New policy on the appointment of insolvency practitioners — could this be a turning point in the South African insolvency industry?
By Ashton Crommelin
The minister of justice and constitutional development has recently determined a policy on the appointment of insolvency practitioners, which was published in the Government Gazette No. 37287 on 7 February 2014. This policy, once it commences, will replace all the previous policies and guidelines that are currently being utilised by the master’s offices to appoint insolvency practitioners and its stated intention is to ‘form the basis of the transformation of the insolvency industry’. The publishing of this policy has since caused upheaval in the insolvency industry and has raised the operative question: does this policy serve the interests of South Africa’s diverse nation as it purports to do or does it in fact pull back on the progress made since 1994 and actually hinder those who have been previously disadvantaged?
This article will aim to provide a summary of the pertinent changes that the implementation of the policy will cause and highlight a few of the arguments raised by the South Africa Restructuring and Insolvency Practitioners Association (SARIPA) and the Concerned Insolvency Practitioners Association (CIPA) against the implementation of the policy.
Before considering the new policy, it is apposite to briefly outline the current one. Due to the lengthy period between the date on which an individual is sequestrated or a company or close corporation is placed into liquidation and the date on that the master convenes the first meeting of creditors, it is common practice for the master to appoint a provisional trustee or liquidator to administer the estate prior to the appointment of the final trustee or liquidator at the first meeting of creditors. Practically, the appointment of a provisional trustee or liquidator is done through the creditors signing requisitions in support of a specific trustee or liquidator, the so-called ‘requisition system’…
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