow. In trying to adopt this approach to mirror the facts here, a necessity existed to determine whether or not the provisions of Sections 36 (“…not reasonably practicable for the other member to carry on the business of the Corporation

with him…”) and 49 (…”a particular act or omission of the Close Corporation is unfairly prejudicial, unjust or inequitable to him…”) of the Act were applicable. The main reason advanced by the Second Respondent for his counter application, was that the amounts determined by the auditor in regard to the loan account and other items attributed to assets of “Ritzshelf” were incorrect. These allegations were nevertheless mere allegations and uncorroborated. “Kanakia” was of the view that the audit report offered by the Second Respondent was flawed by inaccuracies and could not be relied upon (ie. it was pointless to attempt determining whether or not these discrepancies could be substantiated). In the absence of properly audited financial statements for “Ritzshelf”, the Court could not place a value on the: (i) financial statements such as they were; (ii) business of “Ritzshelf”; (iii) profitability in order to exercise its discretion under Sections 36(1)(c) or 49(c) of the Act. The counter application could thus not be granted. As regards the application to wind up “Ritzshelf”, it was evident that the relationship of trust between “Kanakia” and the Second Respondent had broken down. Continued on page 15

Continued from page 14 Furthermore, the Second Respondent was attempting to run the business to the exclusion of “Kanakia”. Moreover, both “Kanakia” and the Second Respondent had bound themselves through suretyship obligations on behalf of “Ritzshelf” in favour of third parties.

All the circumstances pointed to the fact that it was just and equitable for the Court to grant a provisional order of liquidation against “Ritzshelf”.

of time taken to reach it (some two (2) years). The delay here would certainly have been prejudicial to creditors of “Ritzshelf”.

To conclude, I would respectfully submit that the decision arrived at by the Court was a correct one, but hasten to add my disappointment at the length

HENRY MAYO CREDIT MANAGEMENT SOLUTIONS (PTY) LTD JOHANNESBURG, GAUTENG

ABOUT THE AUTHOR: Henry Mayo is an Administration Manager with Credit Management Solutions (Pty) Ltd, and is also the Secretary of AIPSA Northern Region Committee

A SPOUSE’S MONEY for such an order. DU PLESSIS v PIENAAR N.O. 2002 CLR 505(A) is authority for the proposition that a bequest subject to exclusion from a joint estate is not effective against a creditor. The facts giving rise to this case were that in 1983, Du Plessis, who was married in community of property, inherited certain property from her father. The inheritance was subject to the condition that the property was not to form part of any joint estate of her and her husband, and would not fall within any possible insolvent estate of her husband, nor vest in the Trustee of that estate. In 2000, due to the failure of her husband’s business, Du Plessis and her husband were jointly sequestrated. The Trustees of the joint insolvent estate took the view that the inherited property formed part of the insolvent estate and was subject to the claims of creditors. Du Plessis took an opposite view that the property did not form part of the insolvent estate and applied to Court

On appeal, the Court dismissed the application and held that money bequeathed to a spouse married in community of property is subject to sequestration procedures. This is so even if the Testator stipulated that the property was not to fall within any joint estate with the husband of the heir. The Court further held that the bequest, although not forming part of the joint estate is nevertheless susceptible to the claims of creditors who in effect may look to the estate of both the husband and the wife for satisfaction of their claims. In arriving at its decision, the Supreme Court of Appeal considered that when spouses are married in community of property, (subject to certain exceptions), debts incurred by one of them, are incurred by both of them. In other words, in such instances, the Court does not give any consideration to the intentions of the Testator. Obviously the Testator intended that when bequeathing property to his daughter, such property was not to fall into the joint estate or worse still, be subject to

the claims of creditors of the spouse. The judgment has demonstrated that this intention can never be realised. That is to say, in these situations, the Court regards as irrelevant whatever the Testator’s intentions were. The Insolvency Act, No. 24 of 1936 (“the Act”) does not provide for the sequestration of only part of the debtor’s estate. In terms of Section 20(2) of the Act, property of the Insolvent includes all property of the Insolvent as at the date of sequestration. Moreover, the Matrimonial Property Act, No. 88 of 1984 does not provide for the creation of separate estates of spouses by excluding property of one spouse from a joint estate. The Act recognizes the separate property of spouses in certain instances, but these relate to the relationship between spouses and do not create separate estates for them. To conclude, I would respectfully submit that the Court could have arrived at a different decision if Du Plessis and her husband were married out of community of

property with exclusion of the marital power and not subject to the accrual system. In that event, there would be two (2) separate estates, and her estate (as the “solvent spouse”) would then bear the onus of showing in terms of Section 21(2)(c) of the Act that she has acquired property by a title valid as against creditors of the husband’s insolvent estate.

