Insolvency Statutes We Can Be Proud Of: Part II – Scheer v Wagner and the Practical Proof of Our Cross-Border Maturity

In my earlier piece for Business Day and TimesLIVE (read here) last year, I argued that South Africa’s insolvency framework, from the enduring Insolvency Act of 1936 to the Companies Act’s business rescue provisions and the Cross-Border Insolvency Act of 2000, gives us genuine reason for pride. These statutes strike a careful balance by protecting local creditors and employees, offering distressed businesses a genuine second chance, and signalling to the world that we are open to responsible international cooperation rather than protectionist silos.

That was in principle, and now we have the judicial certainty.

On 23 March 2026, the Supreme Court of Appeal delivered its unanimous judgment in Scheer v Wagner N.O. and Others [2026] ZASCA 32. This was the first authoritative SCA pronouncement on how our statutory regime interacts with common-law principles of international comity in dual-jurisdiction personal sequestrations. It is the perfect sequel to the conversation I started, namely a clear demonstration that our statutes are not only well-designed on paper but capable of delivering fair, pragmatic outcomes in complex global cases.

The facts in brief

Jürgen Scheer’s estate was sequestrated in Austria (his country of domicile) in 2017, with the bulk of creditors there facing a substantial shortfall (reportedly exceeding €4.4 million). His South African estate followed in 2018. After local South African creditors and costs were fully satisfied, a surplus remained in the local estate. Raoul Gregor Wagner N.O., the Austrian trustee, obtained recognition in the Western Cape High Court and sought an order permitting the transfer of that surplus to the Austrian estate for the benefit of the unpaid international creditors.

Scheer opposed the application vigorously. He contended that section 116 of the Insolvency Act is peremptory; thus, any surplus after final distribution must be paid to the Master, deposited in the Guardians’ Fund, and ultimately returned to the rehabilitated insolvent. No discretion, no transfer abroad.

The SCA disagreed. On a purposive and contextual interpretation, consistent with Natal Joint Municipal Pension Fund v Endumeni Municipality principles, the court held that section 116 simply does not contemplate the scenario of a dual sequestration where the foreign (domicile) estate remains in deficit. In such circumstances, the balance left in South Africa after satisfying local claims is not a true “surplus” for purposes of section 116. Instead, common-law principles of international comity apply, local priorities are respected first, and the recognised foreign trustee is entitled to the remaining funds to address the broader shortfall.

The appeal was dismissed with costs, including the costs of two counsel.

Why this judgment matters and why it is more than a creditor victory

Most commentary has rightly hailed the decision as a landmark one, for providing long awaited certainty to practitioners, foreign trustees, and international creditors. It confirms that South African courts will not allow local assets to become an orphan pot while creditors in the debtor’s primary jurisdiction go unpaid. It reduces the risk of forum-shopping and promotes a more universal approach without sacrificing territorial protections.

But as the author of the original “statutes we can be proud of” analysis, I see a deeper significance.

This judgment is living proof that our 1936 Act, though dated in parts, remains flexible enough, when read intelligently alongside the Cross-Border Insolvency Act and constitutional values, to handle 21st-century realities. The SCA did not rewrite the statute; it interpreted it in a manner that avoids absurdity and gives effect to the broader objectives of our insolvency regime: equitable distribution, rehabilitation where possible, and respect for international cooperation.

At the same time, the case quietly highlights the limits of judicial creativity. The court had to perform careful interpretive work, invoking the presumption against altering the common law by implication and admitting fresh foreign evidence on appeal. This worked beautifully here, but it should not become the default method for resolving cross-border sequestrations. We now have a clear judicial precedent, yet the underlying statutory language was never drafted with dual sequestrations of high-net-worth individuals (or, increasingly, remote workers and digital nomads with assets across borders) in mind.

A different perspective: From pride to proactive leadership

In my previous article, I celebrated how South Africa has aligned itself with global standards through the UNCITRAL-influenced Cross-Border Insolvency Act. Scheer v Wagner shows that alignment is bearing fruit, but it also reveals unfinished business.

The judgment strengthens South Africa’s position as an investment-friendly jurisdiction in Africa. Foreign investors and expatriates can take greater comfort that, in the event of cross-border distress, our courts will prioritise fairness over rigid local retention of funds. Local creditors remain protected (they are paid in full first), while the principle of comity prevents unjust enrichment of the debtor at the expense of the global creditor body.

Yet the decision also issues a gentle but firm invitation to Parliament and the profession: let us not rest on judicial ingenuity. The next logical step in our evolving framework should include targeted legislative refinement, for example, expressly clarifying the treatment of “surplus” in dual-jurisdiction personal estates, or further operationalising the Cross-Border Insolvency Act for individual (as opposed to corporate) matters with streamlined recognition and relief mechanisms.

Such reforms would not weaken debtor protections; they would make them more predictable and meaningful in a globalised economy. They would position South Africa not merely as a follower of international best practice, but as a thought leader capable of exporting a balanced model suited to emerging markets and the African Continental Free Trade Area (AfCFTA) context.

Practical implications for stakeholders

For insolvency practitioners and trustees, greater certainty in advising on dual sequestrations and structuring recognition applications.

For debtors with international exposure, a clear message that rehabilitation is holistic, you cannot easily compartmentalise assets across borders while leaving the bulk of creditors unpaid.

For foreign creditors and investors, reinforced confidence that South African assets will not become trapped in jurisdictional silos.

For South African businesses and individuals operating globally, a regime that supports responsible cross-border activity rather than punishing it.

Conclusions 

When I wrote that our insolvency statutes are ones we can be proud of, I meant it. Scheer v Wagner N.O. does not undermine that pride; it validates and deepens it. Our judges have shown they can adapt an 88-year-old Act to modern cross-border challenges without compromising core principles.

The sequel, however, is now in our hands. Let us build on this judicial foundation with legislative clarity where needed, so that South Africa’s insolvency framework does not merely keep pace with globalisation but continues to set a thoughtful, balanced example for the region and beyond.

Our statutes have earned our pride. The Scheer judgment shows they are earning it every day in practice. The question now is how boldly we choose to evolve them next.