, PLEASE USE THIS DOCUMENT AS A GUIDE TO ANSWER YOUR ASSIGNMENT
Please also note that the author of this document will not be responsible for any plagiarism you
commit.
1. Thabo owes an amount of R2 567 374.00 to his creditors. Since Thabo’s retrenchment by his
long-standing employer in March 2024, Thabo has been experiencing ongoing financial difficulty.
He has failed to pay his debts over the past few months, and since 30 November 2024 his
liabilities have exceeded his assets. Maria is one of Thabo’s creditors, who is owed an amount of
R320 000 by Thabo. Thabo’s debt to Maria was due and payable on 5 January 2025, but Thabo
failed to pay the debt. Disappointed at this, Maria undertook an investigation into Thabo’s
financial affairs. She has established that Thabo owns an apartment valued at R2 250 000 and
furniture valued at R300,000. She has also discovered that Thabo had owed his cousin an
amount of R400,000, which was due and payable only on 30 April 2025, and that Thabo had
made an early repayment in full to his cousin on 29 January 2025. Thabo had wanted to ensure
that should one of his creditors apply for the sequestration of his estate, his family members
would not suffer any financial loss.
1.1. With the above in mind, discuss whether Maria is likely to be successful in an application
for a court order for the sequestration of Thabo’s estate. Include in your discussion the
requirements she must prove to succeed with such an application.
Introduction
Sequestration is a legal process that allows creditors to obtain a court order to declare a debtor
insolvent, ensuring a fair distribution of assets among creditors. To successfully apply for a
sequestration order against Thabo’s estate, Maria, as the sequestrating creditor, must meet three key
legal requirements: she must have a valid claim, Thabo must be insolvent or have committed an act
of insolvency, and there must be a reasonable advantage to Thabo’s creditors. Understanding these
requirements is essential for determining the viability of Maria’s application and assessing whether
the court will grant sequestration.
Maria’s Claim
Maria holds a liquidated claim of R320,000 against Thabo, significantly exceeding the R100
minimum requirement for sequestration. This debt became due on January 5, 2025, but was not paid.
A liquidated claim refers to a specific, determinable amount of money that is due and payable.
Because Maria’s claim is for an unpaid debt that is already due, her application meets the
requirement of having a valid enforceable claim against Thabo. Without such a claim, she would not
have standing to apply for sequestration, making this an essential first step in the process.
Insolvency or Act of Insolvency
Thabo's financial situation demonstrates factual insolvency, as his liabilities have exceeded his assets
since November 30, 2024. This means that even if Thabo liquidated all his assets, he would still be
unable to settle all his outstanding debts. Additionally, he committed an act of insolvency by making
an early payment of R400,000 to his cousin on January 29, 2025. This payment, which unfairly
preferred one creditor over others, constitutes an act of insolvency under Section 8(c) of the
Insolvency Act. Acts of insolvency are significant because they provide legal grounds for
sequestration even when factual insolvency is not clear-cut. A debtor's financial transactions and
decisions can be scrutinized to determine whether they have deliberately taken actions that
disadvantage creditors. Even if a debtor remains technically solvent, their estate may still be
sequestrated if they have committed an act of insolvency.
Please also note that the author of this document will not be responsible for any plagiarism you
commit.
1. Thabo owes an amount of R2 567 374.00 to his creditors. Since Thabo’s retrenchment by his
long-standing employer in March 2024, Thabo has been experiencing ongoing financial difficulty.
He has failed to pay his debts over the past few months, and since 30 November 2024 his
liabilities have exceeded his assets. Maria is one of Thabo’s creditors, who is owed an amount of
R320 000 by Thabo. Thabo’s debt to Maria was due and payable on 5 January 2025, but Thabo
failed to pay the debt. Disappointed at this, Maria undertook an investigation into Thabo’s
financial affairs. She has established that Thabo owns an apartment valued at R2 250 000 and
furniture valued at R300,000. She has also discovered that Thabo had owed his cousin an
amount of R400,000, which was due and payable only on 30 April 2025, and that Thabo had
made an early repayment in full to his cousin on 29 January 2025. Thabo had wanted to ensure
that should one of his creditors apply for the sequestration of his estate, his family members
would not suffer any financial loss.
1.1. With the above in mind, discuss whether Maria is likely to be successful in an application
for a court order for the sequestration of Thabo’s estate. Include in your discussion the
requirements she must prove to succeed with such an application.
Introduction
Sequestration is a legal process that allows creditors to obtain a court order to declare a debtor
insolvent, ensuring a fair distribution of assets among creditors. To successfully apply for a
sequestration order against Thabo’s estate, Maria, as the sequestrating creditor, must meet three key
legal requirements: she must have a valid claim, Thabo must be insolvent or have committed an act
of insolvency, and there must be a reasonable advantage to Thabo’s creditors. Understanding these
requirements is essential for determining the viability of Maria’s application and assessing whether
the court will grant sequestration.
Maria’s Claim
Maria holds a liquidated claim of R320,000 against Thabo, significantly exceeding the R100
minimum requirement for sequestration. This debt became due on January 5, 2025, but was not paid.
A liquidated claim refers to a specific, determinable amount of money that is due and payable.
Because Maria’s claim is for an unpaid debt that is already due, her application meets the
requirement of having a valid enforceable claim against Thabo. Without such a claim, she would not
have standing to apply for sequestration, making this an essential first step in the process.
Insolvency or Act of Insolvency
Thabo's financial situation demonstrates factual insolvency, as his liabilities have exceeded his assets
since November 30, 2024. This means that even if Thabo liquidated all his assets, he would still be
unable to settle all his outstanding debts. Additionally, he committed an act of insolvency by making
an early payment of R400,000 to his cousin on January 29, 2025. This payment, which unfairly
preferred one creditor over others, constitutes an act of insolvency under Section 8(c) of the
Insolvency Act. Acts of insolvency are significant because they provide legal grounds for
sequestration even when factual insolvency is not clear-cut. A debtor's financial transactions and
decisions can be scrutinized to determine whether they have deliberately taken actions that
disadvantage creditors. Even if a debtor remains technically solvent, their estate may still be
sequestrated if they have committed an act of insolvency.
