MRL2601 Questions and Answers Semester 1 & 2 2021 - $5.49   Add to cart

Exam (elaborations)

MRL2601 Questions and Answers Semester 1 & 2 2021

Section 1 Questions 1. What is the definition of a “debtor” in terms of the Insolvency Act 24 of 1936? (4) A debtor means a person or a partnership or the estate of a person or a partnership which is a debtor in the usual sense of the word, except a body corporate or a company or other association of persons which may be placed in liquidation under the law relating to companies. 2. What is the purpose of a notice of surrender? (2) The purpose of the notice of surrender is to alert creditors as to the intended application in case they wish to oppose the application. 3. State the requirements which must be proved before the Court will grant a voluntary sequestration order. (4) 1. The preliminary formalities have been observed. 2. The debtor’s estate is in fact insolvent. 3. The debtor owns realizable property of sufficient value to defray all costs of the sequestration. 4. Sequestration will be to the advantage of creditors. 4. What is the meaning of the term “spouse” for the purposes of the term “solvent spouse” under section 21 of the Insolvency Act? (3) For the purpose of section 21, “spouse” has an extended meaning and includes a wife or a husband married according to any law or custom, and also a person living with a member of the opposite sex, although not married to her or him (s 21(13)). According to Chaplin NO v Gregory, on the insolvency of a married man or woman who is living with a third person (i.e., not the legal spouse), the property of only the legal spouse, and not that of both the spouse and the third person, vests in the trustee. 5. State the two maximum limits (in time and in money) to the employee’s preferent claim for arrear salary or wages in terms of section 98A of the Insolvency Act. (2) Salary or wages due to an employee, for a period not exceeding three months and to a maximum of R12 000. 6. State three grounds on which the Master may remove a trustee from office. (3) Any three of the following: 1. he was not qualified for appointment or that his election or appointment was illegal or he has become disqualified ; 2. he has failed to perform any of his duties satisfactorily or comply with a lawful demand of the Master; 3. he is mentally or physically incapable of performing satisfactorily his duties as trustee; 4. the majority of creditors have requested in writing that he be removed; 5. he is no longer suitable in the opinion of the Master, to be the trustee of the estate concerned. 7. Name three circumstances in which the Master may refuse to confirm the appointment of a person nominated as a trustee. (3) Any three of the following: 1. he was not properly elected; 2. he is disqualified from being a trustee; 3. he has failed to give the required security; 4. if in the opinion of the Master, he should not be appointed as trustee to the estate in question. 8. When will a disposition made in compliance with a court order qualify as a disposition under section 2 of the Insolvency Act? (3) The disposition will qualify as a disposition under section 2 if the creditor obtained the court order by fraud or collusion with the insolvent and with the intention of prejudicing other creditors (Sackstein & Venter NNO v Greyling). The onus of proving fraud or collusion lies on the party seeking to set aside the disposition (Dabelstein & Others v Lane & Fey NNO). 9. Section 85(2)(a) of the Insolvency Act provides that the claim of the landlord of a building against the insolvent estate of the tenant is secured up to an amount of three months’ rent if the rent is payable monthly or at shorter intervals. Section 85(2)(b)-(d) provides for three other such periods of rent for which the landlord’s claim is secured. State these other periods. (3) The claim is secured up to an amount of: 1. six months’ rent, if the rent is payable at intervals exceeding one month but not more than three months; 2. nine months’ rent, if the rent is payable at intervals exceeding three months but not more than six months; 3. 15 months’ rent, if the rent is payable at intervals exceeding six months. 10. Maredi and Botha are partners in a medical business. You are an attorney, and they instruct you to apply to court for the voluntary surrender of the partnership estate. Only Botha has signed the application. Explain whether the application will succeed. (3) The application will not succeed. As a rule, an application to surrender a partnership estate must be brought by all the partners, or their agents. The exceptions are partners residing outside South Africa, partners en commandite (anonymous partners), and special partners. In Ex parte Bester, the court refused an application for surrender of a partnership estate because only one partner had signed the application. In applying the law to the facts, Maredi must also sign the application in order to succeed. 111. A provisional order for the winding up of Bafana (Pty) Ltd has been granted by the High Court. A provisional liquidator has to be appointed at the same time. Name two of the most important obligations of a provisional liquidator. (2) 1. The provisional liquidator must give security to the satisfaction of the Master for the proper performance of his duties. 2. He is required to hold office until the appointment of a liquidator. 12. Name two grounds on which a close corporation may be wound up by the court. (2) Any two of the following: 1. resolution of the members; 2. failure to commence business or continue with business; 3. inability to pay debts; 4. just and equitable. 13. Complete the following sentence: The award of a sequestration order creates a ..............................................................., and creditors who have proved a claim have the right to share with other proved creditors in the proceeds of the estate assets. (1) Concursus creditorum 14. What is the meaning of “property”, as defined in section 2 of the Insolvency Act 24 of 1936? (5) “Property” means movable or immovable property wherever situated in the Republic and includes contingent interests in property but excludes the contingent interests of a fidei commissary heir or legatee. 15. Under what circumstances may a court having jurisdiction over a debtor refuse (or postpone) the surrender or sequestration of the debtor’s estate? (3) If it appears equitable or convenient that the estate should be sequestrated in another court within the Republic; or the debtor is domiciled in a state which has not been designated in terms of the Cross- Border Insolvency Act 42 of 2000 and it appears to the court equitable or convenient that the estate should be sequestrated by a court outside the Republic. 16. What is the meaning of “special mortgage”, as defined in section 2 of the Insolvency Act 24 of 1936? (5) “Special mortgage” means a mortgage bond hypothecating any immovable property or a notarial mortgage bond hypothecating specially described movable property in terms of section 1 of the Security by Means of Movable Property Act, 57 of 1993, or such a notarial mortgage bond registered before 7 May 1993 in terms of section 1 of the Notarial Bonds (Natal) Act, but excludes any other mortgage bond hypothecating movable property 17. Explain the difference between a void contract and a voidable contract. (2) A void contract simply has no legal force, but a voidable contract has legal force until it is set aside. 18. Discuss Epstein v Epstein 1987 (4) SA 606 (C) in respect of “friendly” sequestrations. (6) This is an example of a “friendly” sequestration. The applicant was the respondent's mother. He committed an act of insolvency by notifying her in a letter that he was unable to repay her a loan of R6000. The court pointed out that the purpose of the Insolvency Act is to effect a just and orderly distribution of a debtor’s estate to his creditors. Therefore it is important that the requirement of advantage to creditors must be proved before a sequestration order may be granted. This requirement is even more important in a “friendly” sequestration where a creditor applies for the sequestration of a debtor’s estate with the sole aim of providing relief for the debtor. This aspect was emphasised by the court’s view that friendly sequestrations should not be automatically refused, but they should be carefully scrutinised. Therefore particular emphasis is placed on the requirement of advantage to creditors. 