CHAPTER 42:02
INSOLVENCY

ARRANGEMENT OF SECTIONS

   SECTION

PART I
Preliminary

   1.   Short title

   2.   Interpretation

PART II
Sequestration and Attachment of Estate

A. Voluntary Surrender

   3.   Circumstances under which an estate may be surrendered

   4.   Publication of notice of surrender and lodging of debtor's schedules or statement at Master's office

   5.   Making of sequestration order by the court

   6.   Prohibition of sale of property of estate after publication of notice of surrender

   7.   Notice of surrender not to be withdrawn without the consent of the Master

B. Compulsory Sequestration

   8.   Acts of insolvency

   9.   Petition for sequestration of estate

   10.   Provisional sequestration

   11.   Order of sequestration of estate of individual and of partnership

   12.   Making of provisional order and service of rule nisi upon the debtor

   13.   When provisional order may be set aside or petition dismissed

   14.   Petitioning creditor to prosecute sequestration proceedings until trustee appointed

   15.   Compensation to debtor if petition unfounded and vexatious

   16.   Lodging by insolvent of schedules or statement with Master

C. Attachment and Custody of the Estate

   17.   Transmission of sequestration order by Registrar to Master and other officers

   18.   Appointment of curator bonis by Master for temporary custody of estate

   19.   Mode of attachment by sheriff

PART III
Effects of Sequestration

Effect upon the Insolvent and his Property

   20.   Effect of sequestration on insolvent's property

   21.   Payment of debts after sequestration

   22.   Powers, duties and privileges of the insolvent during sequestration

   23.   Power of Master to have movable property sold when not over P400 in value

   24.   Estate to remain vested in trustee until rehabilitation

Effect upon Antecedent Transactions

   25.   Dispositions without value

   26.   Antenuptial contracts

   27.   Life insurance policies

   28.   Voidable preferences

   29.   Undue preferences

   30.   Collusive dealings

   31.   Liability of the legal representative of an estate

   32.   Proceedings to set aside antecedent transactions

   33.   Indemnification by trustee of creditors

   34.   Sales of a business

   35.   Contracts to buy immovable property

   36.   Sales for cash

   37.   Leases

   38.   Effect of sequestration on apprenticeship agreements

PART IV
Meetings of Creditors

Meetings: How Convened and When

   39.   Time and place of meetings of creditors

   40.   First and second meetings

   41.   When further meetings to be called and notice of the same

   42.   Special meetings

Proof of Debts

   43.   Proof of liquidated claims

   44.   Duty of the trustee upon delivery of claims to him

   45.   Mutual dealings and set-off

   46.   Particulars of tacit hypothec or right of retention to be specially mentioned

   47.   Proof of conditional claim

   48.   Provisions in case of simultaneous sequestration of partnership estate and estate of a partner

   49.   Mode in which claims to be made up

   50.   Withdrawal of claim and conditions thereof

Voting at Meetings: Recording Resolutions

   51.   Right to vote and reckoning of votes

   52.   Questions upon which creditors may vote

Election of Trustee

   53.   Time of election of trustees and number to be elected and manner of election

   54.   Provisions in case no trustee elected at any meeting

Examination of the Insolvent

   55.   Insolvent to attend without notice first and second meetings of creditors

   56.   Examination of insolvent

   57.   Steps to be taken on suspicion of an offence

PART V
Liquidation and Distribution of Estate

Appointment and Removal of Trustees and Provisional Trustees

   58.   Power of court to appoint provisional trustees

   59.   Persons disqualified from being elected trustees

   60.   Power of court to declare a person disqualified from being a trustee

   61.   Grounds for removal of trustee

   62.   Circumstances under which a trustee may resign from office or absent himself from Botswana

   63.   Election of new trustee on resignation or removal of a trustee

   64.   Election of new trustee on death of trustee

   65.   Confirmation of election of trustee by court or Master

Duties and Powers of Trustee in the Liquidation of the Estate

   66.   Opening of banking account and books

   67.   Retention of moneys or employment of assets by trustees

   68.   Legal proceedings against the estate

   69.   Power of trustee to take legal advice

   70.   Improper advising or conduct of legal proceedings

   71.   Recovery of debts due to estate

   72.   Subsistence allowance for insolvent and family

   73.   Sale of movable property on authorization of Master

   74.   Continuation of insolvent's business

   75.   Duty of trustee at second meeting to report and take instructions in certain matters

   76.   What reports to be made at second meeting of creditors

   77.   Sale of property after second meeting and manner of sale

   78.   Realization of securities

   79.   Power to compound for debts due to the estate and to submit matters in dispute to arbitration

   80.   Continuance of pending legal proceedings by surviving or new trustee

   81.   Remuneration of trustee or curator bonis

PART VI
Application of Assets

Costs and Preferent Claims

   82.   Funeral expenses; deathbed expenses

   83.   Costs of sequestration

   84.   Costs of execution

   85.   Servants' wages

   86.   Preference in regard to taxes on income

Secured Claims

   87.   Landlord's hypothec

   88.   Effect of general bond and general clause; mortgages for future advances

   89.   Costs to which securities are subject

Distributions

   90.   Distribution to creditors

   91.   Equalizing dividends in case of late proof

Contributions

   92.   Contributions by creditors towards costs of sequestration when free residue insufficient

PART VII
Trustee's Accounts

Form of Accounts

   93.   Liquidation account and plan of distribution

   94.   Manner in which plan of distribution and plan of contribution to be prepared

   95.   Power to apply to the court for an order on the trustee to lodge liquidation account

   96.   Costs where Master has refused to grant trustee extension of time

Confirmation of Account: Dividends and Contributions

   97.   Inspection of account: places for and period of

   98.   Objections by insolvent or other interested parties to account

   99.   Confirmation of account

   100.   Distribution of estate and collection of contributions from creditors

