MRL3701
EXAM
PACK
2026
, lOMoARcPSD|58918787
UNISA
MRL3701 – Insolvency Law
Examination Answers
Name: Mokibelo Thato Venessa Mashigo
Student Number: 19025165
Date: 31 October 2025
Question 1
1.1 Case Law and Application
In Voster v Steyn NO en andere 1981 (2) SA 831 (O), the court held that every
friendly sequestration must be scrutinised carefully to ensure that the
requirements of the Insolvency Act are not subverted and that the interests of
creditors are protected. This case illustrates the discretion of the court to grant or
refuse a sequestration order.
In Epstein v Epstein 1987 (4) SA 606 (C), the court determined that it is just
and equitable to wind up a company when the primary objective for which the
company was formed cannot be achieved. This case relates to the winding-up of
a company by a court.
In Rand Air (Pty) Ltd v Ray Bester Investments (Pty) Ltd 1985 (2) SA 345
(W), it was held that property inherited by an insolvent during insolvency forms
part of the insolvent estate, even if the testator’s will states otherwise. This case
demonstrates the rules regarding property that falls into the insolvent estate.
In Amod v Khan 1947 (2) SA 432 (N), the court recognised that although it is
not usually in the ordinary course of business for a debtor to give a pledge for a
previously incurred debt, the insolvent acted reasonably given the
circumstances. This case represents an exception to section 29 of the
Insolvency Act 24 of 1936.
In Pretorius’s Trustee v Van Blommenstein 1949 (1) SA 267 (O), it was held
that a court can refuse a sequestration order if the creditor’s true motive is to
prevent the debtor from enforcing a claim against the creditor. This case
concerns friendly sequestrations.
1.2 Complete the sentences
(a) An insolvent may immediately seek an order of rehabilitation if he has
obtained a certificate from the Master of the High Court confirming that creditors
have accepted an offer of composition.
(b) In terms of section 31(1) of the Insolvency Act 24 of 1936, the court may set
aside a transaction entered into by the debtor before sequestration in terms of
Downloaded by Jonah Njenga ()
, lOMoARcPSD|58918787
which he, in collaboration with another person, disposed of his property.
(c) If a trustee elects to repudiate the contract, the other party is prevented from
obtaining an order of specific performance.
(d) Whenever an insolvent has acquired possession of property that the trustee
claims, it is deemed to belong to the insolvent estate.
(e) Aspects of the law of insolvency have been amended (or might have to be) to
achieve transformational constitutionalism and so comply with the Constitution.
1.3 Scenario – Londeka
1.3.1 Londeka is committing an offer of arrangement with her other creditors.
1.3.2 The type of action is an offer of arrangement.
1.3.3 This action occurs during the process of compulsory sequestration.
1.3.4 The creditor must prove that the sequestration will be to the advantage of
creditors.
1.3.5 Peter can apply for Londeka’s compulsory sequestration to recover the
debt.
1.4 True or False
1.4.1 True
1.4.2 False
1.4.3 True
1.4.4 True
1.4.5 False
1.5 Ubuntu and Transformative Constitutionalism
In terms of transformative constitutionalism, the concept of ubuntu represents
human dignity, respect, compassion, social justice, and fairness. The courts, in
cases such as Afriforum and Another v Malema and Another 2011 (6) SA 240
(EqC), have applied ubuntu to balance individual rights with community values,
promoting reconciliation, fairness, and mutual respect. Ubuntu encourages the
application of law in a humane and socially responsible manner. Total Question
1: [50]
Downloaded by Jonah Njenga ()
, lOMoARcPSD|58918787
Question 2
2.1 Similarities and Differences
Similarities:
1. Both voluntary surrender and compulsory sequestration aim to distribute an
insolvent’s assets fairly among creditors.
2. Both require proof that sequestration will be to the benefit of creditors.
Differences:
1. Voluntary surrender is initiated by the debtor; compulsory sequestration by a
creditor.
2. In voluntary surrender, the debtor must show that their estate’s sequestration
will benefit creditors, while in compulsory sequestration the creditor must prove
this.
3. The notice procedure differs — voluntary surrender requires notice in the
Government Gazette, whereas compulsory sequestration requires a formal
application and service on the debtor and interested parties.
2.2 Security for Costs
When an insolvent wishes to institute or defend legal proceedings, section 23(9)
of the Insolvency Act requires that the insolvent provide security for costs. This
ensures creditors are not prejudiced if the insolvent fails in litigation. The trustee
or Master must approve such action. The purpose is to protect the estate’s
assets and prevent frivolous litigation. The court has discretion to dispense with
security if the claim benefits the estate. The security acts as financial assurance
that the insolvent will cover costs if unsuccessful.
