, MRL3701 Assignment 2 (COMPLETE ANSWERS) Semester 1
2026 - DUE 24 March 2026 ;100% trusted ,comprehensive and
complete reliable solution with clear explanation
Question 1: Intended Purpose of Section 21 of the Insolvency Act 24
of 1936 (3 marks)
Answer:
Section 21 of the Insolvency Act 24 of 1936 provides for the
preferential claim of certain creditors over the estate of an insolvent
person. Its primary purpose is to:
Purpose of Section 21 of the Insolvency Act 24 of 1936
1. Protection of Certain Creditors
Section 21 is designed to protect specific creditors, such as employees
who are owed salaries or wages, and revenue authorities who are owed
taxes. These creditors are given preferential treatment to ensure that their
claims are paid before other creditors during the distribution of the
insolvent estate. This protection is important because these creditors are
considered socially or economically vulnerable. For instance, unpaid
employees could face significant hardship if their wages were treated as
ordinary claims. Similarly, government revenue from taxes is crucial for
public services and societal functioning. By prioritizing these claims,
Section 21 safeguards the financial well-being of individuals and the
state while promoting social and economic stability.
2026 - DUE 24 March 2026 ;100% trusted ,comprehensive and
complete reliable solution with clear explanation
Question 1: Intended Purpose of Section 21 of the Insolvency Act 24
of 1936 (3 marks)
Answer:
Section 21 of the Insolvency Act 24 of 1936 provides for the
preferential claim of certain creditors over the estate of an insolvent
person. Its primary purpose is to:
Purpose of Section 21 of the Insolvency Act 24 of 1936
1. Protection of Certain Creditors
Section 21 is designed to protect specific creditors, such as employees
who are owed salaries or wages, and revenue authorities who are owed
taxes. These creditors are given preferential treatment to ensure that their
claims are paid before other creditors during the distribution of the
insolvent estate. This protection is important because these creditors are
considered socially or economically vulnerable. For instance, unpaid
employees could face significant hardship if their wages were treated as
ordinary claims. Similarly, government revenue from taxes is crucial for
public services and societal functioning. By prioritizing these claims,
Section 21 safeguards the financial well-being of individuals and the
state while promoting social and economic stability.
