MRL3701
Assignment 1
Semester 2
Due 12 August 2025
, NB: The portal for submission will open on 5 August, and the due date is 12
August.
Student Name:
Student Number:
Module: MRL3701
Assignment 1 – Semester 2, 2025
a. Briefly explain the purpose of a sequestration order (5)
The purpose of a sequestration order is to initiate the legal process of insolvency,
whereby a debtor's estate is placed under administration to ensure the fair distribution of
the debtor’s assets among creditors. This process is governed by the Insolvency Act 24
of 1936.
Sequestration serves a dual function: (1) it enables creditors to recover part of the
money owed to them through a regulated procedure, and (2) it provides the debtor with
an opportunity for financial rehabilitation after meeting the legal requirements (MRL3701
Study Guide, 2025: 2).
A key feature of sequestration is the creation of a concursus creditorum a legal situation
where all creditors are compelled to claim from the insolvent estate through a collective
process. Once sequestration is granted, individual creditors lose the right to execute
against the debtor’s assets independently. This prevents a “race to execution” and
ensures equitable treatment of all creditors (Hockly, 2006: para 1.2).
Additionally, the court will only grant a sequestration order if it is satisfied that it will be
to the advantage of creditors, meaning there must be reasonable expectation that
creditors will receive some dividend from the insolvent estate (MRL3701 Study Guide,
2025: 23; Ex parte Henning 1981 (3) SA 843 (O)).
Assignment 1
Semester 2
Due 12 August 2025
, NB: The portal for submission will open on 5 August, and the due date is 12
August.
Student Name:
Student Number:
Module: MRL3701
Assignment 1 – Semester 2, 2025
a. Briefly explain the purpose of a sequestration order (5)
The purpose of a sequestration order is to initiate the legal process of insolvency,
whereby a debtor's estate is placed under administration to ensure the fair distribution of
the debtor’s assets among creditors. This process is governed by the Insolvency Act 24
of 1936.
Sequestration serves a dual function: (1) it enables creditors to recover part of the
money owed to them through a regulated procedure, and (2) it provides the debtor with
an opportunity for financial rehabilitation after meeting the legal requirements (MRL3701
Study Guide, 2025: 2).
A key feature of sequestration is the creation of a concursus creditorum a legal situation
where all creditors are compelled to claim from the insolvent estate through a collective
process. Once sequestration is granted, individual creditors lose the right to execute
against the debtor’s assets independently. This prevents a “race to execution” and
ensures equitable treatment of all creditors (Hockly, 2006: para 1.2).
Additionally, the court will only grant a sequestration order if it is satisfied that it will be
to the advantage of creditors, meaning there must be reasonable expectation that
creditors will receive some dividend from the insolvent estate (MRL3701 Study Guide,
2025: 23; Ex parte Henning 1981 (3) SA 843 (O)).