   101.   Trustee to produce acquittances for dividends or to pay over unpaid dividends

   102.   Application to court for an order to pay dividend

   103.   Surplus money to be paid to Master

   104.   Enforcing payment of contributions of creditors by writ of execution

Authentication of Accounts

   105.   Authentication of confirmed accounts by Master and transmission to magistrate and local inspection of same

PART VIII
Compositions and Rehabilitations

Compositions

   106.   Offer of composition or security for composition by insolvent

   107.   Effect of acceptance of offer of composition

   108.   Payment of moneys in pursuance of offer of composition to be made through trustee

Rehabilitations

   109.   Application for rehabilitation and conditions of making the same

   110.   Security to be furnished prior to application for rehabilitation

   111.   Facts to be averred by insolvent on application for rehabilitation

   112.   Opposition to or refusal by court of rehabilitation

   113.   Effect of order of rehabilitation

   114.   Illegal inducements to vote for composition or not to oppose rehabilitation

   115.   Proceedings to recover penalty

PART IX
Assignments

   116.   Voluntary assignments not affected

   117.   Meaning of assignment of estate by debtor

   118.   Debtor may assign his estate

   119.   Who may execute deed of assignment

   120.   Effect of execution of deed of assignment

   121.   Duties of debtor assigning estate to transmit schedules and give notice

   122.   Effect of publication of notice of assignment

   123.   When deed may be signed by creditors entitled to sign

   124.   When deed not signed

   125.   Duty of Master if creditors do or do not take action to set aside assignment or place estate under sequestration

   126.   Attestation of signatures to deed of assignment

   127.   Effect of registration of deed of assignment

   128.   Supervision of assigned estate by Master

   129.   Costs of assignment

PART X
Search Warrants and Examinations

Concealed Property

   130.   Search warrants

Examination of Insolvent and other Persons by Order of Court

   131.   Examination of insolvent and other persons and production of books and documents

   132.   Expenses of person examined

   133.   Apprehension of persons failing to appear to undergo examination

   134.   Committal to prison of persons refusing to answer questions or produce documents, etc. and bankers' evidence

   135.   Appeal to court against such order of committal

   136.   Limited protection of magistrate for warrant illegally issued by him

PART XI
Offences

Offences prior to Sequestration or Assignment

   137.   Concealing, etc. books, assets, or destruction or disposition of same

   138.   Concealment of liabilities or pretence to existence of assets

   139.   Failure to keep proper records

   140.   Undue preferences, contracting debts without expectation of ability to pay, etc.

Offences after Sequestration or Assignment

   141.   Failure to give information as to or delivery of assets, books, etc.

   142.   Obtaining credit during insolvency, offering inducements, etc.

   143.   Failure to attend meetings or give explanation of insolvency

   144.   False answers on oath while under examination

   145.   Failure to appear before meeting of creditors or before the court or a magistrate

   146.   Failure of debtor or spouse to appear to give evidence in proceedings

   147.   Inducement by consideration or promise to do or omit certain acts in relation to insolvent estate

   148.   Removing or concealing property to defeat an attachment or failure to give information

   149.   Liability of partners or administrators

   150.   Liability of agents and managers and evidence of liability or date thereof

PART XII
Judicial

   151.   Jurisdiction of the court

   152.   Review by and appeal to the court

   153.   Power of the President to make rules

PART XIII
Miscellaneous

   154.   Duty of trustee to assist in relation to prosecution of insolvent

   155.   Evidence

   156.   Formal defects

   157.   Notices

   158.   Proceedings against the trustee or assignee

   159.   Fees

   160.   Custody of documents and admissibility of copies

   161.   Destruction of documents

   162.   Saving of law as to land settlement

   163.   Special provision in case of sale of goods under a suspensive condition

   164.   Rights of purchaser of immovable property who has paid part of purchase price

   165.   Deceased estates placed under sequestration

   166.   Power of President to make regulations

      First Schedule - Forms

      Second Schedule

      Third Schedule - Fees

Proc. 25, 1929,
Proc. 21, 1930,
Cap. 69, 1948,
Cap. 82, 1959,
Proc. 4, 1959,
Proc. 29, 1961,
Law 27, 1962,
HMC Order 1, 1963,
Law 23, 1964,
L.N. 55, 1965,
L.N. 84, 1966,
L.N. 94, 1966,
Act 41, 1972,
Act 3, 1981,
Act 14, 2005.

An Act to make provision for the administration of insolvent and assigned estates and for matters incidental thereto.

[Date of Commencement: 23rd August, 1929]

PART I
Preliminary
(ss 1-2)

1.   Short title

   This Act may be cited as the Insolvency Act.

2.   Interpretation

   In this Act, unless the context otherwise requires-

   "account" means liquidation account and plan of distribution or of contribution, or of distribution and contribution, as the case may require;

   "bailiff" means any bailiff of a magistrate's court, or any official lawfully acting as such, and includes any duly appointed deputy bailiff;

   "court" means the High Court of Botswana but, in sections 25, 28, 29, 30 and 32 includes a magistrate's court acting within its jurisdiction, and in relation to any offence against this Act the term "court" or "the court" means a magistrate's court having jurisdiction in respect of that offence within Botswana;

   "creditor" includes any person who or any estate of a person which, is a creditor in the usual sense of the word;

   "debtor", when used in connection with an estate which is about to be sequestrated or assigned, includes any person who, or any estate of a person which, is a debtor in the usual sense of the word, except a body corporate or a company or other association of persons which may be placed in liquidation under the law for the time being in force relating to the winding up of companies;

   "disposition" means any transfer or abandonment of rights to property and includes sale, lease, mortgage, pledge, conveyance, delivery, payment, release, compromise, donation or any contract therefor, but does not include a disposition in compliance with an order of the court;

