EXAM PACK ANSWERS (2020 - 2024) AND 2024 BRIEF
NOTES
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MRL3701 INSOLVENCY LAW
PAST EXAM PACK QUESTIONS AND ANSWERS
(2020 -2024) SUMMARISED NOTES 2024
,QUESTION 1
a) Inability to pay debts is, at most merely evidence of insolvency. (page 3)
b) Brenda’s application for voluntary surrender must be set out the causes of her insolvency in
some detail to enable the court to determine whether the application is .........................
c) Christopher commits an act of insolvency by departing from his dwelling with the intent by
doing so to evade payment of his debts.(page 36)
d) The court must be mindful of the fact that where a debtor and creditor in sequestration
proceedings are not at arm’s length, there is considerable potential for .......................
e) If a trustee elects to set aside a contract, he may recover any performance rendered by the
insolvent, but he must also restore to the third party any perfomance that the insolvent has received
under the transaction.
f) Dave is a miner, and his right to a benefit or a reward, or money paid to him as a miner, does
not form part of his insolvent estate. (page 72)
g) One of the duties of the sheriff on receiving a sequestration order is to serve a copy of the order
on the solvent spouse if she has a separate estate that has not been sequestrated. (page 81)
h) Section 84(1) of the Insolvent Act presupposes that the seller is the owner of the property sold
(the res vendita). (page 96)
i) If the insolvent has carried out his side of the contract and only the other party’s performance is
outstanding, the right to that performance is an asset in the insolvent estate and vests in the trustee.
(page 86)
j) Kim, the trustee of Lee’s estate, is obliged to convene a general meeting of creditors by means
of a notice that must state the matters to be dealt with at the meeting. (page 111-112)
k) Where the insolvent contracted to acquire immovable property and the property has not been
transferred to him, the trustee must make his election to uphold or repudiate the contract within six
weeks after receiving written notice from the other party calling upon him to do so.(page 88)
l) If the creditors elect a trustee unlawfully, the Master is not obliged to confirm the election.
(page 124)
m) In deciding whether a disposition was made in the ordinary course of business, an objective test
is applied. (page 143)
,n) In terms of section 89(2) of the Insolvency Act, a secured creditor may, when proving his claim,
choose to rely exclusively on his security. (page 183)
o) Compared to common-law compromise, the main advantage of a statutory composition is that it
does not depend on the participation of all the creditors. (page 203)
p) An application for rehabilitation is brought by way of notice of motion supported by affidavits.
(page 212)
q) When a partnership is dissolved because the estate of one of the partners has been
sequestrated, the partnership assets are divided among the partners in terms of partnership contract or
the common law. (page 223)
r) The human beings (natural persons) who administer the business of the company are the
management/its directors. ()
s) A voluntary winding up of Kilo CC may be either a creditors’ voluntary winding up, a voluntary
winding up by the corporation, or a shareholders voluntary winding up. (page 241)
t) The application for compulsory business rescue suspends any liquidation proceedings involving
the company. (page 279)
QUESTION 2
1. T (page 6)
2. T (page 19)
3. F (page 39)
4. F (page 63)
5. F (page 78)
6. T (page 81)
7. F (page 63)
8. F (page 111-112)
9. T (page 148)
10. F (page 95)
11. F (page 209)
12. F (page 18)
13. F (page 243)
14. T (page 241)
, 15. F (page 279)
QUESTION 3
a) A person is insolvent when his liabilities fairly valued exceed his assets fairly valued. A person’s
estate may be sequestrated in-order to secure the orderly and equitable distribution of a debtor’s assets
wher they are insufficient to meet claims of all his creditors. Therefore for the granting of a
sequestration order the following requirements must be met;
• The debtor’s estate must in fact be insolvent
• The debtor has sufficient assets to defray all costs of sequestration
• Only if sequestration is to the advantage of creditors. (page 18)
If these requirements are met the order for sequestration may be granted if not sequestration order will
be refused.
b) In terms of section 17(4) of the Matrimonial Property Act 88 of 1984 both spouses who jointly
own an estate because they are married in Community of property may apply for sequestration. (page
18)
c) Amod v Khan SEE ATTACHED DOCUMENT FOR CASE SUMMARIES
d) (i) The trustee of the insolvent estate may have a claim in terms against Mpho’s estate to
the extent of the accrual. This is so because the ante-nuptial contract does not exclude accrual therefore
a part of the accrual estate belongs to Tenza’s insolvent estate and the trustee is mandated with the
collection of all assets for the orderly and fair distribution to all creditors.
(ii) The answer will not change the exception is if Mpho bequeath her estate to Tenza then the
inheritance will then fall into Tenza’s insolvent estate.
e) Section 26 provides that dispositions made without value may be set aside, whereas section 27
provides an exception to this by saying No immediate benefit under duly registered ante-nuptial
contract given in good faith by a man to his wife or any child born of the marriage shall be set aside as a
disposition without value unless that the man’s estate was sequestrated within two years of the
registration of that ante-nuptial contract.
f) Notification of the intention to sequestrate will inform the creditors so that they can have time
to adequately deal with the matter to their advantage.
