MRL3701
Assignment 1
Semester 2
Due 12 August 2025
, MRL3701
Assignment 1 Semester 2
Due 12 August 2025
EXCEPTIONALLY CRAFTED
Question: Insolvency Application for Spouses Married Out of Community of Property
Thandeka and Owen, who are married out of community of property, are seeking your
legal advice. Both of their individual businesses have been severely impacted by the
COVID-19 pandemic, leading to significant financial distress and an inability to meet
their financial obligations. They believe that sequestration is in their best interests.
To minimize costs, they propose bringing a single application before the court to
sequestrate their respective separate estates, given that they do not have a joint estate.
a) Purpose of Sequestration
The purpose of a sequestration order is to enable an orderly legal process for
distributing a debtor’s assets fairly among creditors. This is achieved through the
appointment of a trustee who assumes control of the insolvent estate, sells off the
assets, and allocates the proceeds in accordance with the statutory order of preference
outlined in the Insolvency Act 24 of 1936. The key function is to prevent a disorderly and
potentially prejudicial race by individual creditors to recover their debts, ensuring that all
creditors are treated equitably.
Sequestration also provides limited relief to the debtor by allowing for eventual
rehabilitation, which discharges remaining unpaid debts and restores legal capacity.
Assignment 1
Semester 2
Due 12 August 2025
, MRL3701
Assignment 1 Semester 2
Due 12 August 2025
EXCEPTIONALLY CRAFTED
Question: Insolvency Application for Spouses Married Out of Community of Property
Thandeka and Owen, who are married out of community of property, are seeking your
legal advice. Both of their individual businesses have been severely impacted by the
COVID-19 pandemic, leading to significant financial distress and an inability to meet
their financial obligations. They believe that sequestration is in their best interests.
To minimize costs, they propose bringing a single application before the court to
sequestrate their respective separate estates, given that they do not have a joint estate.
a) Purpose of Sequestration
The purpose of a sequestration order is to enable an orderly legal process for
distributing a debtor’s assets fairly among creditors. This is achieved through the
appointment of a trustee who assumes control of the insolvent estate, sells off the
assets, and allocates the proceeds in accordance with the statutory order of preference
outlined in the Insolvency Act 24 of 1936. The key function is to prevent a disorderly and
potentially prejudicial race by individual creditors to recover their debts, ensuring that all
creditors are treated equitably.
Sequestration also provides limited relief to the debtor by allowing for eventual
rehabilitation, which discharges remaining unpaid debts and restores legal capacity.
