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What is sequestration? (Part 2)

bar WE SAID LAST MONTH THAT ONCE THE COURT HAS GRANTED A SEQUESTRATION ORDER, AN INDEPENDENT PERSON IS APPOINTED TO ACT AS THE INSOLVENT'S TRUSTEE. THE TRUSTEE TAKES CHARGE OF ALL THE ASSETS OF THE INSOLVENT AND HAS THE JOB OF WORKING OUT WHO THE INSOLVENT'S CREDITORS ARE AND IN WHAT ORDER THEY ARE TO BE PAID.

WHAT DOES THE INSOLVENT ESTATE CONSIST OF?

The insolvent estate basically consists of all property owned by the insolvent at the date of sequestration (including property in the hands of the sheriff under a writ of attachment) and all property which the insolvent acquires during the sequestration. Some property is excluded from the insolvent estate: The insolvent's trustee must collect the assets in the estate, sell them, and distribute the proceeds amongst creditors in the order of preference set out in the Insolvency Act. The trustee has rights over and control over the insolvent estate until a court sets aside the sequestration order, or until the insolvent's creditors agree to an offer of composition which provides that the insolvent's property will be restored to him or her, or until the insolvent is rehabilitated.

HOW IS THE INSOLVENT PERSON AFFECTED?

If your estate has been sequestrated, there are a number of restrictions on your ability to perform certain activities during the period in which the sequestration order remains in place. Your capacity to contract, earn a living, litigate (in other words sue in court) and hold office are limited.
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