Changes which have occurred in the treatment of claims of creditors of an insolvent estate should, in my view, be seen in the wider context of the process of fundamental change being experienced in South Africa. For example, various statutory provisions which were speci¢cally enacted, under the old regime, in order to protect the interests of certain types of creditors, and which a¡ected the ranking of their claims, have since been declared unconstitutional and invalid by our courts. Further amendments to our insolvency legislation have been proposed, some of which will impact upon the ranking of creditors'claims.This paper focuses upon the treatment of secured creditors in South African insolvency law: the current position, recent changes which have taken place and some of the proposed amendments.The claims of preferent creditors, i.e., unsecured creditors who have priority claims, are discussed only where they are relevant to the consideration of the position of secured creditors.
II. Treatment of Creditors' Claims: the Present Position
The Insolvency Act 24 of 1936 1 distinguishes between secured, preferent and nonpreferent (concurrent) creditors. 2 Secured creditors are paid out of the proceeds of the property which they hold as security. Thereafter, claims of certain creditors who have been designated, by the Legislature, as preferent creditors 3 are paid out of the free residue, 4 i.e., the unencumbered portion of the estate. Once the claims