When a debtor stops paying, the reason often is not simple avoidance — it is that a formal insolvency process has started. In South Africa that process takes one of three main forms: sequestration of a person's estate, liquidation (winding-up) of a company, or business rescue. Each is governed by different legislation, each is announced in the Government Gazette, and — most importantly for a debt collector or financial services provider — each gives a creditor a very different set of recovery options and deadlines.
Confusing them is expensive. Chasing an account that is already under a business-rescue moratorium can breach the law; missing a proof-of-claim deadline in a sequestration can forfeit a dividend you were entitled to. This guide explains what each procedure means for your recovery strategy and how to spot it early by screening your debtor book against gazette notices.
The three procedures at a glance
Sequestration (individuals and their estates)
Sequestration is the insolvency process for a natural person (or a partnership or trust), governed by the Insolvency Act 24 of 1936. A debtor can apply for voluntary surrender, or a creditor can bring an application for compulsory sequestration. The court first grants a provisional order, then — after a return date — a final sequestration order.
Once a final order is granted, the Master of the High Court appoints a trustee to take control of the estate, realise the assets and distribute the proceeds among creditors according to the Act's ranking rules. Creditors participate by proving a claim at the meetings of creditors convened under section 40 of the Act, with liquidated claims proved under section 44.
Liquidation (companies and close corporations)
Liquidation — also called winding-up — is the equivalent process for a company or close corporation. It can be voluntary (initiated by the company) or compulsory (by court order), and an insolvent winding-up is administered largely through the Insolvency Act read with the surviving winding-up provisions of the Companies Act 61 of 1973. As with sequestration, the Master appoints a liquidator, creditors prove claims at convened meetings, and assets are distributed by statutory preference.
For a creditor the mechanics feel similar to sequestration: watch for the appointment of the liquidator, prove your claim on time, and understand where you sit in the ranking (secured, preferent or concurrent).
Business rescue (companies in distress — but not yet dead)
Business rescue is the newest and most different of the three. It sits in Chapter 6 of the Companies Act 71 of 2008 and is aimed at rehabilitating a financially distressed company, not burying it. Proceedings begin either by a company resolution (section 129) or a court order on application (section 131), and a business rescue practitioner (BRP) takes temporary supervision of the company.
The feature that matters most to collections is the moratorium in section 133: while business rescue is in progress, no legal proceeding or enforcement action may be started or continued against the company or its property, except with the written consent of the practitioner or the leave of the court. In practice this means active recovery on that account must generally pause.
What each one means for your recovery options
The practical differences determine what your team should — and should not — do.
- Sequestration and liquidation are terminal. The debtor's assets are being realised and distributed. Your job is to prove a claim correctly and on time, establish your ranking, and then wait for the trustee's or liquidator's distribution account. Continuing to dun the debtor directly is pointless and, once a formal estate exists, generally improper.
- Business rescue is a restructuring, not a funeral. The company may keep trading. Under section 145 every creditor is entitled to notice of each meeting, decision and court proceeding, may participate, may make proposals to the practitioner, and has the right to vote on the business rescue plan. Your recovery is shaped by that plan (published under section 150) — which may compromise, reschedule or in some cases pay claims in full. Aggressive collection during the moratorium is not just futile; it can be unlawful.
- Ranking still governs the outcome in all three. Whether the account ends in a distribution account or a rescue plan, a secured or preferent creditor is treated very differently from a concurrent one. Knowing your status before you act changes the economics of pursuing the debt at all.
Why misclassifying the procedure costs money
A collections operation that treats every insolvency the same makes two classic errors: it keeps chasing a company under a business-rescue moratorium (wasting effort and risking a complaint or sanction), or it fails to lodge a claim in a sequestration or liquidation before the relevant meeting and loses a dividend it had every right to. Both errors come from the same root cause — not knowing, early enough, which procedure a debtor has entered.
