UNIVERSITY OF SOUTH AFRICA
College of Law
⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄⋄
MCL5903: Corporate Insolvency Law
Assignment 01 — Semester 1, 2026
⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄⋄
MCL5903
Module Code:
Corporate Insolvency Law
Module Name:
Assignment 01
Assignment:
270885
Unique Number:
15 May 2026
Due Date:
20
Total Marks:
Submitted in partial fulfilment of the requirements for MCL5903 — UNISA 2026
, UNISA | MCL5903 Corporate Insolvency Law – Assignment 1
Question (a): Solvency, Insolvency and the Prospects of Banca Ltd’s Winding-
Up Application
The distinction between a solvent and an insolvent company sits at the very heart of South
African company liquidation law, yet it remains one of the more technically demanding ques-
tions practitioners encounter. Whether Banca Ltd will succeed against Gumdrops (Pty) Ltd
turns entirely on how a court reads that distinction, and the answer, as explained below, is
heavily influenced by the Supreme Court of Appeal’s landmark judgment in Boschpoort On-
dernemings (Pty) Ltd v ABSA Bank Ltd.1
(a.1) The Statutory Framework Governing Liquidation
South Africa’s liquidation landscape is split between two statutes that operate in parallel. The
Companies Act 71 of 2008 (the new Act) governs the winding-up of solvent companies, with
sections 79 to 81 constituting the operative provisions.2 Insolvent companies, by contrast,
continue to be wound up under Chapter 14 of the Companies Act 61 of 1973 (the old Act),
which was preserved by Item 9(1) of Schedule 5 to the new Act despite the old Act’s formal
repeal.3 That savings clause reads, in relevant part, that “Chapter 14 of that Act continues to
apply with respect to the winding-up and liquidation of companies under this Act, as if that
Act had not been repealed.”
Critically, the new Act contains no definition of either “solvent” or “insolvent.” 4 This lacuna,
which was almost certainly deliberate,5 has generated substantial and at times conflicting case
law. The crux of the legislative scheme is therefore a gateway question: into which category
does the company fall? Get it right and the correct procedural regime follows. Get it wrong
and the liquidation application may fail entirely or be granted on the wrong statutory basis.
(a.2) The Two Forms of Insolvency: Factual and Commercial
South African law has long recognised two distinct forms of insolvency.6 Understanding them
is indispensable to advising Gumdrops.
1
Boschpoort Ondernemings (Pty) Ltd v ABSA Bank Ltd (936/2012) [2013] ZASCA 173; 2014 (2) SA 518
(SCA).
2
Companies Act 71 of 2008, ss 79–81.
3
Companies Act 71 of 2008, Item 9(1) of Schedule 5.
4
Boschpoort (n 1) para 14.
5
Ibid para 17.
6
For the historical development, see Johnson v Hirotec (Pty) Ltd 2000 (1) SA 420 (A).
Page 2 of 14
College of Law
⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄⋄
MCL5903: Corporate Insolvency Law
Assignment 01 — Semester 1, 2026
⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄⋄
MCL5903
Module Code:
Corporate Insolvency Law
Module Name:
Assignment 01
Assignment:
270885
Unique Number:
15 May 2026
Due Date:
20
Total Marks:
Submitted in partial fulfilment of the requirements for MCL5903 — UNISA 2026
, UNISA | MCL5903 Corporate Insolvency Law – Assignment 1
Question (a): Solvency, Insolvency and the Prospects of Banca Ltd’s Winding-
Up Application
The distinction between a solvent and an insolvent company sits at the very heart of South
African company liquidation law, yet it remains one of the more technically demanding ques-
tions practitioners encounter. Whether Banca Ltd will succeed against Gumdrops (Pty) Ltd
turns entirely on how a court reads that distinction, and the answer, as explained below, is
heavily influenced by the Supreme Court of Appeal’s landmark judgment in Boschpoort On-
dernemings (Pty) Ltd v ABSA Bank Ltd.1
(a.1) The Statutory Framework Governing Liquidation
South Africa’s liquidation landscape is split between two statutes that operate in parallel. The
Companies Act 71 of 2008 (the new Act) governs the winding-up of solvent companies, with
sections 79 to 81 constituting the operative provisions.2 Insolvent companies, by contrast,
continue to be wound up under Chapter 14 of the Companies Act 61 of 1973 (the old Act),
which was preserved by Item 9(1) of Schedule 5 to the new Act despite the old Act’s formal
repeal.3 That savings clause reads, in relevant part, that “Chapter 14 of that Act continues to
apply with respect to the winding-up and liquidation of companies under this Act, as if that
Act had not been repealed.”
Critically, the new Act contains no definition of either “solvent” or “insolvent.” 4 This lacuna,
which was almost certainly deliberate,5 has generated substantial and at times conflicting case
law. The crux of the legislative scheme is therefore a gateway question: into which category
does the company fall? Get it right and the correct procedural regime follows. Get it wrong
and the liquidation application may fail entirely or be granted on the wrong statutory basis.
(a.2) The Two Forms of Insolvency: Factual and Commercial
South African law has long recognised two distinct forms of insolvency.6 Understanding them
is indispensable to advising Gumdrops.
1
Boschpoort Ondernemings (Pty) Ltd v ABSA Bank Ltd (936/2012) [2013] ZASCA 173; 2014 (2) SA 518
(SCA).
2
Companies Act 71 of 2008, ss 79–81.
3
Companies Act 71 of 2008, Item 9(1) of Schedule 5.
4
Boschpoort (n 1) para 14.
5
Ibid para 17.
6
For the historical development, see Johnson v Hirotec (Pty) Ltd 2000 (1) SA 420 (A).
Page 2 of 14
