Report: Insolvency Amendment Bill [B 14 - 2002], dated 7 June 2002:
The Portfolio Committee on Justice and Constitutional Development, having considered the subject of the Insolvency Amendment Bill [B 14 - 2002] (National Assembly - sec 75), referred to it and classified by the Joint Tagging Mechanism as a section 75 Bill, reports the Bill with amendments [B 14A - 2002], and endorses the classification of the Bill as a section 75 Bill.
The Committee wishes to report further, as follows:
1. During its deliberations on the Bill, the Committee's attention was drawn to the NEDLAC Report on the Labour Law Amendment Bills (September 2001) and the fact that amendments to sections 4, 9, 11 and 136 of the Insolvency Act, 1936 (Act No. 24 of 1936), agreed upon at NEDLAC, were not included in the Bill. These provisions deal with notice to trade unions and employees of applications for the sequestration of an employer's estate, service of court orders on trade unions and employees and the creation of an offence for failure to give certain notices.
2. According to the memorandum on the objects of the Bill, the proposed amendments to these provisions require amendments to other legislation, such as the Companies Act, 1973 (Act No. 61 of 1973), and the Close Corporations Act, 1984 (Act No. 69 of 1984). The Committee has not taken a stand on this issue, but if this view were accepted as correct, it would follow that amendments to the Insolvency Act, 1936, only would apply to the insolvency of individual debtors and not to corporate debtors. A large percentage of cases where the problems aimed to be remedied by these amendments occur, are cases of corporate insolvent debtors.
3. The Committee's attention was drawn to the fact that proposed uniform legislation that deals with corporate and individual insolvencies is under consideration by the Department of Justice and Constitutional Development. The proposed legislation emanates from reports by the South African Law Commission and the Standing Advisory Committee on Company Law.
4. The Bill now under consideration by the Committee proposes amendments to sections 38 and 98A of the Insolvency Act, 1936. These sections apply to the insolvency of individual debtors as well as to companies and close corporations that are wound up because of insolvency. The main objects of the Bill are to further regulate the effect of sequestration on employment contracts and the claims for severance and retrenchment pay. The Committee is of the view that the Bill is not the appropriate mechanism to deal with notice to trade unions and employees of applications for the sequestration of an employer's estate, service of court orders on trade unions and employees and the creation of an offence for failure to give certain notices. Interested parties have not had an opportunity to make submissions to the Committee on these matters and the Committee has not taken any position on the acceptability of these provisions.
5. The Committee recommends that the Minister for Justice and Constitutional Development be approached to request his Department to consider the inclusion of the proposals dealing with notice to trade unions and employees of applications for the sequestration of an employer's estate, service of court orders on trade unions and employees and the creation of an offence for failure to give certain notices in the proposed uniform legislation that deals with corporate and individual insolvencies.