One of the most effective ways to make a difference to the bottom line of a company is proper the management of the debtor’s book. Here a holistic approach is necessary, for example;

If the company allows for a 30day period before the client has to pay, a proper agreement must be in place and the director of the client company must sign suretyship in his personal capacity. Various other factors like purchase orders, delivery notes where the client company except delivery of the ordered goods and declares that it is satisfied with the quantity and quality as per order.

All of the above is to pave the way for the company to effect easy litigation in a Court of Law. There are various other aspects to consider to affect the goal for expedient litigation, which will not be addressed here.

A handy instrument or remedy available to a company, is collection of debt via Liquidation.

This is where the creditor company approaches the court with an Application to liquidate the debtor company on the grounds that the debtor company is unable to pay for goods delivered and accepted.

The applicant (creditor) company must be sure of the fact that there is equity in the debtor company, before it embarks on this route.

If there is no equity in the debtor company, the creditor company runs the risk to pay at least the administration fees of the Liquidator.

The creditor company must be in a position to proof that the claim against the debtor company is a liquid claim (cannot be disputed) hens the relevance of a proper paper history of the transaction.

The creditor must send a notice to the debtor informing it of his intention to liquidate the debtor company.

If there is no response to the notice as well as no answering papers to the creditor company’s court application, it is advisable to proceed with care as it is more than likely that there is no equity in the debtor company, however where the debtor company is solvent the above method could prove to be an effective tool to control you debtors book.

Early success to collecting the debt is a cheap exercise as it will only require the notification to the debtor company, of the creditors company to effect payment.

As said above various factors must be taken into account as part of the holistic approach, by confronting the debtors company of your intention to liquidate it;

Are you going to create a rift between your company and your client?
Are you in the position to lose the debtors company as a client?
What is the payment history of the client?
The amount of money involved?
The cash flow of your own company?

Should the debtor company file opposing documents to your court application you must carefully consider if you want to continue with your application as it can be costly.

Each case must be judged on its own merits. It is going to be difficult for a debtor company to explain why a check was dishonored by the bank or way it is not in a position to pay for the goods received.

If the debtor company files apposing papers your legal team will be in a better position to see if there are any merits in the opposing party’s argument.

The success rate in the above legal instrument is quite high, and could be a short and effective way to manage your debtors book.


Fill in the form below and we will get back to you…


Insolvency Care is the spearhead
company for a national panel of
attorneys who specialise in
sequestrations, rehabilitations
and company liquidations.


Waterford Court, Block A, Unit 6
C/o Glover Avenue & Rabie Street
234 Glover Avenue, Hoewes