Chris Fick & Associates

02It’s unfortunately an all too familiar story in these hard times – your debtor fails and is liquidated, and you are left with nothing but a worthless concurrent claim.

But before you write your claim off, there is one specific circumstance in which you might still recover your losses – quite possibly in full.

If – and unfortunately only if – your claim against the company in liquidation is covered by the liquidated company’s liability insurance, you are entitled to recover your loss directly from the insurer.  In other words, you won’t have to wait in line with other creditors in the hope of receiving some form of dividend, nor must you share the pay-out from the insurer with other creditors.  You can recover direct from the insurer whatever the debtor could have claimed from it.  In other words, provided you can prove that the liquidated debtor had a valid claim against the insurer, you – rather than the liquidator – can claim up to the limit of the applicable cover.

A warning here – don’t delay in claiming on the insurance, or your claim could prescribe.  That’s exactly what happened in a matter recently heard by the Supreme Court of Appeal:

  • A cattle feedlot business had sued a supplier of tallow for almost R2m as damages for defective tallow sold and delivered.
  • The tallow supplier denied liability but was liquidated just prior to trial of the matter.
  • The liquidated supplier held insurance cover for such claims up to a limit of R1,5m.  The creditor duly claimed R1,5m from the insurer.
  • The claim was repudiated, and the insurer was able to show that the creditor’s claim had prescribed, because it had issued Summons more than 3 years after the supplier’s liquidation.  The creditor, in other words, lost R1,5m by not suing timeously.

Don’t delay!

As soon as your debtor is liquidated (“sequestrated” if your debtor is an individual), check whether the debtor held insurance cover that might apply to your claim – if it did, seek legal assistance immediately.

If you want to get in touch with us to act in respect of any matter stated herein, please send an email to

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