MRL with complete solutions questions and answers

person's The terms sequestration and sequestration order should stritly be used only with reference to a ____ estate personal In Ex Parte Henning, the statement of affairs that lay for inspection did not contain the ____ information 8(g) According to section ____ of the Insolvency Act, it is an act of insolvency if a debtor gives notice in writing to a creditor that he is unable to pay one or more of his debts written A debtor may not, without the ____ consent of the trustee enter into a contract which adversely affects his estate released The property of the spouse of the insolvent, where the marriage is out of community of property, also vests in the trustee of the insolvent estate, until it is ____ by the trustee defamation Section 23(8) allows the insolvent to recover for his own benefit compensation for any loss or damage which he may have suffered, whether before or after sequestration of his estate, by reason of ____ or personal injury title The trustee is obliged to release property which was acquired by the solvent spouse during her marriage with the insolvent by a valid _____ against creditors of the insolvent sequestration The _______ of an employers estate suspends the employment contract between him and his employees with immediate effect asset 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 ___ in the insolvent estate and vests in the trustee first After receiving a final sequestration order the Master must immediately convene (cause to come together) a _____ meeting of creditors by notice in the gov gazette minor child A nurse who has treated the insolvent's deceased wife or ____ may have a preferent claim against the insolvent estate if further requirements are met absolute Note that as a result of a relative ground for disqualification such a person cannot be a trustee of a specific insolvent estate. This prohibition differs from the ____ grounds for disqualification where such a person may not be a trustee of any insolvent estate whatsoever order of court the term disposition does not include a disposition made in compliance with an ______ pledge A valid ____ is constituted where there is delivery of movable property to a creditor on the understanding that it will be retained by him until his claim has been satisfied two Interest due on a secured claim for a period not exceeding ____ years immediately preceding the date of sequestration is secured as if it were part of the capital sum court The rehabilitation of an insolvent is a matter which lies solely within the discretion of the _____ directors the human beings (the natural persons) who administer the business of the company are its ______ common law 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 the partnership contract or the ______ sequestration Rehabilitation has the effect of putting an end to the _____ unsecured Employees are "preferred ______ creditors" for unpaid but due and payable sums of remuneration, reimbursements for expenses or other employment related money before the business rescue proceedings began equitable the main objective of a sequestration order is to secure the just and ____ distribution of a debtor's assets where they are insufficient to meet the claims of all his creditors legislature the Master is a 'creature of statute' and as such has only the powers granted to him by the _____ dispose The debtor may not make a contract which purports to ____ of any property of his insolvent estate final On the receipt of a ______ sequestration order, the Master is obliged to convene immediately by notice in the Gazette, a first meeting of creditors of the estate abandonment According to section 2 of the Insolvency Act 24 of 1936, the term 'disposition' includes , amongst others, a transfer or ______ of rights to property retention (or lien) Broadly speaking, a party (Ben), has a right of ____ over specific property belonging to anther if he (Ben) has expended labour or incurred expenses in respect of the property impeachable there may be various reasons why an interested person wishes to apply for an order that automatic rehabilitation should not take place after the lapse of 10 years. It may, for example, happen that only just before the completion of the 10 year period the trustee becomes aware of some possible _____ dispositions interrogation A special meeting may be called for either of the following purposes: 1) proof of claims and 2) ______ of the insolvent voidable preferences In Hendriks NO v Swanepoel 1962, the legal position in respect of ________ was considered repudiate If the trustee elects to ____ the contract (or if he is deemed to have done so), the opposite party is precluded from obtaining an order of specific performance trader But the insolvent may not, without the consent in writing of his trustee, carry on, be employed in any capacity in, or have any direct or indirect interest in, the business of a _______ who is a general dealer or manufacturer free residue that portion of the insolvent estate which is not subject to any right of preference by reason of any special mortgage, legal hypothec, pledge or right of retention is also known as the _______ equally Although concurrent creditors rank equally, they do not necessarily receive the same amounts when the free residue of the estate is distributed. The dividend payable to concurrent creditors