19. Name three persons who are relatively disqualified from being a trustee in respect of a particular estate. (3) The following persons are disqualified in respect of a particular estate: 1. a person related to the insolvent in blood or by marriage within the third degree; 2. a person having an interest opposed to the general interest of the creditors; 3. a person who acted as the bookkeeper, accountant, or auditor, of the insolvent at any time during a period of 12 months immediately preceding the date of sequestration; or 4. An agent authorized to vote on behalf of a creditor at a meeting and who acts or purports to act in terms of that authority (s 55). 20. The trustee may terminate employment contracts between the insolvent employer and the employees after consultation with certain parties. Name these parties. (5) 1. collective agreement 2. workplace forum 23. registered trade union 4. employees registered trade union 5. employee personally 6. employee’s nominated representative 21. State the requirements of section 72(7) of the Close Corporations Act 69 of 1984 that must be met before a composition will be binding on persons who had notice and were entitled to vote at the relevant meeting of creditors of the close corporation. (5) 1. the composition was accepted by two-thirds (in number and in value) of the creditors who proved claims against the corporation; 2. payment under the composition is made or secured as specified in the offer; 3. the rights of secured or preferent creditors are not prejudiced (unless waived in writing) 22. What is the meaning of “immovable property” as defined in section 2 of the Insolvency Act 24 of 1936? “Immovable property” means land and every right or interest in land or minerals which is registrable in any office in the Republic intended for the registration of title to land or the right to mine. 23. What is the definition of “disposition” in terms of section 2 of the Insolvency Act 24 of 1936? (4) “Disposition” means any transfer or abandonment of rights to property and includes a sale, lease, mortgage, pledge, delivery, payment, release, compromise, donation or any contract therefore, but does not include a disposition in compliance with an order of the court. 24. Name any four of the various estates that fall within the meaning of the word “estate”. (4) Any four of the following: 1. An estate that includes all assets and liabilities. 2. An estate that consists of liabilities only. 3. The joint estate of spouses married in community of property. 4. The separate estates of spouses married out of community of property. 5. The new estate of a debtor whose estate has been sequestrated. 25. State the requirements which must be proved before the Court will grant a voluntary sequestration order. (4) 1. The preliminary formalities have been observed. 2. The debtor’s estate is in fact insolvent. 3. The debtor owns realizable property of sufficient value to defray all costs of the sequestration. 4. Sequestration will be to the advantage of creditors. 26. Name briefly and without discussion any two acts of insolvency. (2) Any two of the following: 1. Absence from the Republic or dwelling. 2. Failure to satisfy a judgment. 3. Disposition prejudicing creditors or preferring one creditor. 4. Removal of property with intent to prejudice or prefer. 5. Offer of arrangement. 6. Failure to apply for surrender. 7. Notice of inability to pay. 8. Inability to pay debts after notice of transfer of business. 27. Explain the concept "liquidated claim" and state three examples of such a claim. (6) A liquidated claim is a claim for money, the amount of which is fixed by agreement, judgment, or otherwise. The examples of such a claim given by Hockly include the following: 1. a claim for the price of goods sold and delivered; 2. a claim based on judgment for provisional sentence; and 3. a claim for the return of the price paid under a sale which has been cancelled because of the seller's repudiation. 28. Discuss Vorster v Steyn en andere 1981 (2) SA 831 (O) in respect of assets inherited by the insolvent whilst his estate is under sequestration. Do not discuss the issue of a declaratory order. (6) Facts: A testator attempted to place the property bequeathed to his heir out of reach of the heir’s creditors by providing that a trust should hold the inheritance if the heir is insolvent, until his rehabilitation; The case thus deals with the vesting of property inherited by the insolvent while his estate is under sequestration and he is not yet rehabilitated. The court decided that a clause of this nature is void and that the assets vested in the trustee. A testator could validly state that the insolvent heir is substituted with another heir, for example, by stating that if his heir is an unrehabilitated insolvent at the time of his death then the assets would go to his brother. Another possibility is the creation of a discretionary trust which gives the trustee the exclusive discretion to name a substitute heir if the intended heir is insolvent at the death of the testator. 329. Name three instances when the trustee must vacate his office. (3) 1. If his estate is sequestrated. 2. If an order is issued for his detention under the Mental Health Act or if he is declared by the court to be incapable of managing his own affairs. 3. If he is convicted of an offence and sentenced to imprisonment without the option of a fine. 4. If he is convicted of theft, fraud, forgery, uttering a forged document, or perjury. 30. Name one of the ways in which a sequestration order can be brought about. (1) Voluntary surrender (or debtor applies) OR Compulsory sequestration (or creditor/s applies). 31. What is the definition of a “debtor” in terms of section 2 of the Insolvency Act 24 of 1936? (4) A debtor means a person or a partnership or the estate of a person or a partnership which is a debtor in the usual sense of the word, except a body corporate or a company or other association of persons which may be placed in liquidation under the law relating to companies. 32. Under what circumstances may a court having jurisdiction over a debtor refuse (or postpone) the surrender or sequestration of the debtor’s estate? (3) If it appears equitable or convenient that the estate should be sequestrated in another court within the Republic; or the debtor is domiciled in a state which has not been designated in terms of the Cross- Border Insolvency Act 42 of 2000 and it appears to the court equitable or convenient that the estate should be sequestrated by a court outside the Republic. 33. What is the meaning of “special mortgage”, as defined in section 2 of the Insolvency Act 24 of 1936? (5) • “Special mortgage” means a mortgage bond hypothecating any immovable property, or • a notarial mortgage bond hypothecating specially described movable property in terms of section 1 of the Security by Means of Movable Property Act, or • such a notarial mortgage bond registered before 7 May 1993 in terms of section 1 of the Notarial Bonds (Natal) Act, but excludes any other mortgage bond hypothecating movable property. 34. Explain what the position is in respect of an asset when a person who became a creditor after the sequestration of a debtor’s estate alleges that the asset in question does not form part of the insolvent estate. (2) Under section 24(2) of the Insolvency Act such property is deemed not to belong to the insolvent estate unless the contrary is proved. 35. Discuss Vorster v Steyn en andere 1981 (2) SA 831 (O) in respect of assets inherited by the insolvent whilst his estate is under sequestration. Do not discuss the issue of a declaratory order. 