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Access to the formal insolvency system
„Access to the formal insolvency regime‟ is the third matter dealt with under „Core legal attributes‟. Apart from some introductory remarks, „[d]ebtor access‟ and „[c]ontrolling access in a multi-track system‟ are specifically considered. It is noted that access ought to be transparent and certain and that access requirements should safeguard against improper use by both creditors and debtors. In jurisdictions where creditors are allowed to file insolvency procedures, it can be misused and should therefore be regulated. The two traditional entry standards of access to insolvency, namely, the „cessation of payments test‟ or the liquidity test231 and the balance sheet test, are mentioned.232 The former is generally preferred in natural person insolvency and is easier to apply. „Acts of bankruptcy‟ are said to be out-dated, as the focus is on the inability to pay and not on the wrongful actions of the debtor.
As far as „debtor access‟ is concerned, it is stated that complicated access requirements may keep debtors in a state of informal insolvency, where they lose incentives to participate in society, may rely on state support and even disappear to hide from creditors. On the other hand, systems with lower access barriers have the benefit of reducing honest but unfortunate debtors‟ reluctance to seek relief.
However, such systems may require good behaviour as a requirement for a discharge. Creditors or state agencies may play a role in challenging the discharge, which protects against moral hazard and, through increased participation, improves the legitimacy of the system. Nevertheless, criteria for challenges should be clear as benefits may be overshadowed by increased decision making and error costs.
Conferring substantial discretion on presiding officers to decide on discharge issues is not favoured as it results in variation in decision making and it is difficult to judge behaviour in hindsight.
CHAPTER 1: INTRODUCTION
1.1 Research motivation .
1.2 Research objectives
1.3 Delineation and limitations
1.4 Methodology
1.6 Reference methods, key references, terms and definitions
CHAPTER 2: INTERNATIONAL TRENDS AND GUIDELINES
2.1 Introduction .
2.2 The fresh-start policy, an American invention
2.3 European recommendations
2.4 An innovative administrative approach in France
2.5 INSOL international consumer debt reports
2.5.1 General background
2.5.2 First principle
2.5.3 Second principle
2.5.4 Third principle
2.5.5 Recommendations to stakeholders
2.5.6 Synopsis
2.6 World Bank Report on treatment of the insolvency of natural persons
2.6.1 General background
2.6.2 Core legal attributes of an insolvency regime for natural persons
2.6.3 Synopsis
2.7 Conclusion .
CHAPTER 3: NATURAL PERSON DEBT RELIEF IN TERMS OF THE
INSOLVENCY ACT 24 OF 1936
3.1 Introduction
3.2 Brief historical overview
3.3 Aspects of sequestration and rehabilitation
3.4 Statutory composition .
3.5 Evaluation in terms of the right to equality
3.6 Conclusion
CHAPTER 4: DEBT RELIEF PROCEDURES
4.1 Introduction .
4.2 Aspects of the administration order procedure
4.3 Aspects of the debt review procedure
4.4 Evaluation in terms of the right to equality
4.5 Conclusion
CHAPTER 5: PROPOSED AND ANCILLARY DEBT RELIEF PROCEDURES
5.1 Introduction
5.2 Proposed pre-liquidation composition
5.3 The in duplum rules
5.4 Court-ordered debt review
5.5 Reckless credit in terms of the NCA .
5.6 Other measures in terms of the NCA
5.7 Common law composition .
5.8 Extinctive prescription
5.9 Conclusion
CHAPTER 6: NEW ZEALAND DEBT RELIEF
CHAPTER 7: ENGLAND AND WALES DEBT RELIEF
CHAPTER 8: CONCLUSION
Bibliography
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