Abstract
LL.M. (Banking Law)
In an attempt to balance rights between creditors and debtors, there has been a shift in the legal paradigm, from one that is creditor protectionist to one that is debtor friendly. In this regard, the legislature introduced two statutory mechanisms to assist debtors, specifically, debt review in the case of natural persons and business rescue in the case of juristic persons. The focus of this dissertation is to provide a legal perspective on these two mechanisms in consideration of the business of a bank.
This dissertation firstly discusses debt review; thereafter, business rescue. In each discussion, the legal position prior to the introduction of the relevant process is briefly considered. The conclusion is reached that these earlier mechanisms, although intending to assist debtors, weighed heavily in favour of creditors.
In considering debt review, the dissertation sets out the manner in which the debt review process is commenced in terms of the National Credit Act. Thereafter, with reference to secondary source material, the role of debt counsellors in the debt review process is examined by considering the possibility of abuse by debt counsellors, the current dilemma arising from end balance disputes as well as the current educational and competency requirements to practise as a debt counsellor. The conclusion is reached that firstly, to ensure additional oversight and standards, debt counsellors should be affiliated to a professional body, such as the Law Society of the Northern Provinces, and, secondly, the current educational and competency requirements must be reviewed.
This dissertation will also explore the policy considerations a court will consider in exercising its judicial discretion when the defence of over-indebtedness in terms of section 85 is raised. The analysis into case law finds that firstly, a mere allegation of over-indebtedness will not be sufficient, something more is needed; secondly, each case will be decided on its own merits, and, lastly, the courts act as a check and balance in ensuring that this defense is not misused by debtors.
In considering business rescue, the entire process in terms of the Companies Act of 2008 is set out. The appointment of a business rescue practitioner is assessed, and, it is concluded that section 129 errs by not ensuring that a practitioners‟ appointment is subject to a ratification...