   "free residue", in relation to an estate, means that portion of the estate under sequestration which is not subject to any right of preference by reason of any special mortgage, legal hypothec, pledge or right of retention;

   "good faith", when used in connection with dispositions of property, means the absence of any intention to prejudice creditors in obtaining payment of their debts or to prefer one above another;

   "immovable property" means land and every right or interest in land or minerals which is registrable under the Laws of Botswana in any deeds or other registration office wherein title to immovable property or mining title may be registered;

   "insolvent" means a debtor whose estate is under sequestration;

   "marketable security" means any stock, debenture, share or any other interest whatever capable of being sold in a share market or exchange and includes also the scrip, certificate, warrant or other instrument by which the title to such stock, debenture, share or other interest is represented;

   "Master" means the Master of the High Court and includes, to the extent to which he is empowered to act, any Assistant Master;

   "movable property" means every kind of property and every right or interest which is not immovable property;

   "preference", in regard to any claim in an estate under sequestration, means the right to have assets of the estate applied in satisfaction of that claim in preference to other claims;

   "property" includes movable or immovable property wherever situate within Botswana and includes contingent interests in property;

   "provisional order" means an order whereby an estate is placed under sequestration provisionally;

   "qualified accountant" means an accountant holding such qualifications as may be prescribed;

   "Registrar" means the Registrar of the High Court;

   "security" as distinguished from "marketable security", in relation to the claim of a creditor, means property of the insolvent over which the creditor has a preference right by virtue of any special mortgage, legal hypothec, pledge or right of retention, but does not include property over which the creditor has, or purports to have, a preferent right by reason of a mortgage or pledge of the general assets of the estate or of the general assets of any business belonging to the estate;

   "sequestration order" means any order whereby an estate is placed under sequestration or under provisional sequestration, when such order for provisional sequestration has not been set aside;

   "sheriff" means any person appointed in that capacity by the Minister or any person lawfully acting as such and includes any duly appointed deputy sheriff;

   "special mortgage" does not include any document which, having been executed after the coming into effect of this Act, purports to pledge as security for a debt movable property which has not been delivered to and retained by the pledgee;

   "trader" means any person who carries on any trade, business, industry, or undertaking in which goods are sold, bought, exchanged, or manufactured for the purpose of sale or exchange;

   "trustee" means the trustee in any estate under sequestration, and includes a provisional trustee;

   "unliquidated claim" means a claim the amount of which has not been determined by agreement or by a judgment of a court or otherwise and includes a claim for damages or for an interdict.

PART II
Sequestration and Attachment of Estate
(ss 3-19)

A. Voluntary Surrender (ss 3-7)

3.   Circumstances under which an estate may be surrendered

   (1) The surrender of an estate may be accepted by the court-

   (a)   upon the petition in writing of the debtor, or of his duly authorized agent, setting forth that the debtor is insolvent and tendering the surrender of his estate for the benefit of his creditors;

   (b)   upon the like petition of any person in whom is legally vested the administration of the estate of-

      (i)   any deceased debtor; or

      (ii)   any debtor incapable of administering his estate; or

   (c)   upon the like petition presented on behalf of a partnership estate and made by the greater number of the partners present or represented in Botswana.

   (2) Before accepting the surrender the court may direct the petitioner or any other person to appear and be examined before the court or before a magistrate appointed by the court; and all opposed cases of voluntary surrender shall be heard in the first instance by a magistrate in the district where the parties reside, and the said magistrate shall transmit the sworn evidence taken in such case, together with his report thereon for the consideration of the court.

4.   Publication of notice of surrender and lodging of debtor's schedules or statement at Master's office

   (1) Before presenting any such petition the petitioner shall cause due notice of surrender, as nearly as may be in the Form A in the First Schedule, to be published in the Gazette, and in any newspaper circulating in the district in which the debtor resides, or, if the debtor is a trader, in the district in which he has his principal place of business, and by means of a notice published at the office of a magistrate in the district in which the debtor resides or has his principal place of business.

   (2) Every such publication shall be not less than 14 days prior to the hearing of the petition.

   (3) The petitioner shall lodge in duplicate at the office of the Master the debtor's schedules or statement of his affairs.

   (4) If the debtor resides or is a trader carrying on business in any district other than the South East District, the petitioner shall also lodge a copy of those schedules at the office of a magistrate of the district.

   (5) The schedules referred to in subsection (4) shall be open to the inspection of any creditor at all times during office hours for a period of 14 days from a date to be mentioned in the notice of surrender and, upon the expiration of the notice, the Master shall transmit one set of the schedules to the court.

   (6) The schedules referred to in subsection (4) shall be supported by a valuation under oath of the assets of the estate, and that valuation shall, if the Master so directs, be verified by an independent valuation made by a sworn appraiser or such other person as the Master may appoint.

   (7) The schedules shall be framed as nearly as may be in the Form B in the First Schedule and shall contain the particulars and shall be verified by the affidavit thereby required, and shall be accompanied by a certificate from a magistrate of the district in which the petitioner resides, other than the South East District, to the effect that the preceding provisions of this have been complied with.

5.   Making of sequestration order by the court

   The court, on being satisfied that the provisions of section 4 have been complied with and that there are available assets of the estate to an amount sufficient to defray all such costs of sequestration as are by this Act payable out of the free residue, may grant an order placing the estate under sequestration in the hands of the Master.

6.   Prohibition of sale of property of estate after publication of notice of surrender

   (1) After the publication of the notice of surrender in the Gazette, it shall not be lawful to sell any property of the estate which has been attached under writ of execution or other process in the nature of an attachment, unless the person charged with the execution of the same could not have known of the publication:

   Provided that-

   (i)   the Master, if in his opinion any such property does not exceed P400 in value, or the court, if it exceeds that amount, may order the sale to be proceeded with and direct how the proceeds of the sale shall be applied, and

   (ii)   the proceeds of any such property already sold shall be retained by the officer charged by law with the execution of legal process and shall not be paid out by him before the application for surrender of the estate has been made and adjudicated upon except upon an order of the court or unless the notice of surrender has been withdrawn under section 7.

