MRL3702 Assignment 2 (COMPLETE ANSWERS) Semester 1 2026 - DUE
April 2026
200 Practice Questions: Insolvency Law & Labour Law
1. The primary legislation governing insolvency in South Africa is:
a) Companies Act 71 of 2008
b) Insolvency Act 24 of 1936
c) National Credit Act 34 of 2005
d) Consumer Protection Act 68 of 2008
Answer: b) Insolvency Act 24 of 1936
Explanation: The Insolvency Act 24 of 1936 is the main statute regulating insolvency of natural persons
and certain other debtors.
2. Which of the following debtors CANNOT be sequestrated under the Insolvency Act?
a) A natural person who is insolvent
b) A deceased estate
c) A partnership
d) A company registered under the Companies Act
Answer: d) A company registered under the Companies Act
Explanation: Companies are sequestrated (liquidated) under the Companies Act 71 of 2008, not the
Insolvency Act.
,3. The two main types of sequestration applications are:
a) Compulsory and voluntary
b) Summary and plenary
c) Provisional and final
d) Sole and joint
Answer: a) Compulsory and voluntary
Explanation: Sequestration may be voluntary (debtor applies) or compulsory (creditor applies).
4. For a compulsory sequestration, the creditor must prove that the debtor has committed an "act of
insolvency". How many acts of insolvency are listed in the Insolvency Act?
a) 5
b) 6
c) 7
d) 8
Answer: d) 8
Explanation: Section 8 of the Insolvency Act lists eight acts of insolvency.
,5. One of the acts of insolvency is where a debtor leaves the Republic with the intention of evading
payment of debts. This is known as:
a) Absconding
b) Migration
c) Relocation
d) Expatriation
Answer: a) Absconding
Explanation: Section 8(a) of the Insolvency Act provides that leaving the Republic or remaining absent
with intent to evade or delay payment of debts constitutes an act of insolvency.
6. In voluntary surrender, the court will accept the surrender only if:
a) The debtor has at least three creditors
b) Sequestration will be to the advantage of creditors
c) The debtor has committed an act of insolvency
d) The debtor consents in writing
Answer: b) Sequestration will be to the advantage of creditors
Explanation: Section 6(1) of the Insolvency Act requires that the court be satisfied that sequestration will
be to the advantage of creditors.
, 7. The legal term for the coming together of creditors after a sequestration order is granted is:
a) Concursus creditorum
b) Consensus ad idem
c) Pari passu
d) Res judicata
Answer: a) Concursus creditorum
Explanation: Once a sequestration order is granted, the concursus creditorum is established, and the
interests of the group of creditors take preference over individual creditors.
8. Upon sequestration of an employer who is an individual, who takes over the affairs of the insolvent
business?
a) A liquidator
b) A curator
c) A trustee
d) An administrator
Answer: c) A trustee
Explanation: The Insolvency Act distinguishes between a trustee (for an individual insolvent employer)
and a liquidator (for an insolvent company).
9. Upon sequestration of the employer, the contract of employment is suspended for a period of:
April 2026
200 Practice Questions: Insolvency Law & Labour Law
1. The primary legislation governing insolvency in South Africa is:
a) Companies Act 71 of 2008
b) Insolvency Act 24 of 1936
c) National Credit Act 34 of 2005
d) Consumer Protection Act 68 of 2008
Answer: b) Insolvency Act 24 of 1936
Explanation: The Insolvency Act 24 of 1936 is the main statute regulating insolvency of natural persons
and certain other debtors.
2. Which of the following debtors CANNOT be sequestrated under the Insolvency Act?
a) A natural person who is insolvent
b) A deceased estate
c) A partnership
d) A company registered under the Companies Act
Answer: d) A company registered under the Companies Act
Explanation: Companies are sequestrated (liquidated) under the Companies Act 71 of 2008, not the
Insolvency Act.
,3. The two main types of sequestration applications are:
a) Compulsory and voluntary
b) Summary and plenary
c) Provisional and final
d) Sole and joint
Answer: a) Compulsory and voluntary
Explanation: Sequestration may be voluntary (debtor applies) or compulsory (creditor applies).
4. For a compulsory sequestration, the creditor must prove that the debtor has committed an "act of
insolvency". How many acts of insolvency are listed in the Insolvency Act?
a) 5
b) 6
c) 7
d) 8
Answer: d) 8
Explanation: Section 8 of the Insolvency Act lists eight acts of insolvency.
,5. One of the acts of insolvency is where a debtor leaves the Republic with the intention of evading
payment of debts. This is known as:
a) Absconding
b) Migration
c) Relocation
d) Expatriation
Answer: a) Absconding
Explanation: Section 8(a) of the Insolvency Act provides that leaving the Republic or remaining absent
with intent to evade or delay payment of debts constitutes an act of insolvency.
6. In voluntary surrender, the court will accept the surrender only if:
a) The debtor has at least three creditors
b) Sequestration will be to the advantage of creditors
c) The debtor has committed an act of insolvency
d) The debtor consents in writing
Answer: b) Sequestration will be to the advantage of creditors
Explanation: Section 6(1) of the Insolvency Act requires that the court be satisfied that sequestration will
be to the advantage of creditors.
, 7. The legal term for the coming together of creditors after a sequestration order is granted is:
a) Concursus creditorum
b) Consensus ad idem
c) Pari passu
d) Res judicata
Answer: a) Concursus creditorum
Explanation: Once a sequestration order is granted, the concursus creditorum is established, and the
interests of the group of creditors take preference over individual creditors.
8. Upon sequestration of an employer who is an individual, who takes over the affairs of the insolvent
business?
a) A liquidator
b) A curator
c) A trustee
d) An administrator
Answer: c) A trustee
Explanation: The Insolvency Act distinguishes between a trustee (for an individual insolvent employer)
and a liquidator (for an insolvent company).
9. Upon sequestration of the employer, the contract of employment is suspended for a period of:
