MRL3701
Assignment 1 Semester 1 2025
Unique #:
Due Date: 25 March 2025
Detailed solutions, explanations, workings
and references.
+27 81 278 3372
, QUESTION 1 (3 ANSWERS PROVIDED)
Maria, as a creditor, must satisfy the court that she has locus standi (legal
standing), that Thabo has committed an act of insolvency or is factually insolvent,
and that sequestration would be to the advantage of creditors.
Maria’s Legal Standing as a Creditor
Under Section 9(1) of the Insolvency Act, a creditor can apply for sequestration if
they have a liquidated claim of more than R100.00. Maria meets this requirement
as she is owed R320,000, an amount that is due and payable. Her failure to
receive payment despite the debt being due further strengthens her legal
standing.
Act of Insolvency or Factual Insolvency
A debtor's estate may be sequestrated if they commit an act of insolvency under
Section 8 of the Act or if they are factually insolvent—meaning their liabilities
exceed their assets.
1. Factual Insolvency:
Maria’s investigation into Thabo’s financial affairs revealed that his liabilities
exceed his assets. His total liabilities amount to R2,567,374, while his known
assets consist of an apartment valued at R2,250,000 and furniture worth
R300,000—a total of R2,550,000. Since his debts exceed his assets, Thabo is
factually insolvent, fulfilling one of the key requirements for sequestration.
2. Act of Insolvency - Preferential Payment (Section 8(c))
Thabo made an early repayment of R400,000 to his cousin, even though this debt
was only due on 30 April 2025. This constitutes an act of insolvency under
Section 8(c), as the repayment had the effect of prejudicing his other creditors by
preferring one creditor over others. Courts do not require intent to prejudice
creditors—the effect of the transaction alone is sufficient. This act of insolvency
strengthens Maria’s case.
Advantage to Creditors
The court will only grant a sequestration order if it finds that sequestration will be
to the advantage of creditors. This means there must be a reasonable
Varsity Cube 2024 +27 81 278 3372
Assignment 1 Semester 1 2025
Unique #:
Due Date: 25 March 2025
Detailed solutions, explanations, workings
and references.
+27 81 278 3372
, QUESTION 1 (3 ANSWERS PROVIDED)
Maria, as a creditor, must satisfy the court that she has locus standi (legal
standing), that Thabo has committed an act of insolvency or is factually insolvent,
and that sequestration would be to the advantage of creditors.
Maria’s Legal Standing as a Creditor
Under Section 9(1) of the Insolvency Act, a creditor can apply for sequestration if
they have a liquidated claim of more than R100.00. Maria meets this requirement
as she is owed R320,000, an amount that is due and payable. Her failure to
receive payment despite the debt being due further strengthens her legal
standing.
Act of Insolvency or Factual Insolvency
A debtor's estate may be sequestrated if they commit an act of insolvency under
Section 8 of the Act or if they are factually insolvent—meaning their liabilities
exceed their assets.
1. Factual Insolvency:
Maria’s investigation into Thabo’s financial affairs revealed that his liabilities
exceed his assets. His total liabilities amount to R2,567,374, while his known
assets consist of an apartment valued at R2,250,000 and furniture worth
R300,000—a total of R2,550,000. Since his debts exceed his assets, Thabo is
factually insolvent, fulfilling one of the key requirements for sequestration.
2. Act of Insolvency - Preferential Payment (Section 8(c))
Thabo made an early repayment of R400,000 to his cousin, even though this debt
was only due on 30 April 2025. This constitutes an act of insolvency under
Section 8(c), as the repayment had the effect of prejudicing his other creditors by
preferring one creditor over others. Courts do not require intent to prejudice
creditors—the effect of the transaction alone is sufficient. This act of insolvency
strengthens Maria’s case.
Advantage to Creditors
The court will only grant a sequestration order if it finds that sequestration will be
to the advantage of creditors. This means there must be a reasonable
Varsity Cube 2024 +27 81 278 3372