   (2) After publication of the said notice of surrender in the Gazette, the Master may, upon the request in writing of any creditor who has to his satisfaction guaranteed the additional costs to be incurred, instruct the sheriff or the bailiff to attach the estate of the debtor.

   (3) If the notice of surrender is withdrawn, the attachment shall determine and the costs thereof shall be included in the costs of such notice, and all rights of or against the estate shall revive as if such notice had not been given.

   (4) After publication of the notice of surrender in the Gazette the Master may-

   (a)   appoint a curator bonis to take and have the custody of the estate and to exercise in regard to the conduct of any business or undertaking of the debtor such powers of control as may appear to the Master to be desirable; and

   (b)   direct the sheriff or the bailiff of a magistrate's court to attach the estate of the debtor as if it were an estate under sequestration.

   (5) If the court does not accept the surrender, or if the notice of surrender is withdrawn under section 7, then as soon as the Master has certified that provision has been made for the payment by the debtor of all costs and expenses arising out of the exercise of the powers of subsection (4) or of any other provision of this Act, full control of the estate shall be restored to the debtor.

7.   Notice of surrender not to be withdrawn without the consent of the Master

   (1) No notice of surrender published in the Gazette may be withdrawn without the written consent of the Master.

   (2) If it appears to the Master that such notice was published in good faith, and that there is good cause for its withdrawal, he shall certify his consent thereto on payment of the costs of the notice; and notice of the withdrawal and of the consent of the Master thereto shall thereupon be published by the debtor at his own expense in the Gazette and in the newspaper in which the notice of surrender appeared, and thereupon the notice of surrender shall be deemed to have been withdrawn.

   (3) If, within 14 days after the date specified in the notice of surrender as the date on which application will be made to the court for the surrender of the estate, the debtor has failed to make application, the Master may publish a notice in the Gazette at the expense of the debtor, cancelling the notice of surrender and as from the date of such publication the notice of surrender shall be deemed to have been withdrawn, and a copy of such notice of withdrawal shall be published at the office of a magistrate in the district in which the debtor resides or has his principal place of business.

B. Compulsory Sequestration (ss 8-16)

8.   Acts of insolvency

   A debtor commits an act of insolvency-

   (a)   if, having any property within Botswana, he departs therefrom, or being out of Botswana remains absent therefrom, or departs from his dwelling or otherwise absents himself, with intent by so doing to evade or delay the payment of his debts;

   (b)   if, having against him the sentence of any competent court, and being thereto required by the officer charged with the execution of the same, he does not satisfy the same or point out to that officer sufficient disposable property to satisfy the same, or if it appears from the return made by such officer that he has not found sufficient disposable property;

   (c)   if he makes any disposition of any of his property which has the effect of prejudicing his creditors or of preferring one creditor above another;

   (d)   if he removes any of his property with intent to prejudice his creditors or to prefer one creditor above another;

   (e)   if, except as provided in this Act, he agrees or offers to assign his estate for the benefit of his creditors or any of them, or makes or offers to make any arrangements with his creditors for releasing him wholly or partially from his debts;

   (f)   if, having published a notice of surrender which has not been withdrawn in the manner aforesaid, he omits to lodge his schedules as required by law, or lodges schedules containing material misrepresentations or omissions, or fails to present his petition to the court within 21 days from the publication in the Gazette of that notice;

   (g)   if he gives notice to any of his creditors that he has suspended or is about to suspend payment of his debts or if he has suspended payment of his debts;

   (h)   if he makes default in publishing the notice required by section 121 or if his creditors have, in terms of section 124, declined the assignment of his estate;

   (i)   if, being a trader, he gives notice in the Gazette in terms of section 34 and is unable to meet the liabilities of his business;

   (j)   if, a notice of assignment having been published, he omits to lodge his schedules as by law required or his schedules do not fully disclose his debts or property and that omission is material.

9.   Petition for sequestration of estate

   (1) A creditor (or his agent) who has a liquidated claim for not less than P100, or two or more creditors (or their agent) who in the aggregate have liquidated claims for not less than P200 against a debtor who has committed an act of insolvency, or is insolvent, may petition the court for the sequestration of the estate of the debtor.

   (2) A liquidated claim which has accrued but which is not yet due on the date of hearing of the petition shall be reckoned as a liquidated claim for the purposes of subsection (1).

   (3) Every such petition shall contain the following facts-

   (a)   the amount involved;

   (b)   the cause and nature of the claim in question;

   (c)   a statement as to whether the claim is or is not secured, and, if it is, the nature and value of the security; and

   (d)   the debtor's act of insolvency upon which the petition is based or otherwise the allegation that the debtor is in fact insolvent.

   (4) The facts stated in the petition in accordance with subsection (3) shall be confirmed by affidavit and the petition shall be accompanied by a certificate of the Master given not more than 10 days before the date of such petition that sufficient security has been given for the payment of all fees and charges necessary for the prosecution of all sequestration proceedings and of all costs of administering the estate until a trustee has been appointed, or, if no trustee is appointed, of all fees and charges necessary for the discharge of the estate from sequestration.

   (5) Before any petition is presented to the court in accordance with the provisions of this section, a copy of the petition and of every affidavit confirming the facts stated in the petition shall be lodged with the Master, or, if there is no Master at the seat of the court, with an officer in the public service designated for that purpose by the Master by notice published in the Gazette (in this section referred to as the "designated officer"), and the Master or such designated officer may report to the court any facts ascertained by him which would appear to him to justify the court in postponing the hearing or in dismissing the petition.

