Rehabilitation is the legal process as governed by the Insolvency Act 24 of 1936 under Sections 124 and 127A.
In order to rehabilitate after sequestration an application has to be made to the High Court who has jurisdiction. This typically refers to the High Court where the Sequestration order was granted.
This application will be complied by your attorney and presented to the High Court with the assistance of that attorney’s advocate.
You can apply for rehabilitation 12 months after creditors have proven their claims against your insolvent estate. This period is determined by the Master who has confirmed the liquidation and distribution account as submitted by the Curator. There is a further condition that a period of four years must have passed after the official date of sequestration.
Section 124(2) has further provisional conditions which states that if your trustee’s first liquidation account has been confirmed by the Master, the Master may recommend rehabilitation should such be to the advantage of the general wellbeing of South Africa or commerce in general. For instance, if you wish to become a director of a company or where such will benefit previously disadvantaged people.
It is important to note that early rehabilitation will not be considered if it is for your own benefit exclusively but should you qualify for rehabilitation under this provision you can in practice apply for rehabilitation once the affairs of your insolvent estate has been concluded.
If you have been previously sequestrated and rehabilitated, you will only be allowed to apply for rehabilitation after 4 years have lapsed since the date of your sequestration and 3 years have lapsed after the date of confirmation from the trustees or curators’ first liquidation account has been confirmed by the master.
If you have been found guilty of a criminal offense in your insolvent estate such as obtaining credit from a registered credit provider after sequestration in a fraudulent manner, you may only be allowed to apply for rehabilitation after a period of 5 years has elapsed, determined from the date that the criminal judgement
Often in very small insolvent estates creditors are afraid that they would need to pay contribution (with special reference to the admin costs) to the estate in which case they forfeit their right to proof their claims on the insolvent estate. Should none of your creditors proof their claims in the insolvent estate and a period of 6 months has lapsed since the date of your successful sequestration you may be granted the opportunity to apply for rehabilitation.
Usually applicable to cash sequestrations where the Insolvent estate realizes sufficient funds to pay all creditors including legal and administrative fees immediately after the date of sequestration, you qualify to apply for rehabilitation sooner.
Take note that in all the above scenarios the curator must complete his administrative functions and the Master must officially accept the L & D account before you can be considered as a candidate for rehabilitation
In terms of section 124(5) of the Insolvency Act you need not formally apply for rehabilitation if a period of 10 years has lapsed.