MRL3701
Assignment 1
Semester 2
Due 12 August 2025
, MRL3701
Assignment 1
Semester 2
Due 12 August 2025
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 primary purpose of a sequestration order is to provide a legally regulated process
for distributing a debtor's estate fairly among creditors. It ensures that creditors are not
left to pursue individual remedies, which could result in unequal treatment and possible
prejudice to less aggressive creditors. Through sequestration, a trustee is appointed to
take control of the debtor’s estate, realise assets, and distribute the proceeds in
accordance with the Insolvency Act 24 of 1936.
This process reflects the legal principle of concursus creditorum, which means that all
creditors are brought together in a collective proceeding. This ensures orderly asset
distribution and prevents a situation where one creditor benefits at the expense of
others.
Assignment 1
Semester 2
Due 12 August 2025
, MRL3701
Assignment 1
Semester 2
Due 12 August 2025
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 primary purpose of a sequestration order is to provide a legally regulated process
for distributing a debtor's estate fairly among creditors. It ensures that creditors are not
left to pursue individual remedies, which could result in unequal treatment and possible
prejudice to less aggressive creditors. Through sequestration, a trustee is appointed to
take control of the debtor’s estate, realise assets, and distribute the proceeds in
accordance with the Insolvency Act 24 of 1936.
This process reflects the legal principle of concursus creditorum, which means that all
creditors are brought together in a collective proceeding. This ensures orderly asset
distribution and prevents a situation where one creditor benefits at the expense of
others.