   (6) The Master or the designated officer, as the case may be, shall transmit a copy of the report referred to in subsection (5) to the petitioning creditor or his agent.

   (7) The court may, on consideration of the petition and the Master's or the designated officer's report thereon and of any further affidavit by the petitioning creditor in answer thereto, deal with the petition in accordance with the provisions of section 10 or dismiss the petition or postpone its hearing or make such other order in the matter as in the circumstances appears to be just.

10.   Provisional sequestration

Where the court to which the petition for the sequestration of the estate of a debtor has been presented is of the opinion that prima facie -

   (a)   the petitioning creditor has established a claim in accordance with the provisions of section 9(1) against the debtor;

   (b)   the debtor has committed an act of insolvency or is insolvent; and

   (c)   there is reason to believe that it will be to the advantage of creditors of the debtor if his estate is sequestrated,

it may make a provisional order sequestrating the estate of the debtor.

11.   Order of sequestration of estate of individual and of partnership

   (1) It shall be competent for the court to include in one sequestration order the estate of a partnership, and the separate estates of the partners; and every fact which is a ground for the sequestration of the estate of a partnership shall be a ground for the sequestration of the separate estate of every partner:

   Provided that if the court is satisfied that a partner is willing and able to satisfy the debts of the partnership within a time to be determined by the court, the separate estate of that partner shall not be placed under sequestration by reason only of any fact forming a ground for the sequestration of the estate of the partnership.

   (2) Nothing contained in this Act shall affect the rights or liabilities under Roman-Dutch law of partners en commandite or anonymous or other partners who have not held themselves out as ordinary or general partners.

12.   Making of provisional order and service of rule nisi upon the debtor

   (1) If the court grants a provisional order of sequestration, it shall at the same time grant a rule nisi calling upon the debtor upon a day mentioned in the rule to appear and to show cause why a final order of sequestration should not be made against his estate.

   (2) If the debtor has been absent for 21 days from his usual place of residence and of his business (if any) within Botswana, the court may direct that it shall be sufficient service of that rule if a copy thereof is affixed to the outer door of the building where the court sits and published in the Gazette, or may direct some other mode of service.

   (3) Upon the application of the debtor the court may anticipate the return day for the purpose of discharging the order if 24 hours' notice of such application has been given to the petitioning creditor.

13.   When provisional order may be set aside or petition dismissed

   If, upon the hearing, the petitioning creditor fails to prove his claim or if he fails to prove the act of insolvency with which the debtor is charged, or the court is not satisfied that the estate is insolvent or that it will be to the advantage of the creditors that the estate be placed under sequestration, it may set aside the provisional order and dismiss the petition or require further proof of the matters therein set forth and postpone the hearing for any reasonable time, but not sine die.

14.   Petitioning creditor to prosecute sequestration proceedings until trustee appointed

   (1) The creditor upon whose petition a sequestration order is made shall, at his own cost, prosecute all the proceedings in the sequestration until the appointment of a trustee.

   (2) The taxed costs shall be paid to him out of the first funds of the estate available for the purpose under section 83, but shall not be provable against the estate.

   (3) In the event of a contribution under section 92, the petitioning creditor, whether or not he proves a claim, shall have no smaller liability to contribute than if he had proved his claim as stated in the petition.

15.   Compensation to debtor if petition unfounded and vexatious

   Whenever it appears to the court that the petition was unfounded or vexatious, the court may allow the debtor forthwith to prove any damage sustained by him by reason of the provisional sequestration and award him such compensation as it may deem fit; or the debtor may bring an action for damages so sustained by him.

16.   Lodging by insolvent of schedules or statement with Master

   (1) Whenever a final order of sequestration has been made upon the petition of a creditor, the insolvent shall, within seven days of the service of that order, lodge with the Master his schedules or statements of affairs in duplicate framed as nearly as may be in the Form B in the First Schedule, containing the particulars and verified by the affidavit thereby required.

   (2) No stamp duty shall be payable in respect of that affidavit.

C. Attachment and Custody of the Estate (ss 17-19)

17.   Transmission of sequestration order by Registrar to Master and other officers

   (1) The Registrar shall without delay transmit-

   (a)   a duplicate original of every sequestration order, and of every order amending or setting aside the same, to the Master;

   (b)   a duplicate original of every provisional order of sequestration and, where there has been no provisional order, of every final order of sequestration, and of every order amending or setting aside the same-

      (i)   to the sheriff;

      (ii)   to every officer charged with the registration of title to any immovable property or interest in minerals within Botswana which appears to be an asset of the insolvent's estate;

      (iii)   to every bailiff of the magistrate's court to whom it appears that the property of the insolvent is under attachment:

         Provided that when the value of an estate is under P400 and the court so orders, the movable assets may remain in the custody of the insolvent or any other person upon such terms as to security as the court may direct, and in that case it shall not be necessary to transmit the order of sequestration to any sheriff or bailiff.

   (2) Every officer shall register every order so transmitted to him and note on the order the day and hour when it is received.

   (3) Upon the receipt of any sequestration order the Master shall give notice thereof in the Gazette.

18.   Appointment of curator bonis by Master for temporary custody of estate

   (1) Whenever it seems necessary or expedient to the Master, he may appoint a curator bonis to take and have custody of any estate under sequestration until the appointment of a trustee.

   (2) Every such curator bonis shall find security to the satisfaction of the Master and thereafter may collect such debts and may sell or dispose of such property and carry on such business in connection with the estate as the Master may authorize.