6) Facts: a testator attempted to place the property bequeathed to his heir out of reach of the heir’s creditors by providing that a trust should hold the inheritance if the heir is insolvent, until his rehabilitation; The case thus deals with the vesting of property inherited by the insolvent while his estate is under sequestration and he is not yet rehabilitated; The court decided that a clause of this nature is void and that the assets vested in the trustee; A testator could validly state that the insolvent heir is substituted with another heir, for example, by stating that if his heir is an unrehabilitated insolvent at the time of his death then the assets would go to the heir’s brother; Another possibility is the creation of a discretionary trust which gives the trustee of the trust the exclusive discretion to name a substitute heir if the intended heir is insolvent at the death of the testator; Some students also mention the case of Wessels v De Jager and its finding that on the testator's death, the beneficiary is not obliged to accept the succession benefit but acquires the competence (“bevoegdheid”) to do so. 36. Name three instances when the Master may refuse to confirm the election of a person elected as trustee, or to appoint him as such. (3) 1. If: he was not properly elected; 2. he is disqualified from being a trustee; 3. he has failed to give the required security; or 4. in the opinion of the Master, he should not be appointed as trustee to the estate in question 37. The trustee may terminate employment contracts between the insolvent employer and the employees after consultation with certain parties. Name these parties. (5) 1. collective agreement 2. workplace forum 3. registered trade union 4. employees’ registered trade union 45. employee personally 6. employee’s nominated representative 38. Name one consequence of a composition in terms of section 119 of the Insolvency Act 24 of 1936. (1) Any one of the following: 1. all concurrent creditors are bound ; 2. restoration of property to insolvent; 3. restoration of property to solvent spouse; 4. trustee to frame accounts, administer composition, and report to creditors; or 5. right to prompt rehabilitation 39. Name three situations in which the court may postpone the insolvent’s application for rehabilitation. (3) 1. the court requires further information for the proper exercise of its discretion; or 2. criminal proceedings against the insolvent are pending; or 3. the court postpones the application as a mark of its disapproval of the applicant’s conduct. 40. Name one of the requirements that must be met before a company may be placed under judicial management by the court. (1) In terms of section 427(1), the court may grant an order placing a company under judicial management where: 1. the company, because of mismanagement or any other cause, is unable to pay its debts or is probably unable to meet its obligations; 2. the company has not become or has been prevented from becoming a successful concern; 3. there is a reasonable probability that, if the company is placed under judicial management, it will be enabled to pay its debts or meet its obligations and become a successful concern -- in other words there must be a reasonable probability, and not merely a possibility, that the company will recover; and 4. it appears just and equitable to grant a judicial management order. 41. Complete the following sentence: The award of a sequestration order creates a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ., and creditors who have proved a claim have the right to share with other proved creditors in the proceeds of the estate assets. (1) Concursus creditorum 42. What is the meaning of “immovable property”, as defined in section 2 of the Insolvency Act 24 of 1936? (5) “Immovable property” means land and every right or interest in land or minerals which is registrable in any office in the republic intended for the registration of title to land or the right to mine. 43. Under what circumstances may a court having jurisdiction over a debtor, refuse (or postpone) the surrender or sequestration of the debtor’s estate? (3) If it appears equitable or convenient that the estate should be sequestrated in another court within the Republic; or The debtor is domiciled in a state which has not been designated in terms of the Cross-Border Insolvency Act 42 of 2000 and it appears to the court equitable or convenient that the estate should be sequestrated by a court outside the Republic (proviso to section 149(1)). 44. What is the meaning of “special mortgage”, as defined in section 2 of the Insolvency Act 24 of 1936? (5) “Special mortgage” means a mortgage bond hypothecating any immovable property or a notarial mortgage bond hypothecating specially described movable property in terms section 1 of the Security by Means of Movable Property Act, 57 of 1993, or such a notarial mortgage bond registered before 7 May 1993 in terms of section 1 of the Notarial Bonds (Natal) Act, but excludes any other mortgage bond hypothecating movable property. 45. Explain the effect that the Insolvency Act has on the contractual capacity of the debtor. (2) The Insolvency Act does not deprive the debtor of his contractual capacity generally. He retains a general competency to make binding agreements, but the Act protects creditors by imposing certain restrictions on the debtor’s capacity to contract. 46. Discuss Epstein v Epstein 1987 (4) SA 606 (C) in respect of “friendly” sequestrations. (6) This is an example of a “friendly” sequestration. The applicant was the respondent's mother. He committed an act of insolvency by notifying her in a letter that he was unable to repay her a loan of R6000. The court pointed out that the purpose of the Insolvency Act is to effect a just and orderly distribution of a debtor’s estate to his creditors. Therefore it is important that the requirement of advantage to creditors must be proved before a sequestration order may be granted. This requirement is even more important in a “friendly” sequestration where a creditor applies for the sequestration of a debtor’s estate with the sole aim of providing relief for the debtor. This aspect was emphasised by the court’s view that friendly sequestrations should not be automatically refused, but they should be carefully scrutinised. Therefore particular emphasis is placed on the requirement of advantage to creditors. 547. Name three persons who are relatively disqualified from being a trustee in respect of a particular estate.(3) The following persons are disqualified in respect of a particular estate: 1. a person related to the insolvent in blood or by marriage within the third degree; 2. a person having an interest opposed to the general interest of the creditors; 3. a person who acted as the bookkeeper, accountant, or auditor, of the insolvent at any time during a period of 12 months immediately preceding the date of sequestration; or 4. an agent authorized to vote on behalf of a creditor at a meeting and who acts or purports to act in terms of that authority (s 55). 48. The trustee may terminate employment contracts between the insolvent employer and the employees after consultation with certain parties. Name these parties. (5) 1. collective agreement; 2. workplace forum; 3. registered trade union representing the employees; 4. employees’ registered trade union; 5. employee personally; 6. employee’s nominated representative. 49. State the requirements of section 72(7) of the Close Corporations Act 69 of 1984 that must be met before a composition will be binding on persons who had notice and were entitled to vote at the relevant meeting of creditors of the close corporation. (5) The requirements are as follows: 1. the composition was accepted by two-thirds (in number and in value) of the creditors; who proved claims against the corporation; 2. payment under the composition is made or secured as specified in the offer; 3. the rights of secured or preferent creditors are not prejudiced (unless waived in writing). 