MRL3701
ASSIGNMENT 1 SEMESTER 2 2025
UNIQUE NO.
DUE DATE: 2025
, Name:
Student Number:
Module: MRL3701 – Insolvency Law
Assignment 01 – Semester 2 – 2025
a. Briefly explain the purpose of a sequestration order. (5 Marks)
The purpose of a sequestration order is rooted in the principles and objectives of
South African insolvency law, as provided under the Insolvency Act 24 of 1936. A
sequestration order is issued by a court to declare a debtor insolvent, leading to the
surrender of their estate, which is then placed under the administration of a trustee
appointed by the Master of the High Court.
The central objective of such an order is to ensure the fair and orderly distribution of
the debtor’s assets among all creditors. This mechanism prevents a chaotic or unjust
scramble where stronger or quicker creditors might otherwise recover
disproportionately, to the detriment of others. The legal process allows all creditors to
lodge claims against the insolvent estate and to share in the distribution pro rata
according to their legal entitlements.
Additionally, sequestration serves the following purposes:
1. Equal Treatment of Creditors: The process ensures that creditors are treated
fairly and equitably, according to the ranking and preferences established by law.
This curbs the risk of fraudulent or preferential payments made before
insolvency.
2. Protection of the Debtor: Once a provisional or final sequestration order is
granted, the debtor gains a degree of legal protection from civil proceedings,
execution of judgments, and attachment of assets by creditors. This prevents a
financial free-fall and gives the debtor a structured legal environment to manage
insolvency.
ASSIGNMENT 1 SEMESTER 2 2025
UNIQUE NO.
DUE DATE: 2025
, Name:
Student Number:
Module: MRL3701 – Insolvency Law
Assignment 01 – Semester 2 – 2025
a. Briefly explain the purpose of a sequestration order. (5 Marks)
The purpose of a sequestration order is rooted in the principles and objectives of
South African insolvency law, as provided under the Insolvency Act 24 of 1936. A
sequestration order is issued by a court to declare a debtor insolvent, leading to the
surrender of their estate, which is then placed under the administration of a trustee
appointed by the Master of the High Court.
The central objective of such an order is to ensure the fair and orderly distribution of
the debtor’s assets among all creditors. This mechanism prevents a chaotic or unjust
scramble where stronger or quicker creditors might otherwise recover
disproportionately, to the detriment of others. The legal process allows all creditors to
lodge claims against the insolvent estate and to share in the distribution pro rata
according to their legal entitlements.
Additionally, sequestration serves the following purposes:
1. Equal Treatment of Creditors: The process ensures that creditors are treated
fairly and equitably, according to the ranking and preferences established by law.
This curbs the risk of fraudulent or preferential payments made before
insolvency.
2. Protection of the Debtor: Once a provisional or final sequestration order is
granted, the debtor gains a degree of legal protection from civil proceedings,
execution of judgments, and attachment of assets by creditors. This prevents a
financial free-fall and gives the debtor a structured legal environment to manage
insolvency.