amounts to a certain ______ of cents in the rand employment When an employment contract between an employer and employee is suspended in terms of section 38(1) of the Insolvency Act, amongst other things, no ______ benefit accrues to the employee in terms of the contract value Examples of dispositions not for ___ are a donation and a payment for a promise which the promisor cannot be compelled to carry out. To qualify as "value" the reciprocal benefit need not be monetary or tangible one pledge a valid ____ is constituted where there is delivery of movable property to a creditor on the understanding that it will be retained by him until his claim has been satisfied fictitious a company is a ____ person that has a legal personality separate from the members of the company True In common parlance, a person is insolvent when he is unable to pay his debts. But the legal test if insolvency is whether the debtor's liabilities, fairly estimated, exceed his assets, fairly valued False Publication if the notice in the gazette and a newspaper must take place not more than 30 days and not less than 18 days before the date stated in the notice as the date for the hearing of the application True Section 9(1) allows for proceedings for the compulsory sequestration of a debtor's estate to be instituted by two or more creditors (or their agents) who have liquidated claims against the debtor amounting in aggregate to not less than R200 False If the trustee elects to set aside a contract, he may not recover any performance rendered by the insolvent False The Insolvency Act deprives a debtor of his contractual capacity and the debtor generally has no competency to make binding agreements True It has been held by a majority of the Constitutional Court that section 21 of the Insolvency Act does not impair the fundamental dignity of solvent spouses True As far as ranking is concerned, a secured creditor (e.g a mortage bondholder) is in the strongest position, because his or her claim is paid first out of the proceeds of a certain asset which serves as security for that claim True Because of the principle of "huur gaat voor koop", the trustee cannot, as a rule, repudiate a lease of immovable property concluded by the insolvent as lessor and must realize the property subject to the lease True An insolvent estate, for purposes of distribution, consists of the proceeds of both the encumbered and unencumbered assets True One effect of the principle of the separate legal personality of the company is that the assets and liabilities of the company are the assets and liabilities of the company and not of the members of the company false If the insolvent has been convicted of a fraudulent act in relation to his insolvency, he may apply for rehabilitation after two years have elapsed from the date of his conviction false An application to surrender a partnership estate must, as a rule, be brought by only one partner false A concurrent creditor enjoys advantage over other creditors of the insolvent True / false Unlike in the case of a company, no provision is made for the appointment of a provisional liquidator for a close corporation true The application for compulsory business rescue suspends any liquidation proceedings involving the company True The court may accept the surrender of a debtor's estate only if it is satisfied that ,amongst others, sequestration will be to the advantage of creditors false The sequestration of an employee's estate does not suspend the employment contract between him and his employer true An application for compulsory sequestration brought by a creditor who is not at arm's length is generally referred to as a 'friendly' sequestration true The purpose of the first meeting of creditors is to enable creditors of the estate to prove their claims against the estate and elect a trustee false a valid pledge is constituted where there is adelivery of immovable property to a creditor on the understanding that it will be retained by him/her until the claim has been satisfied true In Prinsloo v Van Zyl 1967, the offer of composition was accepted only by a majority in value, and so there was no valid acceptance, and thus no valid composition false the sequestration of a partner's estate does not terminate the partnership True A person who has been convicted of fraud and been sentenced for it to a R100 fine is disqualified from being appointed as a liquidator True A liquidated claim is a claim for money, the amount of which is fixed by agreement, judgement or otherwise True Under section 34(3) of the Insolvency Act, Ilse's transfer of her jewellery business in July is void against Jack, who sued Ilse in the Magistrate's court in June for the purchase price of diamonds that he delivered to her for that business false As a general rule, a member of a close corporation must be a juristic person (a human being) false A concurrent creditor enjoys advantage over the other creditors of the insolvent false The free residue must be applied, in the first place, to defray funeral expenses Insolvent person prohibited from holding certain offices? - prejudice to public interest - greater amount of trust & responsibility is required - if possibility of dishonest business practices exists Ensor NO v Rensco Motors 1981 FACTS - debtor had business whereby he sold Mazda parts - trustee wanted to impeach them ito S34 ISSUE - was it an S34 disposition? HELD - no, was in the ordinary course of business - onus on trustee to prove that it was not in the ordinary course of business - the trustee could not discharge this onus advantage of creditors In an application for voluntary surrender, the debtor's founding affidavit must allege that it will be to _____ if the debtor's estate is sequestrated resided The debtor need not have ordinarily _____________ or carried on business for the entire 12 months preceding the sequestration application: ordinary residence or conduct of business at any time during that period suffices. monetary claim A ‗liquidated claim' is a________________, the amount of which is fixed by agreement, judgment, or otherwise (Kleynhans v Van der Westhuizen NO 1970 (2) SA 742 (A)). liability In relation to section 8(e) of the Insolvency Act, the object of the arrangement or offer must be to release the debtor from _____________________, wholly or in part. trustee The function of the ____________ is to collect the assets in the estate, realize them, and distribute the proceeds amongst creditors in the order of preference laid down by the Act. lessor Because of the principle of ―huur gaat voor koop‖, the trustee cannot, as a rule, repudiate a lease of immovable property concluded by the insolvent as ___________ and must realize the property subject to the lease. solvent Section 21 of the Insolvency Act applies only where there is, indeed, a _____________ spouse. collusion Section 21 was introduced to prevent, or at least hamper, ______________ between spouses to the detriment of creditors of the insolvent estate. stolen money A disposition may be made "in the ordinary course of business" if duly made in terms of a valid contract, even though the insolvent's overall business model is illegal and the payment is made with ____________ (Gazit Properties v Botha & others NNO 2012 (2) SA 306 (SCA)). employer When an employment contract between an ____________ and employee is suspended in terms of section 38(1) of the insolvency Act, amongst other things, no employment benefit accrues to the employee in terms of the contract. retention Broadly speaking, a party (Tenza), has a right of ____________ over specific property belonging to another if he (Tenza) has expended labour or incurred expenses in respect of the property. trustee By means of a system of meetings, the insolvent's creditors, inter alia, establish their claims, elect a trustee, and give directions to the ___________ on the winding up of the estate. writing One of the grounds on which the Master may remove a trustee from office is if the majority of creditors has requested in ___________ that the trustee be removed. value In Estate Wege v Strauss 1932 AD 76 the court rejected the argument that no value was received, because a payment which is made in terms of an invalid agreement cannot be regarded as value. In reaching its decision the court held that the word _________ carries its ordinary meaning. sequestration The decision in Pretorius NO v Stock Owners' Co-operative Co Ltd 1959 (4) SA 462 (A) indicates that the trustee is seldom able to prove directly that the insolvent, when making the disposition, realised that ________________ was substantially inevitable. preference The ‗free residue' is defined as that portion of the estate which is not subject to any right of _____________ by reason of any special mortgage, legal hypothec, pledge, or right of retention. equally; proportion Although concurrent creditors rank __________, they do not necessarily receive the same amounts when the free residue of the estate is distributed. The dividend payable to concurrent creditors amounts to a certain _________ of cents in the rand. realizing The costs of sequestration include costs incurred by the trustee in maintaining, conserving and ___________ unencumbered assets. declaratory order The court considered the aspect of ________________ in the case of Vorster v Steyn 1981(2) SA 831 (O). rehabilitated An insolvent not rehabilitated by the court within a period of 10 years from the date of sequestration of his estate is deemed to be _______________ unless the court, on application by an interested person, orders otherwise prior to expiry of the 10-year period false In common parlance, a person is not insolvent when he is unable to pay his debts. false The law proceeds from the premise that, once an order (or provisional order) of sequestration is granted, a concursus creditorum (‗coming together of creditors') is established, and the interests of creditors as a group enjoy concurrent claims over the interests of individual creditors. true The joint estate of spouses married in community of property is an estate for purposes of insolvency. A debtor who is married in community of property does not have a separate estate which can be sequestrated, even where he (or she) is carrying on a business independently of his (or her) spouse. false A liquidated claim is a claim for goods, the amount of which is not fixed by agreement, judgment, or otherwise. true A debtor who has no assets and only liabilities cannot surrender his estate. true In Amod v Khan 1947 (2) SA 432 (N) the debtor had a claim against the applicant's son which was larger than the claim of the applicant against the debtor. The sequestration of the debtor's estate would have meant that he himself (the debtor) would no longer have been able to