50. Name one of the ways in which a sequestration order can be brought about. (1) Voluntary surrender (or debtor applies) OR Compulsory sequestration (or creditor/s applies) 51. What is the definition of a “debtor” in terms of section 2 of the Insolvency Act 24 of 1936? (4) A debtor means a person or a partnership or the estate of a person or a partnership which is a debtor in the usual sense of the word, except a body corporate or a company or other association of persons which may be placed in liquidation under the law relating to companies. 52. Under what circumstances may a court having jurisdiction over a debtor refuse (or postpone) the surrender or sequestration of the debtor’s estate? (3) If it appears equitable or convenient that the estate should be sequestrated in another court within the Republic; or The debtor is domiciled in a state which has not been designated in terms of the Cross-Border Insolvency Act 42 of 2000 and it appears to the court equitable or convenient that the estate should be sequestrated by a court outside the Republic proviso to s 149(1)). 53. Tenza's cousins, Mr Abel, Mrs Brown and Mr Charles, run a greengrocer's shop in partnership as ordinary partners, but the partnership liabilities heavily exceed the partnership assets. Explain who must apply for the voluntary surrender of the partnership estate. (5) Voluntary surrender of the partnership estate may be sought by Mr Abel, Mrs Brown and Mr Charles all together. Alternatively, the application may be brought by their expressly authorised agent. 54. Explain what the position is in respect of an asset when a person who became a creditor after the sequestration of a debtor’s estate alleges that the asset in question does not form part of the insolvent estate. (2) Under section 24(2) of the Insolvency Act such property is deemed not to belong to the insolvent estate unless the contrary is proved. 55. Discuss Vorster v Steyn en andere 1981 (2) SA 831 (O) in respect of assets inherited by the insolvent whilst his estate is under sequestration. Do not discuss the issue of a declaratory order. (6) • Facts - a testator attempted to place the property bequeathed to his heir out of reach of the heir’s creditors by providing that a trust should hold the inheritance if the heir were insolvent, until his rehabilitation; • The case thus deals with the vesting of property inherited by the insolvent while his estate is under sequestration and he is not yet rehabilitated. • The court decided that a clause of this nature is void and that the assets vested in the trustee. • A testator could validly state that the insolvent heir is substituted with another heir, for example, by stating that if his heir were an unrehabilitated insolvent at the time of his death then the assets would go to his brother. • Another possibility is the creation of a discretionary trust which gives the trustee the exclusive discretion to name a substitute heir if the intended heir is insolvent at the death of the testator 656. Name 3 instances when the Master may refuse to confirm the election of a person elected as trustee, or to appoint him as such. (3) 1. if he was not properly elected 2. if he is disqualified from being a trustee 3. if he has failed to give the required security 4. if in the opinion of the Master, he should not be appointed as trustee to the estate in question 57. The trustee may terminate employment contracts between the insolvent employer and the employees after consultation with certain parties. Name these parties. (5) 1. collective agreement 2. workplace forum 3. registered trade union which represents the employee 4. employee’s registered trade union 5. employee personally 6. employee’s nominated representative 58. Name one consequence of a composition in terms of section 119 of the Insolvency Act 24 of 1936. (1) 1. All concurrent creditors are bound 2. Restoration of property to insolvent 3. Restoration of property to solvent spouse 4. Trustee to frame accounts, administer composition, and report to creditors 5. Right to prompt rehabilitation 59. Name three situations in which the court may postpone the insolvent’s application for rehabilitation. (3) 1. The court requires further information for the proper exercise of its discretion; or 2. Criminal proceedings against the insolvent are pending; or 3. The court postpones the application as a mark of its disapproval of the applicant’s conduct 60. Name one of the requirements that must be met before a company may be placed under judicial management by the court. (1) In terms of section 427(1), the court may grant an order placing a company under judicial management where: 1. the company, because of mismanagement or any other cause, is unable to pay its debts or is probably unable to meet its obligations; 2. the company has not become or has been prevented from becoming a successful concern; 3. there is a reasonable probability that, if the company is placed under judicial management, it will be enabled to pay its debts or meet its obligations and become a successful concern - in other words there must be a reasonable probability, and not merely a possibility, that the company will recover; and 4. it appears just and equitable to grant a judicial management order. 61. A person may be insolvent in the sense that his.................................... exceed his ..............................., even though his estate has not yet been sequestrated. In fact, sequestration will usually be applied for only when the .................................. already exceed the..................................... (4) • Liabilities • Assets • Liabilities • Assets 62. The sequestration procedure is aimed mainly at achieving a .......................................... of the available assets among .....................................of the debtor. (2) • Fair distribution • Competing creditors 63. An external company may be .................................................. in South Africa (in terms of the Companies Act 61 of 1973) if it has a place of business in South Africa. If it does not have a place of business in South Africa, its estate may be in South Africa under the Insolvency Act, if a South African court has jurisdiction in terms of section 149 of the Insolvency Act. (2) • Liquidated • Sequestrated 64. What is the meaning of "special mortgage", as defined in section 2 of the Insolvency Act 24 of 1936? (6) 1. “Special mortgage” means a mortgage bond hypothecating any immovable property, or 72. a notarial mortgage bond hypothecating specially described movable property in terms of section 1 of the Security by Means of Movable Property Act, or 3. such a notarial mortgage bond registered before 7 May 1993 in terms of section 1 of the Notarial Bonds (Natal) Act, but excludes any other mortgage bond hypothecating movable property. 65. A formal defect in an application for sequestration will be fatal if the defect causes a substantial injustice to............................................... and that prejudice cannot be put right by a ......................................................... • Creditors • Court order 66. Discuss Vorster v Steyn en andere 1981 (2) SA 831 (O) in respect of assets inherited by the insolvent whilst his estate is under sequestration. Do not discuss the issue of a declaratory order. (6) 1. Facts – a testator attempted to place the property bequeathed to his heir out of reach of the heir’s creditors by providing that a trust should hold the inheritance if the heir is insolvent, until his rehabilitation. 2. The case thus deals with the vesting of property inherited by the insolvent while his estate is under sequestration and he is not yet rehabilitated. 3. The court decided that a clause of this nature is void and that the assets vested in the trustee. 4. A testator could validly state that the insolvent heir is substituted with another heir, for example, by stating that if his heir is an unrehabilitated insolvent at the time of his death then his assets would go to his brother. 