The provisions of the Companies Act create an effective system for tracking down the missing assets of a business and generally revealing the circumstances that led to the insolvency of a business and whether there has been any illegal behavior of a business. from directors or others.
Insolvency law exists primarily to protect a creditor’s claim against a debtor and creditors are often seriously harmed if a business becomes insolvent and is unable to pay what is owed to them, while the former Insolvent firm controllers often retire, financially unscathed and apparently with well-lined pockets.
The law provides that an investigation can be conducted into the trade and affairs of an insolvent company, explains PJ Veldhuizen, Managing Director of Gillan & Veldhuizen. “So, it is not because a company which owes you money is in liquidation and the liquidator tells you that there is no money, and / or very little prospect of dividend. , that this is the end of the story. “
The insolvency regime allows creditors who believe that assets may have been sold for less than their fair value or that suspicious collusive transactions have taken place, or that other creditors have been unduly deferred, to proceed either to a public inquiry before the Master of the High Court or a confidential inquiry to take place before a commissioner appointed by the High Court to inquire into the affairs and affairs of the company in liquidation, and any person connected with that company, to determine if assets need to be recovered, void depositions or claims be made against third parties. While not an inexpensive process, it very often pays dividends to rightfully disgruntled creditors.
Veldhuizen advises: “You want to comply as best you can if you are subpoenaed at an investigation – you don’t want to appear recalcitrant, obscuring or hostile to the investigator – you want to comply and be truthful – end of the story !”