19.   Mode of attachment by sheriff

   (1) As soon as the sheriff has received the sequestration order, he shall proceed by his deputy or by a bailiff to attach and make an inventory of the movable property of the estate capable of manual delivery and not in lawful possession of a pledgee or under attachment by a bailiff, in the following manner-

   (a)   he shall take into his own custody all cash, share certificates, bonds, bills of exchange, promissory notes, deeds and other securities and he shall remit all such cash to the Master, unless otherwise directed by the Master;

   (b)   he shall leave all books of account, invoices, vouchers and business correspondence in a room or other suitable place properly sealed up;

   (c)   he shall leave any other movable property in a room or other suitable place properly sealed up or appoint some suitable person, either the person in whose care it was at the time of attachment or some other person, to hold the same in his custody; and

   (d)   he shall leave with the person so appointed a copy of the inventory with a notice that the property has been attached by virtue of a sequestration order; and that notice shall contain a statement of the offence constituted by section 148 and of the penalties provided therefor.

   (2) Any person interested in the estate may be present or may authorize some person to represent him when the sheriff is making his inventory.

   (3) The sheriff or bailiff shall forthwith report to the Master in writing the fact of the attachment, and shall transmit with the report a copy of his inventory and a list of any property which to his knowledge is in the lawful possession of a pledgee.

   (4) Every bailiff shall transmit to the Master without delay an inventory of all property attached by him and known to belong to an insolvent.

   (5) The sheriff or bailiff shall be entitled to fees and remuneration taxed by the Master according to Tariff A in the Second Schedule.

PART III
Effects of Sequestration
(ss 20-38)

Effect upon the Insolvent and his Property (ss 20-24)

20.   Effect of sequestration on insolvent's property

   (1) The effect of a sequestration order shall be-

   (a)   to divest the insolvent of his estate and to vest it in the Master until a trustee has been appointed, and, upon the appointment of a trustee, to vest the estate in him;

   (b)   to stay, until the appointment of a trustee, any civil proceedings instituted by or against the insolvent except such proceedings as may, in terms of this Act, be instituted by the insolvent for his own benefit or be instituted against the insolvent:

         Provided that if any claim which formed the subject of legal proceedings against the insolvent which were so stayed, has been proved and admitted against the insolvent's estate in terms of this Act, the claimant may also prove against the estate a claim for his taxed costs, incurred in connection with those proceedings before the sequestration of the insolvent's estate;

   (c)   as soon as any sheriff or messenger, whose duty it is to execute any judgment given against an insolvent, becomes aware of the sequestration of the insolvent's estate, to stay that execution, unless the court otherwise directs;

   (d)   to enable the insolvent, if in prison for debt, to apply to the court for his release, after notice to the creditor at whose suit he is so imprisoned.

   (2) For the purposes of subsection (1) the estate of an insolvent shall comprise-

   (a)   all property of the insolvent at the date of the sequestration, including property or the proceeds thereof which are in the hands of a sheriff or a messenger under writ of attachment; and

   (b)   all property which the insolvent may acquire or which may accrue to him during the sequestration, except as otherwise provided in section 22: Provided that any moneys or policy of life insurance or asset or, as the case may be, any moneys or proceeds in realization of any policy of life insurance or of any asset in respect of which protection is afforded by virtue of any provision of Part VIII of the Insurance Industry Act to the extent of that protection, shall be excluded from the estate.

   (3) The additional effect of the sequestration of the separate estate of one of two spouses who are not living apart under a notarial deed of separation or a judicial order of separation shall be to vest in the Master, until a trustee has been appointed, and, upon the appointment of a trustee, to vest in him all the property of the spouse whose estate has not been sequestrated (hereinafter referred to as "the solvent spouse") as if it were property of the sequestrated estate, and to empower the Master or trustee to deal with such property accordingly, but subject to the following provisions of this section.

   (4) The trustee shall release any property of the solvent spouse which is proved-

   (a)   to have been the separate property of that spouse immediately before the marriage to the insolvent;

   (b)   to have been acquired by that spouse under a marriage settlement;

   (c)   to have been acquired by that spouse during the marriage with the insolvent by a title valid as against creditors of the insolvent;

   (d)   to be protected by section 27; or

   (e)   to have been acquired with any such property or with the income or proceeds thereof.

   (5) The trustee of the insolvent estate shall not, except with the leave of the court, realize property which ostensibly belonged to the solvent spouse, until the expiry of six weeks' written notice of his intention to do so, given to that spouse.

   (6) Such notice shall also be published in the Gazette and in a newspaper circulating in the district in which the solvent spouse resides or carries on business, and a copy of such notice shall be published at the office of a magistrate in the district in which such solvent spouse resides and shall call upon all separate creditors for value of that spouse to prove their claims as provided in subsection (8).

   (7) The solvent spouse may apply to the court for an order releasing any property vested in the trustee of the insolvent estate under subsection (3) or for an order staying the sale and releasing the property and at any time before distribution of the proceeds thereof for an order declaring the applicant to be entitled to those proceeds; and the court may make such order on the application as it thinks just.

   (8) Subject to any order made under subsection (7) any property of the solvent spouse realized by the trustee shall bear a proportionate share of the costs of the sequestration as if it were property of the insolvent estate but the separate creditors for value of the solvent spouse having claims which could have been proved against the estate of that spouse if it had been the estate under sequestration, shall be entitled to prove their claims against the estate of the insolvent spouse in the same manner and, except as is otherwise provided in this Act, shall have the same rights and remedies and be subject to the same obligations as if they were creditors of the insolvent estate; and the creditors who have so proved claims shall be entitled to share in the proceeds of the property so realized according to their legal priorities inter se and in priority to the separate creditors of the insolvent estate, but shall not be entitled to share in the separate assets of the insolvent estate.

   (9) If any property of the solvent spouse has been released by virtue of subsection (4) or (7) the separate creditors of that spouse shall only be entitled to a share in the proceeds of any property of the solvent spouse which has been realized by the trustee, after the property so released and any property of that spouse acquired by him since the sequestration, have been excussed.