NOTES
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MRL3701 INSOLVENCY LAW
PAST EXAM PACK QUESTIONS AND ANSWERS
(2020 -2024) SUMMARISED NOTES 2024
,QUESTION 1
a) Inability to pay debts is, at most merely evidence of insolvency. (page 3)
b) Brenda’s application for voluntary surrender must be set out the causes of her insolvency in
some detail to enable the court to determine whether the application is .........................
c) Christopher commits an act of insolvency by departing from his dwelling with the intent by
doing so to evade payment of his debts.(page 36)
d) The court must be mindful of the fact that where a debtor and creditor in sequestration
proceedings are not at arm’s length, there is considerable potential for .......................
e) If a trustee elects to set aside a contract, he may recover any performance rendered by the
insolvent, but he must also restore to the third party any perfomance that the insolvent has received
under the transaction.
f) Dave is a miner, and his right to a benefit or a reward, or money paid to him as a miner, does
not form part of his insolvent estate. (page 72)
g) One of the duties of the sheriff on receiving a sequestration order is to serve a copy of the order
on the solvent spouse if she has a separate estate that has not been sequestrated. (page 81)
h) Section 84(1) of the Insolvent Act presupposes that the seller is the owner of the property sold
(the res vendita). (page 96)
i) If the insolvent has carried out his side of the contract and only the other party’s performance is
outstanding, the right to that performance is an asset in the insolvent estate and vests in the trustee.
(page 86)
j) Kim, the trustee of Lee’s estate, is obliged to convene a general meeting of creditors by means
of a notice that must state the matters to be dealt with at the meeting. (page 111-112)
k) Where the insolvent contracted to acquire immovable property and the property has not been
transferred to him, the trustee must make his election to uphold or repudiate the contract within six
weeks after receiving written notice from the other party calling upon him to do so.(page 88)
l) If the creditors elect a trustee unlawfully, the Master is not obliged to confirm the election.
(page 124)
m) In deciding whether a disposition was made in the ordinary course of business, an objective test
is applied. (page 143)
,n) In terms of section 89(2) of the Insolvency Act, a secured creditor may, when proving his claim,
choose to rely exclusively on his security. (page 183)
o) Compared to common-law compromise, the main advantage of a statutory composition is that it
does not depend on the participation of all the creditors. (page 203)
p) An application for rehabilitation is brought by way of notice of motion supported by affidavits.
(page 212)
q) When a partnership is dissolved because the estate of one of the partners has been
sequestrated, the partnership assets are divided among the partners in terms of partnership contract or
the common law. (page 223)
r) The human beings (natural persons) who administer the business of the company are the
management/its directors. ()
s) A voluntary winding up of Kilo CC may be either a creditors’ voluntary winding up, a voluntary
winding up by the corporation, or a shareholders voluntary winding up. (page 241)
t) The application for compulsory business rescue suspends any liquidation proceedings involving
the company. (page 279)
QUESTION 2
1. T (page 6)
2. T (page 19)
3. F (page 39)
4. F (page 63)
5. F (page 78)
6. T (page 81)
7. F (page 63)
8. F (page 111-112)
9. T (page 148)
10. F (page 95)
11. F (page 209)
12. F (page 18)
13. F (page 243)
14. T (page 241)
, 15. F (page 279)
QUESTION 3
a) A person is insolvent when his liabilities fairly valued exceed his assets fairly valued. A person’s
estate may be sequestrated in-order to secure the orderly and equitable distribution of a debtor’s assets
wher they are insufficient to meet claims of all his creditors. Therefore for the granting of a
sequestration order the following requirements must be met;
• The debtor’s estate must in fact be insolvent
• The debtor has sufficient assets to defray all costs of sequestration
• Only if sequestration is to the advantage of creditors. (page 18)
If these requirements are met the order for sequestration may be granted if not sequestration order will
be refused.
b) In terms of section 17(4) of the Matrimonial Property Act 88 of 1984 both spouses who jointly
own an estate because they are married in Community of property may apply for sequestration. (page
18)
c) Amod v Khan SEE ATTACHED DOCUMENT FOR CASE SUMMARIES
d) (i) The trustee of the insolvent estate may have a claim in terms against Mpho’s estate to
the extent of the accrual. This is so because the ante-nuptial contract does not exclude accrual therefore
a part of the accrual estate belongs to Tenza’s insolvent estate and the trustee is mandated with the
collection of all assets for the orderly and fair distribution to all creditors.
(ii) The answer will not change the exception is if Mpho bequeath her estate to Tenza then the
inheritance will then fall into Tenza’s insolvent estate.
e) Section 26 provides that dispositions made without value may be set aside, whereas section 27
provides an exception to this by saying No immediate benefit under duly registered ante-nuptial
contract given in good faith by a man to his wife or any child born of the marriage shall be set aside as a
disposition without value unless that the man’s estate was sequestrated within two years of the
registration of that ante-nuptial contract.
f) Notification of the intention to sequestrate will inform the creditors so that they can have time
to adequately deal with the matter to their advantage.