Total Question 2: [25]
Downloaded by Jonah Njenga ()
EXAM
PACK
2026
, lOMoARcPSD|58918787
UNISA
MRL3701 – Insolvency Law
Examination Answers
Name: Mokibelo Thato Venessa Mashigo
Student Number: 19025165
Date: 31 October 2025
Question 1
1.1 Case Law and Application
In Voster v Steyn NO en andere 1981 (2) SA 831 (O), the court held that every
friendly sequestration must be scrutinised carefully to ensure that the
requirements of the Insolvency Act are not subverted and that the interests of
creditors are protected. This case illustrates the discretion of the court to grant or
refuse a sequestration order.
In Epstein v Epstein 1987 (4) SA 606 (C), the court determined that it is just
and equitable to wind up a company when the primary objective for which the
company was formed cannot be achieved. This case relates to the winding-up of
a company by a court.
In Rand Air (Pty) Ltd v Ray Bester Investments (Pty) Ltd 1985 (2) SA 345
(W), it was held that property inherited by an insolvent during insolvency forms
part of the insolvent estate, even if the testator’s will states otherwise. This case
demonstrates the rules regarding property that falls into the insolvent estate.
In Amod v Khan 1947 (2) SA 432 (N), the court recognised that although it is
not usually in the ordinary course of business for a debtor to give a pledge for a
previously incurred debt, the insolvent acted reasonably given the
circumstances. This case represents an exception to section 29 of the
Insolvency Act 24 of 1936.
In Pretorius’s Trustee v Van Blommenstein 1949 (1) SA 267 (O), it was held
that a court can refuse a sequestration order if the creditor’s true motive is to
prevent the debtor from enforcing a claim against the creditor. This case
concerns friendly sequestrations.
1.2 Complete the sentences
(a) An insolvent may immediately seek an order of rehabilitation if he has
obtained a certificate from the Master of the High Court confirming that creditors
have accepted an offer of composition.
(b) In terms of section 31(1) of the Insolvency Act 24 of 1936, the court may set
aside a transaction entered into by the debtor before sequestration in terms of
Downloaded by Jonah Njenga ()
, lOMoARcPSD|58918787
which he, in collaboration with another person, disposed of his property.
(c) If a trustee elects to repudiate the contract, the other party is prevented from
obtaining an order of specific performance.
(d) Whenever an insolvent has acquired possession of property that the trustee
claims, it is deemed to belong to the insolvent estate.
(e) Aspects of the law of insolvency have been amended (or might have to be) to
achieve transformational constitutionalism and so comply with the Constitution.
1.3 Scenario – Londeka
1.3.1 Londeka is committing an offer of arrangement with her other creditors.
1.3.2 The type of action is an offer of arrangement.
1.3.3 This action occurs during the process of compulsory sequestration.
1.3.4 The creditor must prove that the sequestration will be to the advantage of
creditors.
1.3.5 Peter can apply for Londeka’s compulsory sequestration to recover the
debt.
1.4 True or False
1.4.1 True
1.4.2 False
1.4.3 True
1.4.4 True
1.4.5 False
1.5 Ubuntu and Transformative Constitutionalism
In terms of transformative constitutionalism, the concept of ubuntu represents
human dignity, respect, compassion, social justice, and fairness. The courts, in
cases such as Afriforum and Another v Malema and Another 2011 (6) SA 240
(EqC), have applied ubuntu to balance individual rights with community values,
promoting reconciliation, fairness, and mutual respect. Ubuntu encourages the
application of law in a humane and socially responsible manner. Total Question
1: [50]
Downloaded by Jonah Njenga ()
, lOMoARcPSD|58918787
Question 2
2.1 Similarities and Differences
Similarities:
1. Both voluntary surrender and compulsory sequestration aim to distribute an
insolvent’s assets fairly among creditors.
2. Both require proof that sequestration will be to the benefit of creditors.
Differences:
1. Voluntary surrender is initiated by the debtor; compulsory sequestration by a
creditor.
2. In voluntary surrender, the debtor must show that their estate’s sequestration
will benefit creditors, while in compulsory sequestration the creditor must prove
this.
3. The notice procedure differs — voluntary surrender requires notice in the
Government Gazette, whereas compulsory sequestration requires a formal
application and service on the debtor and interested parties.
2.2 Security for Costs
When an insolvent wishes to institute or defend legal proceedings, section 23(9)
of the Insolvency Act requires that the insolvent provide security for costs. This
ensures creditors are not prejudiced if the insolvent fails in litigation. The trustee
or Master must approve such action. The purpose is to protect the estate’s
assets and prevent frivolous litigation. The court has discretion to dispense with
security if the claim benefits the estate. The security acts as financial assurance
that the insolvent will cover costs if unsuccessful.
Total Question 2: [25]
Downloaded by Jonah Njenga ()