5. Another possibility is the creation of a discretionary trust which gives the trustee the exclusive discretion to name a substitute heir if the intended heir is insolvent at the death of the testator. 6. Extra marks: Some students also mention the case of Wessels v De Jager and its finding that on the testator’s death, the beneficiary is not obliged to accept the succession benefit but acquires the competence (“bevoegdheid”) to do so). 67. Name 3 instances when the Master may refuse to confirm the election of a person elected as trustee, or to appoint him as such. (3) 1. He was not properly elected 2. He is disqualified from being elected 3. He has failed to give the required security 4. In the opinion of the Master he should not be appointed as trustee to the estate in question. 68. By making use of a "friendly" sequestration the debtor avoids complying with the ................................................................... for an application for voluntary surrender. Preliminary formalities 69. Name three situations in which the court may postpone the insolvent's application for rehabilitation. (3) 1. Where the court requires further information for the proper exercise of its discretion 2. Where criminal proceedings against the insolvent are pending 3. As a mark of the court’s disapproval of the applicant’s conduct 70. On which grounds may a close corporation be wound up by the court? (4)  Resolution of members  Failure to commence or to continue with business  Inability to pay debts  Just and equitable 71. An estate is usually conceived of as a collection of................................................... and..................................................................... (2) Assets (1) & Liabilities (1) 72. An application for voluntary surrender is made by the .......................................................... and an application for compulsory sequestration is made by one or more................................ (2) Debtor (1) Creditors (1) 73. An insolvent not rehabilitated by the court within a period of............................................ from the date of sequestration of his estate is deemed to be rehabilitated unless the court, on application by an interested person, orders otherwise prior to the expiry of the ..................................................... period. (2) 10 years (1) 10-year (1) 74. An application to surrender a partnership estate must, as a rule, be brought by all the ............................................................or their.................................................................... (2) 8Partners (1) Agents (1) 75. Spouses married in community of property have a ................................................... estate, and spouses married out of community of property have a.................................................... estate. (2) joint (1) separate (1) 76. Briefly and without discussion, name the eight acts of insolvency. (8) (1) Absence from Republic or dwelling (1) (2) Failure to satisfy judgment (1) (3) Disposition prejudicing creditors or preferring one creditor (1) (4) Removal of property with intent to prejudice or prefer (1) (5) Offer of arrangement (1) (6) Failure to apply for surrender (1) (7) Notice of inability to pay (1) (8) Inability to pay debts after notice of transfer business (1) 77. Which requirements must the plaintiff prove when bringing the actio Pauliana? (4) (1) The transaction diminished the debtor's assets (1) (2) The person who received from the debtor did not receive his own property (1) (3) There was an intention to defraud; (1) (4) The fraud took effect (1) 78. What is the meaning of “special mortgage”, as defined in section 2 of the Insolvency Act 24 of 1936? (5) The definition of “special mortgage” in section 2 embraces the following: (1) A mortgage bond hypothecating immovable property; (1) (2) A notarial bond hypothecating specially described movable property (1) in terms of section 1 of the Security by Means of Movable Property Act 57 of 1993 – this Act came into operation 7 May 1993 (1); (3) A notarial bond hypothecating specially described movable property registered before 7 May 1993 (1) in terms of section 1 of the Notarial Bonds (Natal) Act 18 of 1932 (1). The latter Act superseded by the Security by Means of Movable Property Act (1). 79. Explain whether the trustee may recover for the benefit of the insolvent estate the damages claimed by the insolvent for bodily injuries suffered in a motor vehicle collision. (3) Section 23(8) allows the insolvent to recover for his own benefit compensation for any loss or damage which he may have suffered, whether before or after sequestration of his estate, by reason of defamation or personal injury (1). The term ‘personal injury’ here includes not only bodily injury, but also injury to personality interests (1). Thus, an insolvent who has sustained bodily injury (1) (whether before or after sequestration) (1) may recover for his own benefit, to the exclusion of his trustee, not only so-called ‘general damages’ but also ‘special damages’ (1). 80. Define the “contract” as governed by chapter II of the Alienation of Land Act 68 of 1981. (4) A "contract" is a sale of land (as defined) (1) in which the purchase price (1) is payable in two or more than two instalments (1). 81. What is the definition of a “debtor” in terms of the Insolvency Act 24 of 1936? (4) A debtor means a person or a partnership or the estate of a person or a partnership which is a debtor in the usual sense of the word, except a body corporate or a company or other association of persons which may be placed in liquidation under the law relating to companies. 82. What is the purpose of a notice of surrender? (2) The purpose of the notice of surrender is to alert creditors as to the intended application in case they wish to oppose the application. 83. State the requirements which must be proved before the Court will grant a voluntary sequestration order. (4) (1) The preliminary formalities have been observed. (2) The debtor’s estate is in fact insolvent. (3) The debtor owns realizable property of sufficient value to defray all costs of the (4) sequestration. (5) Sequestration will be to the advantage of creditors. 84. What is the meaning of the term “spouse” for the purposes of the term “solvent spouse” under section 21 of the Insolvency Act? (3) For the purpose of section 21, “spouse” has an extended meaning and includes a wife or a husband married according to any law or custom, and also a person living with a member of the opposite sex, although not married to her or him (s 21(13)). 9According to Chaplin NO v Gregory (or Wyld) 1950 (3) SA 555 (C), on the insolvency of a married man or woman who is living with a third person (i.e., not the legal spouse), the property of only the legal spouse, and not that of both the spouse and the third person, vests in the trustee. 85. State the two maximum limits (in time and in money) to the employee’s preferent claim for arrear salary or wages in terms of section 98A of the Insolvency Act. (2) Salary or wages due to an employee, for a period not exceeding three months and to a maximum of R12 000. 86. State three grounds on which the Master may remove a trustee from office. (3) (1) he was not qualified for appointment or that his election or appointment was illegal or he has become disqualified ; (2) he has failed to perform any of his duties satisfactorily or comply with a lawful demand of the Master; (3) he is mentally or physically incapable of performing satisfactorily his duties as trustee; (4) the majority of creditors have requested in writing that he be removed; (5) he is no longer suitable in the opinion of the Master, to be the trustee of the estate concerned. 87. Name three circumstances in which the Master may refuse to confirm the appointment of a person nominated as a trustee. (3) (1) he was not properly elected; (2) he is disqualified from being a trustee; (3) he has failed to give the required security; (4) if in the opinion of the Master, he should not be appointed as trustee to the estate in question. 