HENRY MAYO CREDIT MANAGEMENT SOLUTIONS (PTY) LTD JOHANNESBURG, GAUTENG

“THE FINAL ACCOUNT” AN UPDATE FOR LIQUIDATORS From the UK comes news of a 14% rise from last year in personal estate failures (bankruptcy or Individual Voluntary Arrangement), and also of new rescue legislation:

Jack Crook

The current lull in liquidations in South Africa appears to be out of step with what is happening in Europe and America, where increasing business failures are accompanied by a renew ed shift in favour of a turnaround culture. In the U.S., business bankruptcy filings have almost doubled since 1995, and continue to climb – the trend seems likely to persist, as household debt is reported to be at an unprecedented high relative to disposable income

“The Enterprise Act - News Release 15 September 2003 John Verrill, President of R3: "The UK has increasingly embraced the business rescue culture and so to an extent the Enterprise Act 2002 is a reflection of what we as a profession have been doing for some time already in this country. “One policy objective of the legislation is to remove the power of creditors and banks to bayonet wounded businesses as happened in the early 1990s. The legislation therefore will be of most benefit to the small to medium-sized enterprises in the early stages of financial difficulty as the emphasis officially moves to saving viable businesses and giving the owners and managers of those firms some say in putting in place the people they can work with to restructure their business and turn their ailing enterprise

around."” Council is actively taking steps to address practitioners’ concerns surrounding Capital Gains Tax and its impact on liquidations. The tax committee has briefed senior counsel for opinion on various grey areas – hopefully the opinion will provide members with at least some direction on navigating this minefield. A contentious issue, which has been the subject of conflicting Court decisions, is the question of whether an inheritance is recoverable as an asset in an insolvent estate if the insolvent repudiates it shortly before or during insolvency. The topic is considered in depth in an article by R G Evans in 14.4 SA Mercantile Law Journal 688 – it appears that a repudiated inheritance is not an asset and cannot be recovered as an impeachable disposition, nor can the trustee elect to accept the inheritance.

Twee (Pty) Ltd and Others v Connolly and Another 2003 (3) SA 55 C. The Court held that the section requires that a director must be proved to have actually taken part or concurred in irregular business practices. Mere knowledge thereof is insufficient, although the facts may still indicate condonation or concurrence in such conduct even in the absence of positive steps taken by the director. Section 424 was also considered in Nel and Others NNO v McArthur and Others 2003 (4) SA 142 (T), where it was held that a director who takes on a mere supine attitude in regard to a risk can be accused of recklessness whether or not the director realises it involves the taking of a risk; consciousness of risktaking is not required. Contributions to this column please to me Jack Crook at [email protected] or fax (021) 683-6247

The High Court revisited the principles relating to personal liability of directors in terms of section 424 of the Companies Act in Triptomania

National Council Chairman: Deputy Chairman: Secretary/Treasurer:

L von W Bester, Cape Tustees, Durbanville, Cape Town JR Galloway, KPMG Administrators, Parktown, Johannesburg PWM Reynolds, Deloitte and Touche Trust, Parktown

Councillors:

TG Nell, Insollex, Annlin, Pretoria PG Torre, Torre Trustees, Woodhill Golf Estate, Pretoria AS Harris, (non-practising member), Jan S de Villiers, Cape Town PJ Schoerie, Schoerie & Hayes Inc., Pietermaritzburg

Regional Chairpersons KwaZulu Natal Council: Western Cape Council: Northern Council: Eastern Cape Council:

P Berrangé, Lynn & Berrangé, Pietermaritzburg JJ Steenkamp, KPMG, Cape Town AD Pellow, Westrust, Parktown, Johannesburg DJ Strauss, Strauss Trustees, Joubertina

Editorial committee

A Harris, H Mayo, B Smith

AIPSA: The Association of Insolvency Practitioners of Southern Africa PO Box 413152 Craighall 2024 • Website: www.aipsa.co.za • E-mail: [email protected] Telephone: 011 447 2171 • Fax: 011 447 0672