| (1) | A creditor of an insolvent estate who holds as security for his claim any movable property shall, before the second meeting of the creditors of that estate, give notice in writing of that fact to the Master, and to the trustee if one has been appointed. |
| (2) | If such property consists of securities as defined in section 1(1) of the Financial Markets Act, 2012 (Act No. 19 of 2012), a bill of exchange or a financial instrument or a foreign financial instrument as defined in section 1(1) of the Financial Sector Regulation Act, 2017, the creditor may, after giving the notice mentioned in subsection (1) and before the second meeting of creditors, realize the property in the manner and on the conditions mentioned in subsection (8). |
[Section 83(2) substituted by section 290, item 2(a) in Schedule 4, of Act No. 9 of 2017]
| (3) | If such property does not consist of securities or a bill of exchange, the trustee may, within seven days as from the receipt of the notice mentioned in subsection (1) or within seven days as from the date which the certificate of appointment issued by the Master in terms of subsection (1) of section eighteen or subsection (2) of section fifty-six reached him, whichever be the later, take over the property from the creditor at a value agreed upon between the trustee and the creditor or at the full amount of the creditor's claim, and if the trustee does not so take over the property the creditor may, after the expiration of the said period but before the said meeting, realise the property in the manner and on the conditions mentioned in subsection (8). |
[Section 83(3) substituted by section 290, item 2(b) in Schedule 4, of Act No. 9 of 2017]
| (4) | If no trustee has been appointed before the said meeting, the creditor may, with the permission in writing of the Master and before the said meeting, realise in manner and on the conditions mentioned in subsection (8) any such property which he is not entitled to realize in terms of subsection (2). |
| (5) | The creditor shall, as soon as possible after he or she has realised such property, other than property held as security in favour of a secured creditor for obligations arising out of a master agreement defined in section 35B(2) or a transaction referred to in section 35A (including eligible collateral in terms of the applicable standards or rules made under the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017), or the Financial Markets Act, 2012 (Act No. 19 of 2012)), prove in terms of section forty-four the claim thereby secured and the creditor shall attach to the affidavit submitted in proof of the creditor's claim a statement of the proceeds of the realisation and of the facts on which the creditor relies for his or her preference. |
[Section 83(5) substituted by section 3(a) of the Financial Sector Laws Amendment Act, 2021 (Act No. 23 of 2021), Notice No. 789, GG45825, dated 28 January 2022 : effective 29 April 2022 per Notice No. 2050, GG46288, dated 29 April 2022]
| (6) | If he has not so realised such property before the second meeting of creditors, he shall as soon as possible after the commencement of that meeting deliver the property to the trustee, for the benefit of the insolvent estate and if the creditor has not delivered the said property to the trustee within a period of three days as from the commencement of the said meeting the trustee may demand from him delivery of such property. If the creditor fails to comply with such demand of the trustee, the Master, at the request of the trustee and after notice to the creditor shall direct the deputy-sheriff within whose area of jurisdiction the property is situate to attach the property and to deliver it to the trustee, and in that case the creditor shall be liable for the deputy-sheriff's costs, as taxed and allowed by the Master. If those cannot be recovered from the creditor, they shall be paid out of the estate as part of the costs of the sequestration. |
| (7) | When the trustee has received the property mentioned in subsection (6), the said creditor may prove his claim and place a value upon the said property in terms of subsection (4) of section forty-four. |
| (8) | The creditor may realise such property in the manner and on the conditions following, that is to say— |
| (a) | if it is any property of a class ordinarily sold through an authorised user or an external authorised user, on an exchange or an external exchange, each defined in section 1(1) of the Financial Markets Act, 2012 (Act No. 19 of 2012) or, where applicable, a person prescribed by the Minister of Finance as a regulated person in terms of section 5 of that Act, the creditor may, subject to the provisions of that Act and applicable standards and rules in terms of that Act, immediately sell it through an authorised user, external authorised user or such regulated person, or if the creditor is an authorised user, external authorised user or regulated person, also to another authorised user, external authorised user or regulated person; |
[Section 83(8)(a) substituted by section 290, item 2(c) in Schedule 4, of Act No. 9 of 2017]
| (b) | if it is a bill of exchange, the creditor may realize it in any manner approved of by the trustee or by the Master; |
| (c) | if it consists of a right of action, the creditor shall not realize it except with the approval of the trustee or of the Master; |
| (d) | if it is any other property, the creditor may sell it by public auction after affording the trustee a reasonable opportunity to inspect it and after giving such notice of the time and place of the sale as the trustee directed. |
| (9) | As soon as the trustee has directed a creditor in terms of paragraph (d) of subsection (8) to give notice of a sale by public auction, the trustee shall give notice in writing to all the other creditors of the estate in question of the time and place of the proposed sale. |
| (10) | Whenever a creditor has realized his or her security, other than property held as security in favour of a secured creditor for obligations arising out of a master agreement defined in section 35B(2) or a transaction referred to in section 35A (including eligible collateral in terms of the applicable standards or rules made under the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017), or the Financial Markets Act, 2012 (Act No. 19 of 2012)), as hereinbefore provided the creditor shall forthwith pay the net proceeds of the realization to the trustee, or if there is no trustee, to the Master and thereafter the creditor shall be entitled to payment, out of such proceeds, of his or her preferent claim if such claim was proved and admitted as provided by section forty-four and the trustee or the Master is satisfied that the claim was in fact secured by the property so realised. If the trustee disputes the preference, the creditor may either lay before the Master an objection under section one hundred and eleven to the trustee's account, or apply to court, after notice of motion to the trustee, for an order compelling the trustee to pay the creditor forthwith. Upon such application the court may make such order as to it seems just. |
