Abstract:
This dissertation is an investigation into the constitutionality of the requirement of
advantage to creditors in South African consumer insolvency law as well as a
comparative investigation into debt relief procedures available to consumer debtors
in Australia and England. The dissertation identifies and discusses debt relief
procedures available in South African consumer insolvency law namely
sequestration, debt review and administration. The author suggests that these
procedures do not provide adequate relief as it does not provide a debt discharge for
"poor" debtors, that is debtors who do not have any assets or income (the so-called
"No Income No Assets" (NINA) group of debtors) available for distribution amongst
creditors.
The author discusses the possible unconstitutionality of the advantage for creditors
requirement in light of the creditor oriented approach of the South African
insolvency system. In this regard the test that was applied in the famous
constitutional court decision in Harken v Lane 1998 (1) SA 300 CC, will be analysed in
order to determine the possible violation of the right of equality enshrined in the
Constitution of the Republic of South Africa 1996.
The comparative study entails an investigation of certain key issues namely the
availability of alternative debt relief procedures and in particular how both countries
deal with debt discharge for poor debtors.
Ultimately, two sets of conclusions are drawn from the investigation in this
dissertation. Firstly, it is concluded that the requirement of advantage to creditors is
unconstitutional and should be removed as a provision under the consumer
insolvency law. Secondly it is submitted that the South African Reform Commission
should learn from developments in English and Australian consumer insolvency law
and should reconsider alternative and appropriate debt discharge procedures for
debtors, especially "poor" debtors who cannot reasonably repay their creditors.