enforce his claim against the son. true While Sam is under sequestration she breaks Tim's jaw in a fist-fight and so Sam, not the trustee of Sam's insolvent estate, may now be sued by Tim for delictual damages. false A ―disposition‖ includes a contract providing for the alienation or abandonment of rights to property. false Where spouses are married in community of property their creditors may recover debts from both of them, and not only from each spouse's undivided interest in the joint estate, but also from his or her separate estate outside the joint estate. true A solvent wife will not be able to obtain the release of property which was donated to her by her husband while she knew that he was going to apply for the voluntary surrender of his estate. true Once he has decided to uphold or to repudiate the contract the trustee may not change his mind. false After the Master has received a final sequestration order the creditors must immediately convene (cause to come together) a first meeting of creditors by notice in the Government Gazette. true In terms of the Insolvency Act, the Master has the power to confirm, or to refuse to confirm, the appointment as trustee of any elected or nominated person. false If the trustee wishes to set aside a voidable preference under section 29 of the Insolvency Act he or she must prove that the insolvent intended to prefer one of his or her creditors above another. true A person's estate is sequestrated, but his person is rehabilitated liabilities; assets; liabilities; assets A person may be insolvent in the sense that his.................................... exceed his ..............................., even though his estate has not yet been sequestrated. In fact, sequestration will usually be applied for only when the .................................. already exceed the ..................................... fair distribution; competing creditors The sequestration procedure is aimed mainly at achieving a .......................................... of the available assets among .....................................of the debtor. liquidated; sequestrated An external company may be .................................................. in South Africa (in terms of the Companies Act 61 of 1973) if it has a place of business in South Africa. If it does not have a place of business in South Africa, its estate may be in South Africa under the Insolvency Act, if a South African court has jurisdiction in terms of section 149 of the Insolvency Act. Special mortgage" means a mortgage bond hypothecating any immovable property What is the meaning of "special mortgage" as defined in section 2 of the Insolvency Act 24 of 1936? creditors; court order formal defect in an application for sequestration will be fatal if the defect causes a substantial injustice to ................................................... and that prejudice cannot be put right by a ............................................... false In insolvency law, the only estate that is excluded from the meaning of "estate" is an estate that consists of liabilities only. false An act of insolvency includes a disposition made by a debtor which has or would have the effect of prejudicing his or her debtors or preferring one debtor above another (section 8(c) of the Insolvency Act 24 of 1936). false An unrehabilitated insolvent may only with the authority of the court be a member of the National Assembly. false As a general rule, sequestration suspends a contract of employment when the estate of the employee is sequestrated true The trustee may at any time convene a general meeting of creditors. true The trustee's right to repudiate is excluded where he obtains transfer of immovable property which the insolvent bought and resold (without receiving transfer) prior to sequestration false There are four types of debtors' meetings: (1) the first meeting (2) the second meeting (3) a special meeting (4) a general meeting true The Insolvency Act sets out specific circumstances under which a disposition of the insolvent's property may be set aside, but this does not deprive creditors of their right under the common law to set aside a disposition which is in fraud of creditors. false If certain requirements are met, section 88 of the Insolvency Act 24 of 1936 will deprive a bondholder of his preference, but this section applies only to notarial mortgage bonds. false Secured claims rank among themselves in the following order in respect of immovable property: • debtor and creditor lien; • special mortage bond(s) and contract recorded in terms of the Alienation of Land Act 68 of 1981 in the order in which they were registered or recorded; • enrichment lien. true If the compromise involves a sale of assets by the provisional trustee, permission of the Master must be obtained for the sale. false One of the effects of rehabilitation is that it affects the rights, duties and powers under a composition, as well as the liability of a surety for the insolvent. false A private company may be wound up by the court if the number of its members has fallen below seven. false a private company must have at least one member, but not more than 30 members false A notice of surrender published in the Government Gazette can be withdrawn without the written consent of the Master. true The Master or creditors representing one-quarter of the value of all claims proved