A comparative analysis of the treatment NINA debtors in South Africa and Scotland during the Covid-19 pandemic

Abstract

The South African insolvency system remains pro-creditor regardless of the implications which were caused by COVID-19. Sequestration as dealt with in terms of the Insolvency Act 24 of 1936 is still the only procedure that provides for the discharge of pre-sequestration debts, and for this reason, it is referred to as the primary debt relief. The other two procedures which are the administration order in terms of the Magistrates’ Court Act 32 of 1944 and the debt review in terms of the National Credit Act 34 of 2005 are referred to as secondary debt relief as they do not provide for any discharge of debts but are rather repayment plans. Debtors without income or assets are excluded from those procedures as they cannot prove any advantage to creditors, because of this exclusion the government introduced the debt intervention procedure through the National Credit Amendment Act. This Act was signed by the government in 2019 but it is not yet operational, and this debt intervention measure is to address the issue of excluded NINA debtors by giving them access to the debt relief system through a mechanism that provides, amongst others, for a discharge of debts. This dissertation deals with the debt intervention measure as a proposed debt relief measure to assist NINA debtors, while it compares and analyses the lessons that can be learned from international trends such as that of the debt relief system of Scotland. During COVID-19, Scotland proposed the CoronaVirus (Scotland)(no 2) Act 2020 to mitigate the consequences caused by the Virus to assist NINA debtors, and in the dissertation, the research emphasizes what South Africa can learn from Scotland to better the debt intervention procedure.