LIQUIDATION

Where a close corporation or a company owns the immovable property, and where the arrears and utility fees are in excess of R50, 000.00, my suggestion is to apply for the liquidation of the close corporation or company owning the unit.

Liquidating a company or close corporation

Inability to pay debts

A company or close corporation is deemed unable to pay its debts if after a letter of demand has been sent to the registered office of the company or close corporation, demanding payment of the debt, (which letter must be served by the sheriff) and more than 21 days has elapsed from date that the letter has been sent and no payment or response has been received.

A company is also deemed unable to pay its debts if there is a written or oral admission by a representative of the finance credit department of the debtor that the company is unable to pay, because it has cash flow problems.

How does an inability to pay assist in the collection of levies owed by a close corporation or company?

In the first instance, if an attorney is instructed to collect debts in excess of
R50, 000.00 in respect of companies or close corporations which own a property, my suggestion is that instead of issuing a summons and wasting time in obtaining a judgment, one should proceed to send a letter of demand

to the registered office of the company or close corporation and wait for 21 days for a response. In my experience, most directors of companies or members of close corporations do not respond to the letter and one can then commence liquidation proceedings.

Of course, one can always contact the director or member, and if the attorney is advised by the director or member that the company or corporation is unable to pay, and asks for an extension of time, then, in certain cases, particularly where the arrears are high, the oral admission by the director or member is sufficient to begin the liquidation process.

The upshot of both of these processes is that these are severe measures, which ultimately force the owner to come to an arrangement, or lose the property, since the liquidator steps into the shoes of the owner.

Again, in liquidation, the property cannot be transferred until the new purchaser pays the arrear levies and legal costs.

I have found that if one can agree a fee with one’s client for the sequestration or liquidation, one can ultimately collect the costs from the debtor, as in most cases the debtor is under pressure not to lose his property.

Alternatively, if a trustee or liquidator sells the immovable property, the body corporate can furnish the conveyancer with the legal costs, which can be included in the conveyancer’s clearance certificate, and which costs the new purchaser must pay.

How to deal with a dilatory debtor

Finally, to revert to the dilatory owner who defends matters with no genuine defence, but merely in order to buy time, one should consider partially reducing his electricity, so that he can utilise basic electricity. There is a new decision in the South Gauteng High Court, which deals with reducing the owner’s electricity, but whether this will be followed is uncertain at this stage. This process is one, which should be exercised with caution.