How each procedure shows up in the Government Gazette
All three are matters of public record, and the Government Gazette is where they surface. South Africa's national gazette is published weekly (Fridays), and the notices relevant to insolvency include:
- Sequestration orders (provisional and final) and notices of surrender of estates.
- Company liquidation / winding-up orders and notices of the appointment of trustees and liquidators.
- Meetings of creditors — the dates by which you must prove a claim.
- Business rescue notices flowing from the Chapter 6 process, alongside related CIPC filings.
- Adjacent notices such as curator appointments, sales in execution and deceased-estate notices that often intersect with the same debtor book.
The signal is there every week — the problem is volume. The gazette runs to hundreds of pages, and reading it by hand to find your handful of debtors is slow, error-prone and impossible to do consistently across a large book.
Screening a debtor book against the gazette
This is where systematic screening replaces manual scanning. A searchable index of gazette notices lets a collections team turn a weekly document dump into an early-warning system.
A practical workflow
- Load your debtor identifiers. Search by ID number, name, company / CK number or estate number. Bulk upload supports up to 100,000 IDs at once, so an entire book can be checked in a single pass.
- Match against the index. Gazette Search indexes 900,000+ notices with coverage since 2004, updated as the gazette publishes weekly, so a new sequestration, liquidation or rescue notice becomes findable quickly.
- Classify each hit. For every match, identify which procedure it is — sequestration, liquidation or business rescue — because that dictates your next action.
- Act on the classification. Prove claims where the estate is terminal; suspend active collection and register for notices where business rescue applies; and route secured or preferent accounts to the right internal team.
- Set a watchlist and alerts. Put high-value or high-risk debtors on a watchlist with email alerts so a future gazette notice reaches you the week it appears — not months later when the distribution account is already finalised.
The cost argument
Manual, per-record legal or data lookups can run R500 or more each — unworkable across a large book. A prepaid credit model costs one credit per search, however many results that search returns. On the free tier and the Single-to-Pro packs, a search that returns no result is not charged (the free tier gives 5 free searches, and a miss does not use one up), so screening a clean book is cheap; bulk tiers (Business / Bulk / Volume) are billed per record, hit or miss. Pricing runs from Single at R35, through Starter (100 credits / R1,000, R10 a search) and Pro (2,500 / R15,000, R6 a search), down to R0.55 a search at Volume. Credits are valid 12 months, and auto-refill earns 10% off. For a collections team, the maths is straightforward: a few rand to confirm a debtor's insolvency status, versus the cost of chasing a dead account or missing a dividend.
Frequently asked questions
How do I know whether my debtor is under sequestration, liquidation or business rescue?
Check the Government Gazette notice type. Sequestration applies to individuals under the Insolvency Act; liquidation (winding-up) applies to companies and close corporations; business rescue applies to distressed companies under Chapter 6 of the Companies Act 71 of 2008. Screening your book by ID, name or company number against an indexed gazette lets you classify each match quickly.
Can I keep collecting from a company that has entered business rescue?
Generally no. Section 133 of the Companies Act 71 of 2008 imposes a moratorium: no legal proceeding or enforcement action may be started or continued against the company or its property without the practitioner's written consent or the leave of the court. You should pause active recovery, register as a creditor, and participate in the business rescue plan process.
What must I do to recover in a sequestration or liquidation?
You must prove a claim at the meeting of creditors convened by the Master-appointed trustee or liquidator, within the applicable deadlines, and establish your ranking (secured, preferent or concurrent). Distribution then follows the statutory order of preference. Missing the meeting can mean forfeiting a dividend you were entitled to.
How often is the Government Gazette published, and how far back does coverage go?
The national Government Gazette is published weekly, on Fridays. Gazette Search indexes more than 900,000 notices with coverage since 2004, so both current and historical insolvency notices are searchable in one place.
Is screening the whole debtor book expensive?
It does not have to be. Pricing is one credit per search regardless of how many results come back, and on the free and Single-to-Pro tiers a search that returns no result is not charged. That makes screening a large, mostly-solvent book far cheaper than manual per-record lookups, which can cost R500 or more each.