MRL3701 EXAM PACK ANSWERS
(2019 - 2014) AND 2020
BRIEF NOTES
principles, case law, legal frameworks, and ethical issues. It prepares students for legal practice, with specializations that may include constitutional law, criminal law, corporate law
MRL3701
INSOLVENCY
LAW
PAST EXAM PACK QUESTIONS AND ANSWERS
(2019 – 2014)
SUMMARISED
NOTES
2020
, MRL 3701
principles, case law, legal frameworks, and ethical issues. It prepares students for legal practice, with specializations that may include constitutional law, criminal law, corporate law
OCTOBER/NOVEMBER 2018
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)
____________2. Law Exams2.1. Overview of Law EducationLaw education provides students with the knowledge of legal principles, case law, legal frameworks,
and ethical issues. It prepares student
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)
____________2. Law Exams2.1. Ov principles, case law, legal frameworks, and ethical issues. It prepares students for legal practice, with specializations that may include
constitutional law, criminal law, corporate law erview of Law EducationLaw education provides students with the knowledge of legal principles, case law, legal frameworks, and ethical
issues. It prepares student
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.
principles, case law, legal frameworks, and ethical issues. It prepares students for legal practice, with specializations that may include constitutional law, criminal law, corporate law 1.
Overview of Law EducationLaw education provides students with the knowledge of legal principles, case law, legal frameworks, and ethical issues. It prepares student various perspectives
or discussing
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.
g) A court may wind up a company if it is unable to pay its debts as provided in
section 345 of the Companies Act 2008in terms of section 345 a company is
deemed to be unable to pay its debts in the following ways;
A creditor to whom the company is indebted for at least R100 has left a
letter of demand for payment at the company‘s registered office and the
company has neglected for three weeks thereafter to pay, secure or
compromise.
A warrant of execution issued on judgment against the companyhas been
returned by the sherriff with an endorsement that he did not find
(2019 - 2014) AND 2020
BRIEF NOTES
principles, case law, legal frameworks, and ethical issues. It prepares students for legal practice, with specializations that may include constitutional law, criminal law, corporate law
MRL3701
INSOLVENCY
LAW
PAST EXAM PACK QUESTIONS AND ANSWERS
(2019 – 2014)
SUMMARISED
NOTES
2020
, MRL 3701
principles, case law, legal frameworks, and ethical issues. It prepares students for legal practice, with specializations that may include constitutional law, criminal law, corporate law
OCTOBER/NOVEMBER 2018
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)
____________2. Law Exams2.1. Overview of Law EducationLaw education provides students with the knowledge of legal principles, case law, legal frameworks,
and ethical issues. It prepares student
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)
____________2. Law Exams2.1. Ov principles, case law, legal frameworks, and ethical issues. It prepares students for legal practice, with specializations that may include
constitutional law, criminal law, corporate law erview of Law EducationLaw education provides students with the knowledge of legal principles, case law, legal frameworks, and ethical
issues. It prepares student
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.
principles, case law, legal frameworks, and ethical issues. It prepares students for legal practice, with specializations that may include constitutional law, criminal law, corporate law 1.
Overview of Law EducationLaw education provides students with the knowledge of legal principles, case law, legal frameworks, and ethical issues. It prepares student various perspectives
or discussing
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.
g) A court may wind up a company if it is unable to pay its debts as provided in
section 345 of the Companies Act 2008in terms of section 345 a company is
deemed to be unable to pay its debts in the following ways;
A creditor to whom the company is indebted for at least R100 has left a
letter of demand for payment at the company‘s registered office and the
company has neglected for three weeks thereafter to pay, secure or
compromise.
A warrant of execution issued on judgment against the companyhas been
returned by the sherriff with an endorsement that he did not find
