- The Supreme Court of Appeal will decide if Section 116 of the Insolvency Act allows Austrian trustee Raoul Gregor Wagner to access surplus funds in Jürgen Scheer’s South African insolvent estate for unpaid Austrian creditors.
- The Western Cape High Court recognised Wagner to remove surplus funds after distribution under Section 113, stating that Section 116 did not stop the relief sought.
- The appeal focuses on whether Section 116 requires surplus payment into the Guardians’ Fund for the insolvent’s benefit or allows transfer to a recognised foreign trustee under common law.
The question of who benefits from surplus funds in Jürgen Scheer’s South African insolvent estate is now before the Supreme Court of Appeal.
The Supreme Court of Appeal will decide if Section 116 of the Insolvency Act 24 of 1936 prevents Raoul Gregor Wagner, the official receiver of Scheer’s Austrian insolvent estate, from accessing surplus funds in South Africa for the benefit of unpaid Austrian creditors. Wagner is represented in the appeal by Cox Yeats. The matter will be heard virtually on Friday, 27 February 2026.
Background and High Court ruling
Scheer’s estate was declared bankrupt by the Commercial Court of Vienna on 19 June 2017, and Wagner became the official receiver on 7 August 2017. Scheer’s estate in South Africa was finally sequestrated on 14 August 2018, with Johan Christian Gijsbers and Ntanganedzeni Frank Nemakwarani appointed as joint trustees.
It was agreed before the High Court in the Western Cape that there will be surplus funds in Scheer’s insolvent estate in South Africa after all proved claims, costs, charges, and interest have been paid.
In June 2024, Acting Judge A De Wet stated that the matter involved the application of cross-border insolvency principles and whether Wagner had shown, considering comity, convenience, and equity, a right to the relief claimed.
The court found that Wagner showed a real chance that the Austrian assets would not cover the Austrian claims and the costs of those proceedings. Based on that, it concluded that it would be convenient and fair to recognise the applicant and grant the ancillary relief sought.
Section 116 and the surplus dispute
Scheer argued that Section 116 requires payment of any surplus into the Guardians’ Fund for his benefit after rehabilitation.
Acting Judge De Wet rejected that interpretation, stating that Section 116 of the Act does not prevent the relief sought. The court also noted that remaining funds after distribution do not qualify as a surplus under a proper interpretation of section 116(1).
The judge called the requirement for surplus funds to go into the Guardians’ Fund pending finalisation of the Austrian estate impractical, costly, and inconvenient. Scheer was ordered to pay costs on the attorney and client scale.
The issue before the SCA
On appeal, Scheer insists that Section 116 creates a mandatory obligation to pay surplus funds into the Guardians’ Fund for his benefit after rehabilitation, no matter the unpaid Austrian creditors.
Cox Yeats, on behalf of Wagner, will argue that Section 116 should be interpreted purposively and in accordance with common law principles relating to the recognition of foreign insolvency representatives. The firm is expected to submit that, once South African creditors have been paid in full, there is no basis for surplus funds to be paid into the Guardians’ Fund while creditors in the debtor’s home country remain unpaid.
Cox Yeats will contend that Section 116 was not intended to protect an insolvent from valid foreign claims, and that the High Court correctly found that the provision “does not preclude the granting of the relief sought” in the context of concurrent insolvency proceedings.
The Supreme Court of Appeal must now determine if Section 116 takes precedence over the common law power to recognise a foreign trustee and authorise the removal of surplus funds, or if the High Court’s interpretation remains valid.
Legal framework
South Africa has not adopted the Model Law on Cross-Border Insolvency developed by the United Nations Commission on International Trade Law. Recognition of foreign insolvency representatives is therefore governed by common law principles rather than a statutory cross-border framework.
The appeal gives the Supreme Court of Appeal an opportunity to clarify the scope of those common law powers in circumstances where insolvency proceedings run concurrently in more than one jurisdiction.
Get your news on the go. Click here to follow the Conviction WhatsApp channel.
