Abstract

A creditor is often very careful to file a claim against the insolvent estate of his debtor due to the fear of contribution. A person who became the creditor of another only after the sequestration of that debtor’s estate is often uncertain about his legal position vis-à-vis the insolvent estate. This investigation looks at the duty of creditors of an insolvent estate to contribute with particular focus on the position of the sequestrating creditor. The view is taken that this creditor is always obliged to contribute, regardless of whether he has proved his claim, withdrawn his claim, or whether he is a concurrent, preferent, or secured creditor. In certain circumstances he may even be the only creditor to pay contribution. Regarding the conclusion of contracts by an insolvent after the sequestration of his estate, it is pointed out that certain contacts are valid and enforceable and others voidable by the trustee, rather than void. Among other things, the view is taken that the Master of the High Court must first determine under section 24(5) of the Insolvency Act 24 of 1936 which part of the insolvent’s salary or earnings are not or will not be necessary for the support of the insolvent and those dependent upon him, before the insolvent estate will be entitled to any payment from his salary. Prior to such determination, the insolvent has no obligation to contribute to the estate and the trustee’s consent is then unnecessary when the insolvent concludes contracts in respect of these earnings or the fruits thereof. It is the duty of the trustee to take steps to request a determination from the Master concerning the insolvent’s “surplus” salary. If the trustee fails in this duty, he, the estate and the creditors must bear the consequences. There is no authority that such a determination by the Master has retroactive force.