MRL3701
Online Teaching and Learning
Learning
Unit 1:
Introduction to
the Law of
Insolvency
Mrs Z Taljaard
,• Omit 1.7.1 and 1.7.2
• South African Law – Insolvency Act
– SA Insolvency Law routed in Roman-Dutch Law – it is difficult to synchronise with new
modern developments
– Sprung from several Ordinances, then Insolvency Act of 1916 and finally our Act today:
Insolvency Act 24 of 1936
– SA Law Reform Commission has for more than 2 decades tried to revise the Insolvency
Act to include: Should therefore include
• Notices sent in Afr and Eng BUT 11 Official Languages PLUS not Sign Language
• Should use modern methods of communication like emails, SMS, WhatsApp –
especially post COVID lockdown should include electronic communication
• GG must come out timeously – Post office not reliable
• Funeral and death bed expenses not justified
• Amounts for employee’s preferent claim & remuneration not justifiable _ SARS to
blame?
• NO LUCK FOR REFORM – must rely on case law / transformative constitutionalism
• READ the rest of paragraph
• South African Law – Constitution
– Constitution of RSA of 1996 – basis of reform in SA
– Supreme law of land & all law must conform including Bill of Rights with fundamental
rights
– Insolvency pose threat to many fundamental rights!
,– E.g.: Equality / right to freedom and security of person / right to privacy / right of access
to information / right to property / right to just administration
– Insolvency Act needs lot of updates and Transformative transformation
– NB!! See Law Reform pg. 18
– Remember, just because in conflict with rights in Bill of Rights, does not make Insolvency
Act provisions invalid
– Constitutional validity two-fold:
1. Does it conflict with fundamental right?
2. Is the limitation reasonable and justifiable in open and democratic society based on
human dignity, equality and freedom (s 36 of CC)
– Only then can we say an insolvency provision is unconstitutional
, Important Cases for Learning Unit 1
• Magnum Financial Holdings (Pty) Ltd (in Liquidation) v Summerly and Another
NNO 1984 (1) SA 160 (W)
– Can a trust be sequestrated? It can be if it is a debtor defined in s 2 of the
Insolvency Act
– The trust can through the trustees acquire property and incur liabilities and is
therefore not the same as a body corporate
– Therefore, it did fall in the definition, and it is debtor
• Walker v Syfret NO 1911 AD 141 166
– The effect of a winding-up order is to establish a concursus creditorum and
thereafter nothing can be allowed to be done by any of the creditors to alter the
rights of other creditors
Online Teaching and Learning
Learning
Unit 1:
Introduction to
the Law of
Insolvency
Mrs Z Taljaard
,• Omit 1.7.1 and 1.7.2
• South African Law – Insolvency Act
– SA Insolvency Law routed in Roman-Dutch Law – it is difficult to synchronise with new
modern developments
– Sprung from several Ordinances, then Insolvency Act of 1916 and finally our Act today:
Insolvency Act 24 of 1936
– SA Law Reform Commission has for more than 2 decades tried to revise the Insolvency
Act to include: Should therefore include
• Notices sent in Afr and Eng BUT 11 Official Languages PLUS not Sign Language
• Should use modern methods of communication like emails, SMS, WhatsApp –
especially post COVID lockdown should include electronic communication
• GG must come out timeously – Post office not reliable
• Funeral and death bed expenses not justified
• Amounts for employee’s preferent claim & remuneration not justifiable _ SARS to
blame?
• NO LUCK FOR REFORM – must rely on case law / transformative constitutionalism
• READ the rest of paragraph
• South African Law – Constitution
– Constitution of RSA of 1996 – basis of reform in SA
– Supreme law of land & all law must conform including Bill of Rights with fundamental
rights
– Insolvency pose threat to many fundamental rights!
,– E.g.: Equality / right to freedom and security of person / right to privacy / right of access
to information / right to property / right to just administration
– Insolvency Act needs lot of updates and Transformative transformation
– NB!! See Law Reform pg. 18
– Remember, just because in conflict with rights in Bill of Rights, does not make Insolvency
Act provisions invalid
– Constitutional validity two-fold:
1. Does it conflict with fundamental right?
2. Is the limitation reasonable and justifiable in open and democratic society based on
human dignity, equality and freedom (s 36 of CC)
– Only then can we say an insolvency provision is unconstitutional
, Important Cases for Learning Unit 1
• Magnum Financial Holdings (Pty) Ltd (in Liquidation) v Summerly and Another
NNO 1984 (1) SA 160 (W)
– Can a trust be sequestrated? It can be if it is a debtor defined in s 2 of the
Insolvency Act
– The trust can through the trustees acquire property and incur liabilities and is
therefore not the same as a body corporate
– Therefore, it did fall in the definition, and it is debtor
• Walker v Syfret NO 1911 AD 141 166
– The effect of a winding-up order is to establish a concursus creditorum and
thereafter nothing can be allowed to be done by any of the creditors to alter the
rights of other creditors
