The concept of an act of insolvency and the main purpose of section 8 of the Insolvency Act 24 of 1936

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.