   (10) Before awarding any such creditor a share in such proceeds, the trustee may require the creditor to lodge with him, within a period to be determined by the Master, an affidavit, supported by such evidence as may be available, setting forth the result of such excussion and disclosing the balance of his claim which remains unpaid, and he shall then be entitled to share as aforesaid in respect of that balance only:

   Provided that any creditor who has incurred costs in excussing the separate property of the solvent spouse and has been unable to recover those costs from the proceeds of that property shall be entitled to add the amount of those costs to the amount of his claim as proved.

   (11) If, during the period determined by the Master, any such creditor has failed either to lodge with the trustee such an affidavit as aforesaid, or to excuss any separate property of the solvent spouse available for the satisfaction of his claim, he shall be debarred from sharing as aforesaid unless the court otherwise orders.

   (12) A creditor of the solvent spouse who has proved a claim as provided in subsection (8) shall not be liable to make any contribution under section 92 and shall not be entitled to vote at any meeting of the creditors of the insolvent estate; but any direction of the creditors of the insolvent estate which interferes with the just rights of any such creditor may be set aside by the court on application of such creditor.

   (13) If the solvent spouse is carrying on business as a licensed trader apart from the insolvent spouse or if it appears to the court that the solvent spouse is likely to suffer serious prejudice through the immediate vesting of the property of that spouse in the Master or the trustee, and the court is satisfied in either case that the solvent spouse is willing and able to make arrangements whereby the interest therein of the sequestrated estate will be safeguarded without such a vesting, the court, either when making the sequestration order or at some later date, but subject to the immediate completion of such arrangement as aforesaid, may exclude that property or any part thereof from the operation of the order, for such period as it thinks fit.

   (14) During that period the solvent spouse shall lay before the trustee the evidence available in support of his claim to such property and within that period the trustee shall notify the solvent spouse in writing whether or not he will release such property in accordance with subsection (4).

   (15) If the property has not been so released, then upon the expiry of the said period that property shall vest in the Master or in the trustee, but subject to the provisions of this section.

   (16) If application is made to the court for the sequestration of the estate of the solvent spouse on the ground of an act of insolvency committed by that spouse since the vesting of his property in the Master or the trustee of the insolvent estate, and the court is satisfied that the act of insolvency alleged in that application was due to such vesting, then if it appears-

   (a)   that an application is being or, if necessary, will be made under subsection (7) for the release of any property of the solvent spouse; or

   (b)   that any property of the solvent spouse has been released since the making of the sequestration order, and that the solvent spouse is now in a position to discharge his liabilities,

the court may postpone the hearing of the said application or may make such interim order thereon as to it may seem just.

   (17) If the trustee has in accordance with the preceding provisions of this section released any property alleged to belong to the solvent spouse, he shall not be debarred thereby from proving that it belongs to the insolvent estate and from recovering accordingly.

21.   Payment of debts after sequestration

   Every payment or other satisfaction in whole or in part of any debt or claim which was due or the case of which arose before the sequestration shall, if made to the insolvent after such sequestration, be void, unless the debtor proves that the same was made in good faith and without knowledge of the sequestration.

22.   Powers, duties and privileges of the insolvent during sequestration

   (1) Except as is provided in this section the insolvent shall not be able during the sequestration to enter into any contract without the consent in writing of his trustee.

   (2) The insolvent shall be entitled for the support of himself and those dependent upon him to follow any profession or occupation or to enter into any service, but he shall not, during the sequestration of his estate, be entitled, without the consent in writing of the trustee, either to carry on, or to be employed or engaged in any capacity in, the business of a trader:

   Provided that-

   (i)   any of the creditors or the insolvent may, if the trustee gives or refuses such consent, appeal to the Master, whose decision shall be final; and

   (ii)   the insolvent shall keep a detailed record of all assets received by him from whatever source and of all disbursements made by him in the course of his profession, occupation or employment and, if required thereto by the trustee, shall transmit to the trustee in the first week of every month a statement verified by affidavit of all such assets and of all disbursements whatsoever made by him. The trustee may inspect any such record at all reasonable times and may demand the production of reasonable vouchers in support of any item in such accounts of the expenditure of the insolvent for the support of himself and those dependent upon him. Such moneys received or to be received by the insolvent in the course of his profession, occupation or other employment as in the opinion of the Master are not or will not be necessary for the support of the insolvent and those dependent upon him shall vest in and be paid by the employer to the trustee.

   (3) The insolvent shall be entitled to sue or be sued in his own name for any claim due to or against him under subsection (2) but no cession of the insolvent's salary or earnings thereunder made either before or after the sequestration of his estate shall be of any effect so long as his estate is under sequestration.

   (4) The insolvent shall also have the right in his own name to sue for and for his own benefit to receive any pension to which he may be entitled for work and services:

   Provided that, notwithstanding anything contained in any law governing the pensions of public or railway servants, any portion of a pension paid to or for the benefit of an insolvent and those dependent on him, which in the opinion of the Master is not necessary for the support of the insolvent and those dependent on him, shall vest in the trustee.

   (5) The insolvent shall also be entitled in his own name to sue for and receive for his own benefit any damages claimable by him by reason of any insult or personal injury, and he may continue in his own name and for his own benefit any action which may have been commenced by him in respect of such claims previous to the sequestration; and all goods purchased with the moneys so received shall be free from the control of the trustee.

   (6) The insolvent shall also be entitled in his own name to sue for and receive for his own benefit, subject to this section, the wages or reward for work or labour done or for professional service rendered by or on his behalf after the sequestration of his estate.

   (7) The insolvent may also be sued in his own name for any delict committed by him after the sequestration of his estate.

   (8) All moneys or property claimable by the trustee under this section may be recovered from the insolvent by writ of execution to be issued by the Registrar upon the production to him of a certificate by the Master as to the amount so claimable.

