MCL5903
ASSIGNMENT 1 SEMESTER 1 2026
UNIQUE NO. 270885
DUE DATE: 15 MAY 2026
, Corporate Insolvency Law - MCL5903
Assignment 01 (2026)
Introduction
Corporate insolvency law governs the circumstances under which a company may be
liquidated and the legal consequences thereof. Central to this area of law is the
distinction between solvency and insolvency, as well as the statutory and judicial
grounds upon which a company may be wound up. This assignment analyses these
principles with reference to applicable legislation and case law, and further considers
alternative remedies where liquidation is not appropriate.
Question (a)
Legal Meaning of “Solvent” and “Insolvent”
Under South African law, the determination of whether a company is solvent or
insolvent is based on two key tests:
1. Factual (Commercial) Insolvency
A company is considered factually insolvent when its liabilities exceed its assets.
This is a balance-sheet test.
If total debts are greater than total assets, the company cannot satisfy all
creditors in the long term.
This is the traditional understanding of insolvency.
ASSIGNMENT 1 SEMESTER 1 2026
UNIQUE NO. 270885
DUE DATE: 15 MAY 2026
, Corporate Insolvency Law - MCL5903
Assignment 01 (2026)
Introduction
Corporate insolvency law governs the circumstances under which a company may be
liquidated and the legal consequences thereof. Central to this area of law is the
distinction between solvency and insolvency, as well as the statutory and judicial
grounds upon which a company may be wound up. This assignment analyses these
principles with reference to applicable legislation and case law, and further considers
alternative remedies where liquidation is not appropriate.
Question (a)
Legal Meaning of “Solvent” and “Insolvent”
Under South African law, the determination of whether a company is solvent or
insolvent is based on two key tests:
1. Factual (Commercial) Insolvency
A company is considered factually insolvent when its liabilities exceed its assets.
This is a balance-sheet test.
If total debts are greater than total assets, the company cannot satisfy all
creditors in the long term.
This is the traditional understanding of insolvency.
