Alternatives to Bankruptcy in South Africa that Provides for a Discharge of Debts: Lessons from Kenya

Authors

DOI:

https://doi.org/10.17159/1727-3781/2019/v22i0a5364

Keywords:

Kenya, bankruptcy, insolvency law, alternatives to bankruptcy, alternatives to sequestration, debt review, administration orders, debt intervention

Abstract

The problems faced by debtors in South Africa is not that there are no alternatives to insolvency proceedings, but that the available alternatives do not provide for a discharge of debt as with a sequestration order, which is ultimately what the debtor seeks to achieve. Debtors in South Africa can make use of debt review in terms of the National Credit Act 34 of 2005 or administration orders in terms of the Magistrates' Court Act 32 of 1944 to circumvent the sequestration process. However, both debt review and administration orders do not provide for a discharge of debt and provide for debt-restructuring only, in order to eventually satisfy the creditor's claims. Attention is given to the sequestration process and the alternatives to sequestration as they relate specifically to the discharge or lack of a discharge of a debtor's debts. The South African law is compared to Kenyan Law. This article seeks to analyse the alternatives to the bankruptcy provisions of the newly enacted Kenyan Insolvency Act 18 of 2015 in order to influence the possible reform of insolvency law in South Africa. Like the South African Insolvency Act, the old Kenyan Bankruptcy Act (Cap 53 of the Laws of Kenya) also did not have alternatives to bankruptcy. The old Kenyan Bankruptcy Act, however, contained a provision on schemes of arrangement and compositions. The Kenyan Insolvency Act now caters for alternatives to bankruptcy and provides a wide range of alternatives to bankruptcy, some of which allow debtors in different financial positions to obtain a discharge.

 

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Author Biography

Zingaphi Mabe, University of South Africa, Department of Mercantile Law

I am a lecturer of Insolvency Law at the Department of Mercantile Law at Unisa.

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List of Abbreviations

IIR International Insolvency Review

ILRA Insolvency Law Report Act, 2016

IVA Individual Voluntary Arrangements

MCA Magistrates' Courts Act 32 of 1944

NCA National Credit Act 34 of 2005

NCR National Credit Regulator

OR Official Receiver

SALJ South African Law Journal

SA Merc LJ South African Mercantile Law Journal

SIO Summary Instalment Order

THRHR Tydskrif vir Hedendaagse Romeins-Hollandse Reg

TSAR Tydskrif vir die Suid-Afrikaanse Reg

Published

12-03-2019

How to Cite

Mabe, Z. (2019). Alternatives to Bankruptcy in South Africa that Provides for a Discharge of Debts: Lessons from Kenya. Potchefstroom Electronic Law Journal, 22, 1–34. https://doi.org/10.17159/1727-3781/2019/v22i0a5364

Issue

Section

Articles