[Section 83(10) substituted by section 3(b) of the Financial Sector Laws Amendment Act, 2021 (Act No. 23 of 2021), Notice No. 789, GG45825, dated 28 January 2022: effective 29 April 2022 determined by Minister of Finance, Notice No. 2050, GG46288, dated 29 April 2022]
(10A)
| (a) | Whenever a creditor has realized property held as security in respect of claims arising out of a master agreement defined in section 35B(2) or a transaction referred to in section 35A (including eligible collateral in terms of the applicable standards or rules under the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017), or the Financial Markets Act, 2012 (Act No. 19 of 2012)), such creditor may retain the proceeds of the realization for the settlement of the secured claim and shall as soon as possible after realization— |
[Words preceding section 83(10A)(a)(i) substituted by section 3(c) of the Financial Sector Laws Amendment Act, 2021 (Act No. 23 of 2021), Notice No. 789, GG45825, dated 28 January 2022 : effective 29 April 2022 determined by Minister of Finance, Notice No. 2050, GG46288, dated 29 April 2022]
| (i) | give written notice of that fact to the trustee or the Master and provide the trustee or the Master with a certified copy of the master agreement or contract in terms of a transaction referred to in section 35A and an affidavit confirming— |
| (aa) | that the master agreement or contract in terms of a transaction referred to in section 35A had been entered into; |
| (bb) | the nature and particulars of the claim, including the net amount calculated at the date of sequestration; and |
| (cc) | the nature and particulars of the realized security, |
as proof of the secured claim;
| (ii) | if the net proceeds of the realization exceed the value of the claim, pay to the trustee or the Master the balance, after payment of that claim, and such amount shall be added to the free residue of the estate in question; and |
| (iii) | if the net proceeds of the realization are less than the value of the claim, the creditor shall be entitled to rank against the estate in respect of the excess as an unsecured creditor. |
| (b) | Upon receipt of the notice submitted under subsection (10A)(a)(i), the trustee or the Master shall notify all creditors at the second meeting of creditors of the realization of the property held as security and inform them of their right to lodge an objection disputing the secured creditor’s preference. |
[Section 83(10A)(a)(i)(aa) substituted by section 3(d) and (e) of the Financial Sector Laws Amendment Act, 2021 (Act No. 23 of 2021), Notice No. 789, GG45825, dated 28 January 2022: effective 29 April 2022 determined by Minister of Finance, Notice No. 2050, GG46288, dated 29 April 2022]
| (a) | The trustee or any other creditor may dispute the preference in writing to the Master and shall provide reasons therefor by no later than 14 days of the second meeting of creditors. |
| (b) | The Master shall immediately notify the creditor that has realized the property held as security under a master agreement as contemplated in subsection (10A)(a) of the dispute. |
| (c) | The creditor that has realized the property may lay before the Master an objection and response to the dispute of the preference within 14 days of receipt of the notification contemplated in paragraph (b). |
| (d) | The Master shall make a determination on the dispute of the preference within 21 days of receipt of such objection and may request any material information from the parties to be furnished in connection with the dispute. |
| (e) | The Master shall examine the documentation submitted in terms of subsection (10A)(a)(i) for the purpose of ascertaining whether the dispute of the preference is well founded. |
| (f) | If the Master is of the opinion that the dispute of the preference in terms of paragraph (10B)(a) is well founded, the trustee shall apply to court after notice of motion to the secured creditor for an order to set aside the secured creditor’s retention of the net proceeds in terms of subsection (10A)(a), including any accruing interest and the court may upon such application make such order as to it seems just. |
| (g) | For purposes of this subsection, ‘well founded’ means the Master shall be satisfied that the reasons provided by the trustee or any other creditor reasonably and sufficiently challenge the validity of the documentation submitted in terms of subsection (10A)(a)(i) as proof of the secured claim. |
| (h) | The creditor that has realized the property held in terms of subsection (10A)(a), whether or not the creditor has proved a claim against the estate in terms of subsection (10A)(a)(i), shall, subject to paragraph (i), be liable to contribute not less than what the creditor would have had to contribute if such creditor had proved the claim. |
| (i) | Where the creditor, referred to in paragraph (h), relies for the satisfaction of his claim solely on the proceeds of the property which constitutes his security, he shall not be liable for any costs of sequestration other than the costs specified in section 89(1) and other than costs for which he may be liable under paragraph (a) or (b) of the proviso to section 106. |
[Section 83(10B) inserted by section 1(c) of the Financial Matters Amendment Act, 2019 (Act No. 18 of 2019), Notice No. 799, GG 42482, dated 23 May 2019]
| (11) | If a creditor has valued his security when proving his claim, the trustee, if authorised by the creditors, may, unless the creditor has realized his security in terms of subsection (2) or (3), within three months as from the date of his appointment or as from the date of the proof of the claim (whichever is the later) take over the property (whether movable or immovable) which constitutes the security at the value placed thereon by the creditor when his claim was proved: Provided that if two or more creditors have a pledge or special mortgage of the same property, a creditor who has valued his security shall be deemed to have valued, and the trustee shall be entitled to take over, only the preferent rights of the creditor in respect of the property, and not the property itself. If the trustee does not, within that period, take over the said property or security he shall realize it for the benefit of all creditors whose claims are secured thereby, according to their respective rights. |
| (12) | If the claim of a secured creditor exceeds the sum payable to him in respect of his security he shall be entitled to rank against the estate in respect of the excess, as an unsecured creditor, and if the net proceeds of any such property exceed all claims secured thereby the balance, after payment of those claims, shall be added to the other free residue (if any) in the estate in question. |
| (13) | The preceding provisions of this section shall apply mutatis mutandis in respect of any creditor for value of a solvent spouse mentioned in section twenty-one, who holds as security for his claim against that spouse any movable property belonging to that spouse. |
