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

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


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
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