MRL3701 Insolvency Law LATEST EXAM PACK . Question 1
Fill in the missing words:
(a) The term "debtor" also embraces a person who is incapable of managing
his own affairs. (2)
(b) Thabo’s application for voluntary surrender must contain an allegation that it will be to
the advantage of cred...
, 2020 – MAY / JUNE EXAMINATION PAPER
Question 1
Fill in the missing words:
(a) The term "debtor" also embraces a person who is incapable of managing
his own affairs. (2)
(b) Thabo’s application for voluntary surrender must contain an allegation that it will be to
the advantage of creditors if his estate is sequestrated. (2)
(c) Christopher commits an act of insolvency by departing from his dwelling with the intent
by doing so to evade payments of his debts. (2)
(d) An application for compulsory sequestration brought by a creditor who is not at arm’s
length is generally referred to as a " friendly " sequestration. (2)
(e) Section 24(1) of the Insolvency Act which deals with the effect of prohibited contracts on
third parties, places the onus upon a third party to prove that, at the time he
received the property in question, he was neither aware, nor had any reason to suspect,
that the debtor was insolvent. (2)
(f) An insolvent’s right to earn and recover income relates only to lawful
income. (2)
(g) The solvent spouse must, within 7 days of service, lodge with the
Master a statement of his/her affairs as at the date of sequestration, framed by the
necessary requirements and verified by affidavit. (2)
(h) With regard to a contract completed by an insolvent, a right to performance held by the
estate lapses if the other party in good faith, and without knowledge of the
sequestration, performs to the insolvent. (2)
(i) Section 84(2) of the Insolvency Act, which deals with the returning of property sold in
terms of an "instalment agreement" to the seller, is intended to enable the trustee to
reclaim the property for the benefit of concurrent creditors. (2)
(j) Regarding the meeting of creditors, the publication of any statement of affairs made at a
meeting is priveleged to the same extent as the publication of a statement
made in a court of law. (2)
,(k) The Master may remove a trustee from office on the ground that the
majority of creditors has requested in writing that he be removed. (2)
(l) The object of section 26 of the Insolvency Act is simply to prevent a person in insolvent
circumstances from impoverishing his estate by giving away assets without receiving
any appreciable advantage in return. (2)
(m) In deciding whether a disposition was made in the ordinary course of
business, an objective test is applied. (2)
(n) In Estate Wege v Strauss 1932 AD 76 it was decided that although a wagering debt
cannot be enforced in a court of law, it still creates a "natural obligation ".
(2)
(o) Compared to a common-law compromise, the main advantage of a statutory composition
is that it does not depend on the consent
(p) An application for rehabilitation is brought by way of notice of motion supported by
affidavit. (2)
(q) A sequestration of a partner’s estate, ipso iure, terminates the partnership.(2)
(r) A creditors’ voluntary winding-up, unlike a members’ voluntary winding-up or voluntary
winding-up by the company, will be resorted to where the company is
unable to pay its debts. (2)
(s) Section 7(k) of the Companies Act 2008 provides for "the efficient rescue and recovery
of financially distressed companies, in a manner that balances the rights and
interests of all relevant stakeholders". (2)
(t) In voluntary business rescue, the board cannot pass a resolution if the
company is already the subject of liquidation proceedings. (2)
TOTAL QUESTION 1: [40]
, Question 2
Indicate whether the following statements are true or false and motivate the reason for
your answer.
1. Once an order of or a provisional order of sequestration is granted, a concursus
creditorum is established, and the interests of creditors as a group enjoy preference over
the interests of individual creditors. (2)
True. This is designed to ensure that whatever assets the debtor has, are liquidated and
distributed among all his creditors in accordance with a predetermined and fair order of prefera
2. The "costs of sequestration" only include the costs of surrender. (2)
False. It also includes all the general costs of administration.
3. The removal of property with intent to prejudice or prefer is not one of the listed grounds
that may be deemed as "acts of insolvency" in terms of section 8 of the Insolvency Act
24 of 1936. (2)
False. The intention of the debtor to prejudice his creditors or to give preference is important
and is one of the listed grounds
4. The debtor may make a contract that purports to dispose of any property of his insolvent
estate. (2)
False. The debtor may not make a contract which purports to dispose of any property of his
insolvent estate
5. The courts have held that the after-acquired estate of an insolvent debtor may never
again be sequestrated. (2)
False. This is due to sometimes the insolvent during the period of insolvency may acquire a
new estate and hold it with another title, the after-acquired estate can in turn be sequestrated.
6. Section 21 of the Insolvency Act applies to all spouses married in community of property.
(2)
False. The provision applies only to marriages out of community of property.
7. As a general rule, sequestration suspends or puts to an end any contract which the
insolvent had concluded. (2)
False. As a general rule, sequestration does not suspend or put an end to the contract.
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