MRL3701
ASSIGNMENT 1 (SEMESTER 1)
DUE 2 MARCH 2026
QUESTION 1
Voidable Preference
A voidable preference is a disposition of property made by an insolvent debtor to a
creditor shortly before sequestration, which has the effect of preferring that creditor
above others, even though the debtor did not necessarily act with an intention to prefer.
The law allows such a transaction to be set aside in order to ensure equal treatment of
creditors.
In terms of section 29 of the Insolvency Act 24 of 1936, a court may set aside a
disposition as a voidable preference if certain requirements are met. Firstly, the
disposition must have been made within six months before the sequestration of the
debtor’s estate. Secondly, the disposition must have had the effect of preferring one
creditor over others.
Thirdly, the debtor must have been insolvent at the time of making the disposition, or the
disposition must have had the effect of rendering the debtor insolvent. Lastly, the
creditor who benefited from the disposition must be unable to prove that the disposition
was made in the ordinary course of business and without the intention to prefer.
Disclaimer:
All materials are for study assistance only. We do not condone academic dishonesty. Use at your own risk.
We are not liable for any consequences arising from misuse.
Redistribution, resale, or sharing without permission is prohibited.
ASSIGNMENT 1 (SEMESTER 1)
DUE 2 MARCH 2026
QUESTION 1
Voidable Preference
A voidable preference is a disposition of property made by an insolvent debtor to a
creditor shortly before sequestration, which has the effect of preferring that creditor
above others, even though the debtor did not necessarily act with an intention to prefer.
The law allows such a transaction to be set aside in order to ensure equal treatment of
creditors.
In terms of section 29 of the Insolvency Act 24 of 1936, a court may set aside a
disposition as a voidable preference if certain requirements are met. Firstly, the
disposition must have been made within six months before the sequestration of the
debtor’s estate. Secondly, the disposition must have had the effect of preferring one
creditor over others.
Thirdly, the debtor must have been insolvent at the time of making the disposition, or the
disposition must have had the effect of rendering the debtor insolvent. Lastly, the
creditor who benefited from the disposition must be unable to prove that the disposition
was made in the ordinary course of business and without the intention to prefer.
Disclaimer:
All materials are for study assistance only. We do not condone academic dishonesty. Use at your own risk.
We are not liable for any consequences arising from misuse.
Redistribution, resale, or sharing without permission is prohibited.
