Mrl3701 Exam Pack 2023 Latest Questions And Answers

MRL3701 EXAM PACK 2023 LATEST QUESTIONS AND ANSWERS MRL3701 EXAM PACK Revision PACK Questions. Answers NOTES Insolvency Law MRL301-M 1. INTRODUCTION TO INSOLVENCY LAW 1.1. Meaning of “insolvency” Section 2 of the Insolvency Act, 24 of 1936 (“Act”) – Definitions 'insolvent' when used as a noun, means a debtor whose estate is under sequestration and includes such a debtor before the sequestration of his estate, according to the context. 'insolvent estate' means an estate under sequestration. Everyday language A person is unable to pay his debts = merely evidence of insolvency Legal test of insolvency A debtor’s liabilities, fairly estimated, exceed his assets, fairly valued. A person is not treated as insolvent for legal purposes unless his estate has been sequestrated by an order of court, being a formal declaration that a debtor is insolvent granted either at request of: the debtor (voluntary sequestration); or Ways to sequestrate one or more of the debtor’s creditors (compulsory sequestration). an estate Only after a sequestration order has been granted, the consequences of the Act will apply for example Sections 26, 29, 30 and 31 making provision for some disposition s to be set aside. Although the dispositions have taken place before sequestration, the relevant sections of the Act may be invoked only after the court has sequestrated the debtor’s estate. 1.2. Purpose of a sequestration order The main objective of a sequestration order is to secure the orderly and equitable distribution of a debtor’s assets where they are insufficient to meet the claims of all his creditors. Once an order of sequestration is granted, a concursus creditorum (coming together of creditors) is established and the interests of creditors as a group enjoy preference over the interests of the individual creditor. Creditors who have proved a claim have the right to share with other proved creditors in the proceeds of the estate assets replacing their right to recover claims by judicial proceedings. Court won’t grant a sequestration order if no advantage to creditors has been shown and generally not when there is only one creditor. If debtor’s assets aren’t enough to cover the costs of seques- tration, there is no sense in sequestrating his estate as creditors won’t get anything thus being a waste of time and money. The debtor is divested of his estate and can’t burden it with more debts.