MRL3701
ASSIGNMENT 2
SEMESTER 1
DUE DATE: 09 APRIL
6
2024
"Elevate Your Excellence: Where Distinction Meets Assurance in Every Assignment!"
,MRL3701 ASSIGNMENT 2 SEMESTER 1 – 2024 (883082)
DUE DATE: 09 APRIL 2024
1
,QUESTION 1.
Wandile owes a total of R3 million to various creditors. His creditors include Zozo to whom
he owes R400 000. He also owes R1.3 million to DRG Bank.
Last year Wandile invested in a get-rich-quick scheme as a result of which he lost a lot of
money. This left him in a dire financial situation. By 31 October 2023 his liabilities
exceeded his assets by R800 000. Over the past few months Wandile has failed to pay
some of his debts. In particular he failed to pay the R400 000 he owes to Zozo. This debt
was due and payable on 1 February 2024.
Disappointed at not having been paid back the R400 000 owed to her, Zozo undertook an
investigation into Wandile’s financial situation. The investigation turned up unassailable
proof that Wandile had owed R100 000 to his father-in-law, and that Wandile repaid R80
000 to his father-in-law on 3 February 2024. Mindful that he was technically insolvent and
that one of his creditors could apply for the sequestration of his estate at any time,
Wandile had wanted to ensure that whatever happened, his father-in-law would at least
get something from his estate. Hence, he repaid the loan that he had obtained from his
father-in-law even though the amount was only due and payable on 30 November 2024.
Zozo has established that Wandile owns a house in Mamelodi valued at R700 000,
household furniture valued at R300 000 and a motor vehicle valued at R800 000. Zozo is
planning to apply for the sequestration of Wandile’s estate.
2
, Answer the following questions based on the facts given above:
a. Discuss the requirements that an applicant must prove in order to obtain a court
order for the sequestration of a debtor’s estate. (3)
In order to obtain a court order for the sequestration of a debtor’s estate, an applicant must
prove certain requirements as outlined in the Insolvency Act of South Africa:
If the court is satisfied that:
i. The applicant has established a claim which entitles him, in terms of s9(1) to
apply for sequestration of the debtor's estate.
ii. The debtor has committed an act of insolvency or is insolvent; and
iii. There is reason to believe that it will be to the advantage of creditors of the
debtor if his estate is sequestrated (s12(1)).
The ONUS of satisfying the court on these three matters rests throughout on the
sequestrating creditor.
Further Explanation of the above requirements:
• Section 9(1) allows proceedings to be instituted by:
A creditor (or his agent) with a liquidated claim for more than R100, or
Two or more creditors (or their agents) with liquidated claims not less than
R200 in aggregate.
• Insolvency: The debtor must be insolvent. This means that the total liabilities or
debts must be more than the value of his/her assets.
• Benefit to Creditors: The sequestration must be to the benefit of the creditors. The
sequestration costs must be covered, and the creditors must receive the minimum
required benefit from the proceeds of sale.
3
ASSIGNMENT 2
SEMESTER 1
DUE DATE: 09 APRIL
6
2024
"Elevate Your Excellence: Where Distinction Meets Assurance in Every Assignment!"
,MRL3701 ASSIGNMENT 2 SEMESTER 1 – 2024 (883082)
DUE DATE: 09 APRIL 2024
1
,QUESTION 1.
Wandile owes a total of R3 million to various creditors. His creditors include Zozo to whom
he owes R400 000. He also owes R1.3 million to DRG Bank.
Last year Wandile invested in a get-rich-quick scheme as a result of which he lost a lot of
money. This left him in a dire financial situation. By 31 October 2023 his liabilities
exceeded his assets by R800 000. Over the past few months Wandile has failed to pay
some of his debts. In particular he failed to pay the R400 000 he owes to Zozo. This debt
was due and payable on 1 February 2024.
Disappointed at not having been paid back the R400 000 owed to her, Zozo undertook an
investigation into Wandile’s financial situation. The investigation turned up unassailable
proof that Wandile had owed R100 000 to his father-in-law, and that Wandile repaid R80
000 to his father-in-law on 3 February 2024. Mindful that he was technically insolvent and
that one of his creditors could apply for the sequestration of his estate at any time,
Wandile had wanted to ensure that whatever happened, his father-in-law would at least
get something from his estate. Hence, he repaid the loan that he had obtained from his
father-in-law even though the amount was only due and payable on 30 November 2024.
Zozo has established that Wandile owns a house in Mamelodi valued at R700 000,
household furniture valued at R300 000 and a motor vehicle valued at R800 000. Zozo is
planning to apply for the sequestration of Wandile’s estate.
2
, Answer the following questions based on the facts given above:
a. Discuss the requirements that an applicant must prove in order to obtain a court
order for the sequestration of a debtor’s estate. (3)
In order to obtain a court order for the sequestration of a debtor’s estate, an applicant must
prove certain requirements as outlined in the Insolvency Act of South Africa:
If the court is satisfied that:
i. The applicant has established a claim which entitles him, in terms of s9(1) to
apply for sequestration of the debtor's estate.
ii. The debtor has committed an act of insolvency or is insolvent; and
iii. There is reason to believe that it will be to the advantage of creditors of the
debtor if his estate is sequestrated (s12(1)).
The ONUS of satisfying the court on these three matters rests throughout on the
sequestrating creditor.
Further Explanation of the above requirements:
• Section 9(1) allows proceedings to be instituted by:
A creditor (or his agent) with a liquidated claim for more than R100, or
Two or more creditors (or their agents) with liquidated claims not less than
R200 in aggregate.
• Insolvency: The debtor must be insolvent. This means that the total liabilities or
debts must be more than the value of his/her assets.
• Benefit to Creditors: The sequestration must be to the benefit of the creditors. The
sequestration costs must be covered, and the creditors must receive the minimum
required benefit from the proceeds of sale.
3
