MRL3701 ASSIGNMENT 1 FIRST SEMESTER 2022
QUESTION 1
(a) The Action is an act of insolvency.
The debtor gives notice in writing to any one of his creditors that he is unable to
pay any of his debts (section 8(g)).
In the facts of the scenario, Alice intends to write a formal letter to give to her
brother, stating that she can no longer pay her debts to him and if she does so
this is regarded as an act of insolvency in terms of section 8(g) of the Insolvency
Act whereby the debtor gives notice in writing to any one of his creditors that he
is unable to pay any of his debts.
(b) Voluntary Surrender
This is when the debtor himself (or his agent) may apply to court for acceptance
of the surrender of his estate (section 3(1) of the Insolvency Act).
There are requirements that must be met for a debtor to succeed with an
application for a voluntary surrender which are:
(i) The debtor’s estate is, in fact, insolvent
A debtor is insolvent if the amount of his total liabilities exceeds the value
of all of his assets. The test is whether it is established that the debtor is
without funds to pay his debts in full and it is improbable that the assets
will realize enough for this purpose.
(ii) The debtor owns realizable property of sufficient value to defray all costs
of sequestration which will be payable out of the free residue of his estate.
QUESTION 1
(a) The Action is an act of insolvency.
The debtor gives notice in writing to any one of his creditors that he is unable to
pay any of his debts (section 8(g)).
In the facts of the scenario, Alice intends to write a formal letter to give to her
brother, stating that she can no longer pay her debts to him and if she does so
this is regarded as an act of insolvency in terms of section 8(g) of the Insolvency
Act whereby the debtor gives notice in writing to any one of his creditors that he
is unable to pay any of his debts.
(b) Voluntary Surrender
This is when the debtor himself (or his agent) may apply to court for acceptance
of the surrender of his estate (section 3(1) of the Insolvency Act).
There are requirements that must be met for a debtor to succeed with an
application for a voluntary surrender which are:
(i) The debtor’s estate is, in fact, insolvent
A debtor is insolvent if the amount of his total liabilities exceeds the value
of all of his assets. The test is whether it is established that the debtor is
without funds to pay his debts in full and it is improbable that the assets
will realize enough for this purpose.
(ii) The debtor owns realizable property of sufficient value to defray all costs
of sequestration which will be payable out of the free residue of his estate.