88. When will a disposition made in compliance with a court order qualify as a disposition under section 2 of the Insolvency Act? (3) The disposition will qualify as a disposition under section 2 if the creditor obtained the court order by fraud or collusion with the insolvent and with the intention of prejudicing other creditors (Sackstein & Venter NNO v Greyling). The onus of proving fraud or collusion lies on the party seeking to set aside the disposition (Dabelstein & Others v Lane & Fey NNO). 89. Section 85(2)(a) of the Insolvency Act provides that the claim of the landlord of a building against the insolvent estate of the tenant is secured up to an amount of three months’ rent if the rent is payable monthly or at shorter intervals. Section 85(2)(b)-(d) provides for three other such periods of rent for which the landlord’s claim is secured. State these other periods. (3) The claim is secured up to an amount of:  6 months’ rent, if the rent is payable at intervals exceeding one month but not more than three months;  9 months’ rent, if the rent is payable at intervals exceeding three months but not more than six months;  15 months’ rent, if the rent is payable at intervals exceeding six months 90. Maredi and Botha are partners in a medical business. You are an attorney, and they instruct you to apply to court for the voluntary surrender of the partnership estate. Only Botha has signed the application. Explain whether the application will succeed. ( 3 ) The application will not succeed. As a rule, an application to surrender a partnership estate must be brought by all the partners, or their agents. The exceptions are partners residing outside South Africa, partners en commandite (anonymous partners), and special partners. In Ex parte Bester , the court refused an application for surrender of a partnership estate because only one partner had signed the application. In applying the law to the facts, Maredi must also sign the application in order to succeed. 91. A provisional order for the winding up of Bafana (Pty) Ltd has been granted by the High Court. A provisional liquidator has to be appointed at the same time. Name two of the most important obligations of a provisional liquidator. (2) The provisional liquidator must give security to the satisfaction of the Master for the proper performance of his duties. He is required to hold office until the appointment of a liquidator. 92. Name two grounds on which a close corporation may be wound up by the court. (2) (1) resolution of the members; (2) failure to commence business or continue with business; (3) inability to pay debts; (4) just and equitable. Section 2 Questions Indicate whether the following statements are true or false. DO NOT give a written explanation; use only the letters T or F. 1. The publication of a notice of voluntary surrender has as one of its consequences that it is generally unlawful to sell any estate property which has been attached under a writ of execution. (2) T 102. Mr and Mrs Gani were married in community of property in 1999, and are now insolvent. They must both apply for the voluntary surrender of their joint estate. (2) T 3. The assets of the solvent spouse vest in the trustee of the insolvent estate of the insolvent spouse only when such spouses are married in community of property, because they have a joint estate. (2) F 4. Because all the property of the insolvent at the date of sequestration vests in the trustee, the insolvent may not acquire a new estate during the period of his insolvency. (2) F 5. Section 37 of the Insolvency Act applies to the hire of both movable and immovable property, but the trustee may only repudiate the lease by giving notice in writing to the lessor. (2) T 6. Once the trustee has elected to repudiate or continue with the uncompleted contract, he can change his mind if he obtains the permission of the Master to do so. (2) F 7. The auditing company, EMI (Pty) Ltd, qualifies as the trustee of the insolvent estate of Vincent. (2) F 8. The trustee does not abuse his powers in terms of section 42(1) of the Insolvency Act if he purports to call a special meeting for “further proof of claims”, but his only purpose in convening the meeting is to interrogate the insolvent and other witnesses. (2) F 9. If the insolvent, Charles, instead of paying David, his creditor, has paid Eben, a creditor of David, the trustee may set aside the disposition to Eben as a voidable preference under section 29 of the Insolvency Act on the ground that the disposition has the effect of preferring David above the other creditors of Charles. (2) T 10. The Insolvency Act sets out specific circumstances in which a disposition of the insolvent’s property may be set aside, but this does not deprive creditors of their right under the common law to set aside a disposition which is in fraud of creditors. (2) T 11. The date of the meeting of creditors to consider an offer of composition under section 119 of the Insolvency Act must be not earlier than 14 days, and not later than 28 days, after posting or delivery of the notice of the meeting. (2) T 12. If the estate of a person who is a partner is sequestrated, it is not necessary for the partnership estate or private estates of the other partners to be sequestrated. (2) T 13. The court may wind up a company if it has not commenced its business within nine months from its incorporation. (2) F 14. In insolvency law, a debtor who has only liabilities may be regarded as having an estate for sequestration purposes. (2) T 15. An act of insolvency occurs if a debtor makes, or offers to make any arrangement with any of his creditors for releasing him wholly or in part from his debts (section 8(e) of the Insolvency Act 24 of 1936). (2) T 16. An unrehabilitated insolvent may with the authority of the court be a member of the National Assembly. (2) F 17. As a general rule, sequestration terminates the contract if the insolvent’s performance is outstanding. (2) F 18. A special meeting can be convened for the sole purpose of interrogating persons other than the insolvent. (2) F 19. Section 37 of the Insolvency Act applies to the lease of immovable property only, and the trustee may only repudiate the lease by giving notice in writing to the lessor. (2) F 20. Dispositions without value, voidable preferences, and undue preferences do not apply to property disposed of in accordance with the rules of an exchange or property disposed of in terms of an agreement on an informal market. (2) T 21. If the proceeds of the encumbered property are insufficient to cover the secured creditor’s claim, he or she has a preferent claim for the balance. (2) F 22. Where there are funeral and death-bed expenses and the free residue is insufficient to defray them, the deficiency must be paid equally out of the secured assets. (2) F 1123. The interest of eight percent per year on a concurrent creditor’s claim, which is provided for by the Insolvency Act, is compound interest. (2) F 24. A preferent shareholder is not a contingent or prospective creditor for the purposes of bringing an application for the winding-up of a company. (2) T 25. The auditor of a company is qualified to be appointed as the liquidator of that company in a voluntary winding-up by members, but not in a winding-up by the court. (2) T 26. If the resolution that the close corporation should be wound up voluntarily is not registered by the Registrar within 60 days from the date on which it was passed, it lapses. (2) F 27. In Ex parte Henning 1981 (3) SA 834 (O) the court decided that the monthly contribution made to the debtor's creditors by his (the debtor's) wife, to whom he was married out of community of property, should not be taken into account in order to determine whether sequestration of the debtor would be to the advantage of his creditors. (2) T 28. A debtor who has