23.   Power of Master to have movable property sold when not over P400 in value

   If it appears to the Master that the value of all the movable property of an estate under sequestration vested in him does not exceed P400 and that it is in the interest of the creditors that such property or any part thereof be sold forthwith, he may direct the sale thereof to take place on such conditions and in such manner as he may think fit:

   Provided that, if he has received timely notice that any such property or any portion thereof is subject to any right of preference, it shall not be sold without the consent in writing of the person in whose favour such right of preference exists.

24.   Estate to remain vested in trustee until rehabilitation

   (1) The estate of the insolvent shall remain vested in the trustee until the insolvent is reinvested therewith pursuant to a composition under section 107, or until the rehabilitation of the insolvent:

   Provided that any property which immediately before the rehabilitation was vested in the trustee shall remain vested in the trustee after rehabilitation for the purposes of realization and distribution.

   (2) On the death or removal of a trustee the estate shall vest in the remaining trustee if any; otherwise it shall vest in the Master.

Effect upon Antecedent Transactions (ss 25-38)

25.   Dispositions without value

   (1) Every disposition of property not made for value may be set aside by the court where such disposition was made by the insolvent-

   (a)   more than two years before the sequestration of his estate, if it is shown that, immediately after the disposition was made, the liabilities of the insolvent exceeded his assets;

   (b)   within two years of the sequestration of his estate, if the party claiming under or benefited by the disposition is unable to prove that, immediately after the disposition was made, the assets of the insolvent exceeded his liabilities:

         Provided that if it is shown that the liabilities of the insolvent at any time after the making of the disposition exceeded his assets by less than the value of the disposition, it may set aside only to the extent of the excess.

   (2) A disposition of property not made for value shall not, if set aside under this section or if uncompleted by the insolvent, give rise to any claim in competition with the creditors of the insolvent.

26.   Antenuptial contracts

   (1) No immediate benefit under a duly registered antenuptial contract given in good faith by a person to his wife or child to be born of the marriage shall be liable to be set aside as a disposition without value, unless the sequestration of his estate took place within two years of the registration of that antenuptial contract.

   (2) For the purposes of this section an "immediate benefit" means a benefit given by transfer, conveyance, delivery, payment, cession, pledge, or special mortgage of property completed within three months immediately after the date of the marriage.

27.   Life insurance policies

   (1) When a person before or during marriage has effected in favour of or ceded to or for the benefit of his wife any policy or policies of life insurance, the policy or policies to an amount not exceeding P4000, together with any bonus claimable in respect thereof, shall be excluded from her estate, if she become insolvent.

   (2) When a person before or during marriage has in good faith effected in favour of or ceded to or for the benefit of his wife or child, or both, a policy or policies of life insurance at any time more than two years before the sequestration of his estate, the policy or policies, if they are not an immediate benefit within the meaning of section 26, whether to a wife or child or both, shall to an amount not exceeding P4000, together with any bonus claimable in respect thereof, be excluded from his insolvent estate, and, if the insolvent is married in community of property, from the joint estate of the insolvent and his wife:

   Provided that-

   (i)   every policy which, at the time of the sequestration of the estate, was ceded or pledged to any person (other than the wife or child of the insured, or a trustee for such wife or child) shall not, to the extent of the cession or pledge, fall under the protection of this section;

   (ii)   when any policy is protected as to a part only, the person entitled to the protected part may apply to the company by whom such policy was granted for the issue of two policies in the place of such policy, one for the unprotected part and the other for the protected part, in favour of the parties respectively entitled thereto; and the company shall thereupon issue such policies at the expense of the applicant, and the original policy shall thereupon become void; and

   (iii)   for the purposes of this section, the expression, "policy of life insurance" includes a contract for securing an insurance endowment, bonus, or annuity upon the death of the insured, or on the expiration of any period, or on the happening of any event, as well as a fully paid-up policy granted for the surrender or exchange of a policy of an equivalent value, but does not include any other property acquired in consideration of the surrender, pledge or cession of a policy.

   (3) A policy of life insurance effected by a person on his own life which has endured for three years from the date of payment of the first premium shall not, during the lifetime of the insured, vest upon the sequestration of the estate of the insured or the assignment thereof under this Act in the trustee or assignee of the estate:

   Provided that-

   (i)   the protection afforded to a debtor under this section shall not exceed P4000 together with any bonus claimable in respect thereof;

   (ii)   a policy which is pledged, to the extent to which it is pledged, and the proceeds of a policy which is surrendered shall not be protected by this section,

but nothing in this Act shall be construed as preventing the insured from agreeing with an insurance company for the surrender or exchange of his existing policy to the extent to which it is protected by this section for a fully paid-up policy, and such last-mentioned policy shall be wholly protected.

   (4) A policy protected under subsection (3) shall, to the extent to which it is protected, not be available on the death of the insured for the payment of creditors as against the claims of-

   (a)   the surviving spouse of the insured, if the marriage was in community of property, to one-half the protected portion of the policy;

   (b)   the surviving spouse or any parent, child or step-child of the insured, under the will of the insured; or

   (c)   any parent or child of the insured by right of succession ab intestato.

   (5) Notwithstanding anything in this section, if in any case it is proved that any policy was effected, or that the premiums upon any policy were paid, with intent to defraud creditors, the court may order a sum equal to the premiums so paid, with interest thereon, to be a charge upon the policy and to be payable out of the proceeds of such policy.

28.   Voidable preference

   (1) Every disposition of property made by an insolvent within six months of the sequestration of his estate, which has had the effect of preferring one creditor above another, may be set aside by the court if it is shown that immediately after the making of such disposition the liabilities of the insolvent exceeded his assets, unless it is shown by the person benefited by the disposition that the disposition was in the ordinary course of business and that it was not intended thereby to prefer one creditor above another.

   (2) Every disposition of property made under a power of attorney of the insolvent, whether revocable or irrevoc

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