against the insolvent estate may require the trustee to call a general meeting. false A company may be wound up by the court if 55 per cent of its issued share capital has been lost or has become useless for its business true A company, a close corporation, or other body corporate are all disqualified from being a trustee in any insolvent estate. false At the second meeting of creditors, creditors who have proved their claims may elect one or two trustees. true A person who has been convicted of fraud and been sentenced for it to a R100 fine is disqualified from being appointed as a liquidator. false A voidable contract has no legal force. false An insolvent convicted of fraud in relation to his insolvency may apply for his rehabilitation only after five years have elapsed from the date of the sequestration of his estate. false In an application for compulsory sequestration, it is possible to infer that the debtor is insolvent merely because he asked the creditor for time to pay the debt. false The free residue is applied to defray the expenses of the funeral of the insolvent and the funeral of the insolvent's wife or minor child, and those expenses enjoy preference to a maximum amount of R500. true In Prinsloo en n ander v Van Zyl NO 1967 (1) SA 581 (T), the offer of composition was accepted only by a majority in value, and so there was no valid acceptance, and thus no valid composition. false The insolvent who is applying for rehabilitation and also seeking a declaratory order regarding property is required to serve a copy of the relevant notice upon proved creditors but not upon unproved creditors. creditors Insolvency law provides a procedure for dealing fairly with the claims that the unpaid _____________________ of the insolvent person have against the insolvent estate. Insolvency law also protects the debtor from being harassed by his or her creditors. person's The terms 'sequestration' and 'sequestration order' should strictly be used only with reference to a ______________________ estate. A debtor's estate is sequestrated, not the debtor himself. advantage The court may accept the surrender of a debtor's estate only if it is satisfied that the debtor's estate is in fact insolvent, that the debtor own realizable property of sufficient value to defray all the costs of the sequestration which will, in terms of the act be payable out of the free residue of his estate. It must also be shown that sequestration will be to the _________________ of creditors. assets In Ex parte Harmse, the applicant's statement indicated an excess of _______________over liabilities, but the only evidence that he adduced to prove otherwise were certain letters written by estate agents or valuers confirmed The sequestrating creditor has to approach the court twice; once to obtain a provisional order and the second time to have the provisional order ____________________ and made final. sequestrating An act of insolvency need not be committed vis-à-vis the ______________________ creditor high court Only a ______________________ has jurisdiction to wind up a company. bona fide Another category of property which the trustee must release is that acquired by the solvent spouse under a marriage settlement (s 21(2)(b)). The solvent spouse need not prove that the settlement was _____________________. fact The question whether the trustee has elected to abide by the contract is one of_____________, not law. retention Broadly speaking, a party (Ben), has a right of ___________________over specific property belonging to another if he (Ben) has expended labour or incurred expenses in respect of the property. impeachable There may be various reasons why an interested person wishes to apply for an order that automatic rehabilitation should not take place after the lapse of 10 years. It may, for example, happen that only just before the completion of the 10-year period the trustee becomes aware of some possible _______________________ dispositions. reciprocally However, by electing to uphold the contract, the trustee becomes liable to perform only what is ________________________due to the other party. competence The Supreme Court of Appeal has now laid down authoritatively that the beneficiary in this type of case merely has a _________________________________or power to accept the inheritance or benefit in question and that, until he does so, it does not form part of his estate (Wessels NO v De Jager en 'n ander NNO 2000 (4) SA 924 (SCA) 928). intended It is not necessary to establish whether or not the insolvent __________________________ to prejudice creditors by making the disposition: the object of s 26 is simply to prevent a person in insolvent circumstances from impoverishing his estate by giving away assets without receiving any appreciable advantage in return (cf Estate Wege v Strauss 1932 AD 76 84). preferent Concurrent creditors are paid out of the free residue after any_________________________ creditors have been paid. composition As a rule, an insolvent must wait for a certain period of time before he may apply for his rehabilitation. However, where an offer of _____________________________has been accepted, the insolvent may be entitled to apply for his rehabilitation immediately. criminal It is a _________________________offence for a person to accept a benefit as consideration for agreeing to, or for not opposing, a composition (s 141).