no assets and only liabilities cannot surrender his estate. T 29. An unrehabilitated insolvent may with the authority of the court hold the office of manager of a close corporation . (2) T 30. When the debtor applies for voluntary surrender, the debtor's affidavit, verifying that the statement of affairs is true and complete and that every estimated amount contained in it is fairly and correctly estimated, may be attested by the applicant's attorney. (2) F 31. The court may exercise its discretion to refuse to grant a sequestration order if the debtor has instituted an action for damages against the creditor which, if successful, will wipe out the creditor's claim. (2) T 32. Where the estate of a debtor is sequestrated, any employment contract which he or she may have entered into as an employer, may be automatically terminated. (2) F 33. The seller acquires no hypothec under section 84(1) of the Insolvency Act if the seller, prior to sequestration, cancelled the instalment sale transaction on account of the buyer's failure to pay an instalment and the purchaser did not obtain the required reinstatement. (2) T 34. In Ensor NO v Rensco Motors (Pty) Ltd 1981 (1) SA 815 (A) the court held that the franchisee’s transfer of its entire stock of parts had not taken place in the ordinary course of that motor dealer’s business. (2) F 35. Secured claims rank among themselves in the following order in respect of immovable property: • Debtor and creditor lien. • Special mortgage bond(s) and contract recorded in terms of the Alienation of Land Act 68 of 1981 in the order in which they were registered or recorded. • Enrichment lien. (2) F 36. The employee has a preferent claim to any contributions which were, immediately prior to sequestration, owing by the insolvent in his capacity as employer (including contributions payable in respect of any of his employees) to any pension, provident, medical aid, sick pay, holiday, unemployment or training scheme or fund, or to any similar scheme or fund, to a maximum of R12 000 in respect of each scheme or fund. (2) F 37. If Tenza, before becoming insolvent, had thrown away all his financial records and had no way of knowing how much he owed his creditors, the court eventually hearing Tenza's application for rehabilitation might decide that, because he was now earning a substantial remuneration package in his new job, he should be rehabilitated only if he paid the balance of the trustee's fees. (2) T 38. When granting an order for the compulsory sequestration of the Absolutely Wonderful Partnership estate, the court must simultaneously sequestrate the private estates of the partners who live in Saudi Arabia, and the private estates of the partners who initially contributed money to the partnership but do not take part in the management and business of the partnership. (2) F 39. The winding-up of a company by the court is deemed to commence when the provisional winding-up order has been granted by the court. (2) F 40. In insolvency law, the only estate that is excluded from the meaning of “estate” is an estate that consists of liabilities only. (2) F 1241. An act of insolvency includes a disposition made by a creditor which has or would have the effect of prejudicing his or her debtors or preferring one debtor above another (section 8(c) of the Insolvency Act 24 of 1936). (2) F 42. An unrehabilitated insolvent may with the authority of the court participate in the management of a close corporation. (2) T 43. As a general rule, sequestration terminates a contract of employment when the estate of the employee is sequestrated. (2) F 44. The trustee may at any time convene a general meeting of creditors. (2) T 45. Because of the principle of “huur gaat voor koop” the trustee cannot, as a general rule, repudiate the lease of immovable property concluded by the insolvent as lessor and must realize the property subject to the lease. (2) T 46. There are four types of debtors' meetings: (1) the first meeting (2) the second meeting (3) a special meeting (4) a general meeting F 47. The Insolvency Act sets out specific circumstances under which a disposition of the insolvent’s property may be set aside, but this does not deprive creditors of their right under the common law to set aside a disposition which is in fraud of creditors. (2) T 48. If certain requirements are met, section 88 of the Insolvency Act 24 of 1936 will deprive a bondholder of his preference, but this section applies only to notarial mortgage bonds. (2) F 49. Secured claims rank among themselves in the following order in respect of immovable property: • debtor and creditor lien; • special mortgage bond(s) and contract recorded in terms of the Alienation of Land Act 68 of 1981 in the order in which they were registered or recorded; • enrichment lien. F 50. If the compromise involves a sale of assets by the provisional trustee, permission of the Master must be obtained for the sale. (2) T 51. One of the effects of rehabilitation is that it affects the rights, duties and powers under a composition, as well as the liability of a surety for the insolvent. (2) F 52. A private company may be wound up by the court if the number of its members has fallen below seven. (2) F 53. In insolvency law, a debtor who has only liabilities may be regarded as having an estate for sequestration purposes. (2) T 54. With the consent of his trustee, the insolvent Mpho trades as a butcher, and he may also immediately enter into a contract to open a plumbing business. (2) F 55. An unrehabilitated insolvent may with the authority of the court be a member of the National Assembly. (2) F 56. As a general rule, sequestration terminates the contract if the insolvent’s performance is outstanding.(2) F 57. A special meeting can be convened for the sole purpose of interrogating persons other than the insolvent. (2) F 58. Section 37 of the Insolvency Act applies to the lease of immovable property only, and the trustee may only repudiate the lease by giving notice in writing to the lessor. (2) F 59. Dispositions without value, voidable preferences, and undue preferences do not apply to property disposed of in accordance with the rules of an exchange or property disposed of in terms of an agreement on an informal market. (2) T 60. If the proceeds of the encumbered property are insufficient to cover the secured creditor’s claim, he or she has a preferent claim for the balance. (2) F 61. Where there are funeral and death-bed expenses and the free residue is insufficient to defray them, the deficiency must be paid equally out of the secured assets. (2) 13F 62. The interest of eight percent per year on a concurrent creditor’s claim, which is provided for by the Insolvency Act, is compound interest. (2) F 63. A preferent shareholder is not a contingent or prospective creditor for the purposes of bringing an application for the winding-up of a company. (2) T 64. The auditor of a company is qualified to be appointed as the liquidator of that company in a voluntary winding-up by members, but not in a winding-up by the court. (2) T 65. If the resolution that the close corporation should be wound up voluntarily is not registered by the Registrar within 60 days from the date on which it was passed, it lapses. (2) F 66. In insolvency law, the only estate that is excluded from the meaning of "estate" is an estate that consists of liabilities only. (2) F 67. An act of insolvency includes a disposition made by a debtor which has or would have the effect of prejudicing his or her debtors or preferring one debtor above another (section 8(c) of the Insolvency Act 24 of 1936). (2) F 68. An unrehabilitated insolvent may only with the authority of the court be a member of the National Assembly. (2) F 69. As a general rule, sequestration suspends a contract of employment when the estate of the employee is sequestrated (2) F 70. The trustee may at any time convene a general meeting of creditors. (2) T 71. The trustee's right to repudiate is excluded where he obtains transfer of