Sequestration

When your liabilities exceed your assets, you are insolvent. The remedy is to apply for a sequestration order. The effect of such a sequestration order is that creditors must claim from the insolvent estate and that they cannot claim from you anymore.

Liquidation

When it is foreseeable that your company / close corporation will not be able to pay its creditors as they fall due in the ensuing 6 months, there is a legal obligation on you to liquidate the company. The liquidation of a Company / Close Corporation is a legal process whereby the Company and its affairs are placed under the control of a liquidator who must realize the assets and divide the assets amongst creditors according to the stipulations in the Companies Act. The main aim of liquidation is to divide the yield from the sale of assets amongst creditors fairly and to dissolve the Company in an orderly manner.