MRL3701
ASSIGNMENT 1 (SEMESTER 1)
DUE 2 MARCH 2026
QUESTION 1
Voidable Preference
A voidable preference refers to a disposition of property made by a debtor to a creditor
shortly before sequestration, which has the effect of preferring that creditor above
others, even though the debtor may not have acted with a deliberate intention to prefer.
The purpose of this concept is to protect the principle of equality among creditors
(concursus creditorum) once insolvency occurs.
Section 29 of the Insolvency Act 24 of 1936 governs voidable preferences. For a court
to set aside a disposition as a voidable preference, several requirements must be
satisfied. Firstly, there must have been a disposition of property by the debtor in
favour of a creditor. A disposition includes any payment or transfer of value. Secondly,
the disposition must have taken place within six months prior to the sequestration of
the debtor’s estate. Thirdly, at the time of making the disposition, the debtor must have
been insolvent, or the disposition must have had the effect of rendering the debtor
insolvent. Insolvency in this context refers to a situation where the debtor’s liabilities
exceed their assets.
In addition, the disposition must have had the effect of preferring one creditor above
others. This means that the creditor who received payment was placed in a better
position than the other creditors who remained unpaid. Once these requirements are
established, the burden shifts to the creditor who benefited from the disposition. That
ASSIGNMENT 1 (SEMESTER 1)
DUE 2 MARCH 2026
QUESTION 1
Voidable Preference
A voidable preference refers to a disposition of property made by a debtor to a creditor
shortly before sequestration, which has the effect of preferring that creditor above
others, even though the debtor may not have acted with a deliberate intention to prefer.
The purpose of this concept is to protect the principle of equality among creditors
(concursus creditorum) once insolvency occurs.
Section 29 of the Insolvency Act 24 of 1936 governs voidable preferences. For a court
to set aside a disposition as a voidable preference, several requirements must be
satisfied. Firstly, there must have been a disposition of property by the debtor in
favour of a creditor. A disposition includes any payment or transfer of value. Secondly,
the disposition must have taken place within six months prior to the sequestration of
the debtor’s estate. Thirdly, at the time of making the disposition, the debtor must have
been insolvent, or the disposition must have had the effect of rendering the debtor
insolvent. Insolvency in this context refers to a situation where the debtor’s liabilities
exceed their assets.
In addition, the disposition must have had the effect of preferring one creditor above
others. This means that the creditor who received payment was placed in a better
position than the other creditors who remained unpaid. Once these requirements are
established, the burden shifts to the creditor who benefited from the disposition. That
