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Local Government: Municipal Finance Management Act, 2003 (Act No. 56 of 2003)

Chapter 13 : Resolution of Financial Problems

Part 3 : Debt relief and restructuring

153. Application for extraordinary relief

 

(1) A municipality may apply to the High Court for an order—
(a) to stay, for a period not exceeding 90 days at a time, all legal proceedings, including the execution of legal process, by persons claiming money from the municipality;
(b) to suspend the municipality's financial obligations to creditors, or any portion of those obligations, until the municipality can meet those obligations; or
(c) to terminate the municipality's financial obligations to creditors, and to settle claims in accordance with a distribution scheme referred to in section 155.

 

(2) The Court may make an order in terms of subsection (1) only if—
(a) the provincial executive has intervened in terms of section 139 and a financial recovery plan to restore the municipality to financial health has been approved for the municipality;
(b) the financial recovery plan is likely to fail without the protection of such an order;
(c) section 154 has been complied with, in the case of an application for an order referred to in subsection (1) (b); and
(d) section 155(1) has been complied with, in the case of an application for an order referred to in subsection (1)(c).

 

(3) Notice of an application in terms of subsection (1) must be given to—
(a) all creditors to whom the municipality owes an amount in excess of a prescribed amount, or if no amount is prescribed in excess of R100 000, in so far as those creditors can reasonably be contacted;
(b) the MEC for finance and the MEC for local government in the province;
(c) the Minister;
(d) the Cabinet member responsible for local government; and
(e) organised labour.