MRL3701 – Insolvency Law (UNISA) – May 2025 Exam Preparation with Case Summaries and Model Answers

This document contains structured exam preparation material for the MRL3701 module on Insolvency Law at the University of South Africa (UNISA), specifically tailored for the May 2025 exam. It includes concise case law summaries (with ratio decidendi and their legal areas), multiple-choice answers, and comprehensive written responses to typical exam questions. Key topics covered include acts of insolvency, effects of sequestration, trustee powers, protected assets, business rescue procedures, and the constitutional role of ubuntu in insolvency proceedings. The material is clearly organized and offers valuable model answers aligned with South African insolvency legislation and case law. Insolvency Act 24 of 1936 acts of insolvency concursus creditorum vesting of assets section 21 ubuntu and insolvency sequestration requirements trustee powers exempt property rehabilitation process business rescue UNISA law exam MRL3701 preparation Question 1 1.1 In this question, you must match items from Column A to Column B and then to Column C. You are therefore required to take the case name in Column A, match it to the correct ratio decidendi of the case in Column B and then match it to the correct area of insolvency law in Column C. You may either draw a table or write the answers in sentence style. (15) Case Name: (1) Ratio decidendi of the case: (1) Area of Insolvency Law applicable: (1) Sarrahwitz v Maritz NO and another 2015 (4) SA 491 (CC) Section 21 of the Insolvency Act 24 of 1936 authorises the Master of the High Court to allow the trustee to attach the property of the solvent spouse. The purpose of a sequestration order. Walker v Syfret NO 1911 AD 141 Cash purchasers of residential land paying the purchase price in under a year should be protected as vulnerable purchasers. Postponement of rehabilitation. Harksen v Lane NO & Others 1998 (1) SA 300 (CC) In deciding whether a disposition was in the ordinary course of business, an objective test is applied. Sections 21 and 22 of the Alienation of Land Act 68 of 1981. Hendriks NO v Swanepoel 1962 (4) SA 338 (A) The sequestration of a debtor establishes a concursus creditorum. Ordinary course of business. Ex Parte Snooke 2014 (5) SA 426 (FB) There was no proper notice of a second meeting of creditors and the trustees’ report did not provide enough information to enable creditors to access the risk of contribution. Vesting of the assets of the solvent spouse. CONFIDENTIAL 9 of 12 MRL3701 May/June 2025 1.2 Complete the sentences in this question by filling in the correct word/s or term/s. (a) In common parlance, a person is _______ when he cannot pay his _______. (2) (b) In terms of section 157(1) of the Insolvency Act 24 of 1936, nothing will be invalid by reason of a formal __________ or irregularity unless a __________ injustice has been done. (2) (c) After the publication of the notice in the Gazette, it is __________ to sell any property in the estate which has been attached under a writ of __________. (2) (d) If the insolvent enters into a contract which purports to __________ of estate property, the contract is __________ at the option of the trustee. (2) (e) Regarding life insurance policy benefits, section 63(1) of the Long Term Insurance Act 52 of 1998 does not apply if the policy benefits are payable to a __________ and not the __________. (2) (10) 1.3 Read the following scenario and then answer the questions. Londeka owes Peter R170,000 for a motor vehicle purchased from him. Peter knows that you are studying toward obtaining your LLB degree and approaches you for advice. He informs you that he has sent several messages to Londeka, asking her to settle the debt. He further informs you that last week he received an email from Londeka indicating that she is over-indebted and, unfortunately, cannot repay the money she owes him. 1.3.1 In these circumstances, Londeka is committing: (a) Voluntary Surrender (b) Mora Debitoris (c) Mora Creditor (d) Act of Insolvency CONFIDENTIAL 10 of 12 MRL3701 May/June 2025 1.3.2 The type of action referred to in the scenario above is: (a) Inability to pay debts after notice of transfer of business (b) Notice of inability to pay debts (c) Offer of arrangement (d) Failure to satisfy a judgement 1.3.3 This type of action referred to happens during the process of: (a) Compulsory Sequestration (b) Voluntary Surrender (c) Friendly Sequestration (d) Rehabilitation 1.3.4 This scerario forms part of the requirements that must be met for sequestration. In this case, the requirement reffered to is: (a) Debtor committed an act of insolvency or is insolvent (b) The sequestration will be to the advantage of creditors (c) The applicant has established a claim (d) There is reason to believe that it will be to the advantage of creditors for the estate to be sequestrated 1.3.5 You therefore now advise Peter that: (a) He will be able to claim the money in the 2026 financial year (b) He will forfeit the money because Londeka is not able to pay her debt (c) He can apply for her compulsory sequestration (d) He can apply for her rehabilitation (5) CONFIDENTIAL 11 of 12 MRL3701 May/June 2025 1.4 Brenda and Brendon have been married for 12 years. They are married out of community of property. Brendon was recently declared insolvent. However, he does not have sufficient assets to satisfy the debts owed to his creditors. The trustee of the estate therefore took possession of their home, which is the sole property of Brenda. Brenda knows that you are studying toward obtaining your LLB degree and approaches you for advice. She feels that it is unconstitutional for the trustee to attach her property to pay the debts owed by her husband. Based on the facts above, critically discuss the relevant court case and advise Brenda whether the trustee is legally permitted to attach her property. (15) 1.5 Regarding Transformative Constitutionalism in the Law of Insolvency, briefly discuss the principle of ubuntu. (5) TOTAL QUESTION 1: [50] __________________________________________________________________________ Question 2 2.1 Harris was finally sequestrated on 19 February 2025. Subsequent to his sequestration, and after his assets were attached to pay the claim of his creditors, he bought a BMW in order to have access to a motor vehicle again. The trustee of the insolvent estate has since attached the BMW to use the car to further settle the outstanding claims of the creditors. Harris believes that it is unfair for the trustee to attach the BMW. With reference to the facts above and relevant legislation, critically discuss the types of property which fall into the estate of an insolvent. Then advise Harris whether the trustee is entitled to attach his BMW. (15) CONFIDENTIAL 12 of 12 MRL3701 May/June 2025 2.2 In contrast to the facts of the question above, Harris believes that there are certain types of property which do not fall into the insolvent estate. Name 10 types of property that are excluded from the insolvent estate. (10) TOTAL QUESTION 2: [25] __________________________________________________________________________ Question 3 3.1 Discuss the circumstances whereby a new trustee may be elected by the Master of the High Court. (10) 3.2 Discuss the right to a prompt rehabilitation. (5) 3.3 An affected person may apply to court for an order placing a company under supervision and commencing business rescue proceedings. Discuss this application process. (10) TOTAL QUESTION 3: [25] __________________________________________________________________________ TOTAL MARKS: [100] © UNISA 2025