immovable property which the insolvent bought and resold (without receiving transfer) prior to sequestration. (2) T 72. There are four types of debtors' meetings: (1) the first meeting (2) the second meeting (3) a special meeting (4) a general meeting (2) F 73. The Insolvency Act sets out specific circumstances under which a disposition of the insolvent's property may be set aside, but this does not deprive creditors of their right under the common law to set aside a disposition which is in fraud of creditors. (2) T 74. If certain requirements are met, section 88 of the Insolvency Act 24 of 1936 will deprive a bondholder of his preference, but this section applies only to notarial mortgage bonds. (2) F 75. Secured claims rank among themselves in the following order in respect of immovable property: (1) debtor and creditor lien; (2) special mortage bond(s) and contract recorded in terms of the Alienation of Land Act 68 of 1981 in the order in which they were registered or recorded; (3) enrichment lien. (2) F 76. If the compromise involves a sale of assets by the provisional trustee, permission of the Master must be obtained for the sale. (2) T 77. One of the effects of rehabilitation is that it affects the rights, duties and powers under a composition, as well as the liability of a surety for the insolvent. (2) F 78. A private company may be wound up by the court if the number of its members has fallen below seven. (2) F 79. A private company must have at least one member, but not more than 30 members. (2) F 80. A notice of surrender published in the Government Gazette can be withdrawn without the written consent of the Master. (2) F 81. The Master or creditors representing one-quarter of the value of all claims proved against the insolvent estate may require the trustee to call a general meeting. (2) T 1482. A company may be wound up by the court if 55% of its issued share capital has been lost or has become useless for its business. (2) F 83. A company, a close corporation, or other body corporate are all disqualified from being a trustee in any insolvent estate. (2) T 84. At the second meeting of creditors, creditors who have proved their claims may elect one or two trustees. (2) F 85. A person who has been convicted of fraud & been sentenced for it to a R100 fine is disqualified from being appointed as a liquidator. (2) T 86. A voidable contract has no legal force. (2) F 87. An insolvent convicted of fraud in relation to his insolvency may apply for his rehabilitation only after five years have elapsed from the date of the sequestration of his estate. (2) F 88. In an application for compulsory sequestration, it is possible to infer that the debtor is insolvent merely because he asked the creditor for time to pay the debt. (2) F 89. The free residue is applied to defray the expenses of the funeral of the insolvent and the funeral of the insolvent’s wife or minor child, and those expenses enjoy preference to a maximum amount of R500. (2) F 90. In Prinsloo en 'n ander v Van Zyl NO 1967 (1) SA 581 (T), the offer of composition was accepted only by a majority in value, and so there was no valid acceptance, and thus no valid composition. (2) T 91. The insolvent who is applying for rehabilitation and also seeking a declaratory order regarding property is required to serve a copy of the relevant notice upon proved creditors but not upon unproved creditors. F 92. The publication of a notice of voluntary surrender has as one of its consequences that it is generally unlawful to sell any estate property which has been attached under a writ of execution. (2) T 93. Mr and Mrs Gani were married in community of property in 1999, and are now insolvent. They must both apply for the voluntary surrender of their joint estate. (2) T 94. The assets of the solvent spouse vest in the trustee of the insolvent estate of the insolvent spouse only when such spouses are married in community of property, because they have a joint estate. (2) F 95. Because all the property of the insolvent at the date of sequestration vests in the trustee, the insolvent may not acquire a new estate during the period of his insolvency. (2) F 96. Section 37 of the Insolvency Act applies to the hire of both movable and immovable property, but the trustee may only repudiate the lease by giving notice in writing to the lessor. (2) T 97. Once the trustee has elected to repudiate or continue with the uncompleted contract, he can change his mind if he obtains the permission of the Master to do so. (2) F 98. The auditing company, EMI (Pty) Ltd, qualifies as the trustee of the insolvent estate of Vincent. (2) F 99. The trustee does not abuse his powers in terms of section 42(1) of the Insolvency Act if he purports to call a special meeting for “further proof of claims”, but his only purpose in convening the meeting is to interrogate the insolvent and other witnesses. (2) F 100. If the insolvent, Charles, instead of paying David, his creditor, has paid Eben, a creditor of David, the trustee may set aside the disposition to Eben as a voidable preference under section 29 of the Insolvency Act on the ground that the disposition has the effect of preferring David above the other creditors of Charles. (2) T 101. The Insolvency Act sets out specific circumstances in which a disposition of the insolvent’s property may be set aside, but this does not deprive creditors of their right under the common law to set aside a disposition which is in fraud of creditors. (2) T 102. The date of the meeting of creditors to consider an offer of composition under section 119 of the Insolvency Act must be not earlier than 14 days, and not later than 28 days, after posting or delivery of the notice of the meeting. (2) T 15103. If the estate of a person who is a partner is sequestrated, it is not necessary for the partnership estate or private estates of the other partners to be sequestrated. (2) T 104. The court may wind up a company if it has not commenced its business within nine months from its incorporation. (2) F Section 3 Questions 1. Why was the court in Magnum Financial Holdings (Pty) Ltd (in liquidation) v Summerly and another 1984 (1) SA 160 (W) satisfied that the applicants had made out a case for the relief sought (the urgent grant of a provisional sequestration order)? (6) 1. There had been sufficient service of the papers on the trustee of the trust. 2. The one provisional liquidator of the applicant company had locus standi to apply for provisional sequestration of the trust estate. 3. The applicant company had a claim against the trust for about R1,6 million which was due and payable. 4. An act of insolvency in terms of s 8(g) of the Insolvency Act had been committed, and the trust was insolvent. 5. It was to the advantage of trust creditors that its estate should be urgently sequestrated. 6. The necessary security bond had been lodged. 7. A trust falls within the definition of a “debtor”. 2. Viv and Uxor, the debtors, are married in community of property. Prior to publishing their present notice of surrender, they had published a notice of surrender which lapsed due to the expiry of the 14-day period. Explain whether the court will preclude them from surrendering their joint estate because the earlier (lapsed) notice had not been withdrawn in terms of the Insolvency Act. (5) The notice of surrender lapses if the court does not accept the surrender when application is made, or if the notice of surrender is properly withdrawn in terms of the Act, or if the debtor fails to make the application for surrender within 14 days after the date advertised as the date of the hearing of the application (s 6(2)). In Ex parte Viviers et Uxor (Sattar intervening), the court rejected the contention that the debtors were precluded from surrendering their joint estate because the earlier notice had not been withdrawn in terms of the Act. The court held that, because the first notice had become void on expiry of the 14-day period, ther

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