MRL3701 Assignment 1 Semester 1 2026 - DUE 2 March 2026; 100% CORRECT AND TRUSTED SOLUTIONS

, MRL3701 Assignment 1 Semester 1 2026 - DUE 2 March 2026; 100%
CORRECT AND TRUSTED SOLUTIONS


Question

(a) Voidable Preference

1. Meaning of a Voidable Preference

A voidable preference occurs when an insolvent debtor, shortly before
sequestration, pays or gives preference to one creditor over others in
circumstances where the debtor’s liabilities exceed their assets.

Such a transaction is regarded as unfair because it results in one creditor being
favoured while other creditors receive less than they should. The law therefore
allows the court to set aside such a transaction in order to ensure the equal
treatment of creditors.

This concept is regulated by section 29 of the Insolvency Act 24 of 1936.



2. Requirements for a Voidable Preference

In terms of section 29 of the Insolvency Act, the court may set aside a transaction
as a voidable preference if the following requirements are proved:

2.1 Disposition of Property

There must have been a disposition of property by the debtor.
This includes any payment, transfer of money, or giving up of rights in favour of a
creditor.

In this case, repayment of money constitutes a disposition.



2.2 In Favour of a Creditor