December 2015 CESSION AGREEMENTS

1 CESSION AGREEMENTS Shayne De Beer December 2015 2 WHAT IS A CESSION ? The Oxford English dictionary defines a CESSION as the giving up of rights, property A CESSION in legal terms is a transfer of personal right From one party ( the Cedent ) To another ( the cessionary ) Cessions thus allow the Cessionary to claim from the Debtor in terms of the right transferred. Cedent Cessionary Debtor NO RIGHT OF ACTION AFTER CESSION TRANSFER OF RIGHTS RIGHT OF ACTION OVERVIEW Transfer of personal rights Cessions deprive Cedent of rights against third party Cessionary may enforce rights in its own name Must be an intentional transfer of rights between the cedent and cessionary Occurs only by agreement Preferably in writing CESSION of part of a claim is not possible LIQUIDATION AND BUSINESS RESCUE PROCEEDINGS Cessions rank in accordance with the date they were signed The first CESSION trumps the rest Having the first

2 CESSION provides security in business rescue and liquidation proceedings If you have the first CESSION You will be a secured creditor It is therefore important to know if any prior cessions have been signed by the debtor If you do have the first CESSION , then Liquidation or Business Rescue are viable options If you don t have the first CESSION what then? ALTERNATIVE PROCEDURE Do not despair It is always possible to proceed to register a Notarial Bond over the movable assets and/or machinery of the debtor In short this would require: the signing of the Notarial Bond based on an underlying agreement ie.

3 A Loan or an Acknowledgment of Debt the registration of the Notarial Bond in the Deeds Office In order to afford security in the case of a liquidation the Bond would however need to be perfected by means of Court Order prior to the Liquidation or Business Rescue proceedings commencing QUESTIONS ? This presentation is for general information and should not be used or relied on solely as a legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein.

4 Always contact your legal adviser for specific and detailed advice. DISCLAIMER