UNIVERSITY OF SOUTH AFRICA
College of Law
MCL5903 – Corporate Insolvency Law
Assignment 01
Semester 1, 2026
Due Date: 15 May 2026
Unique Number: 270885
Total Marks: 20
Question Marks Allocated
Question (a) 10 marks
Question (b) 10 marks
Total 20 marks
Module: MCL5903 – Corporate Insolvency Law
Submission: Assignment 01
Semester: 1, 2026
Due Date: 15 May 2026
, MCL5903 – Corporate Insolvency Law Assignment 01 – Semester 1 2026
QUESTION (a) [10 marks]
Question: With reference to the applicable statutory framework and authoritative
case law, provide a detailed analysis of the legal meaning of “solvent” and “insolvent”
for purposes of company liquidation. On this basis, advise Gumdrops (Pty) Ltd on
the likelihood of Banca Ltd succeeding in its application for a winding-up order. (10
marks)
1. Factual Background
Gumdrops (Pty) Ltd (“Gumdrops”) is a confectionery distributor operating across
Gauteng. The company faces liquidity constraints and has fallen into arrears on a loan
advanced by Banca Ltd. Banca Ltd has initiated winding-up proceedings, alleging
indebtedness in an unspecified amount. The parties agree that Gumdrops’ long-term
prospects are poor. Crucially, however, its assets continue to exceed its liabilities.
2. Applicable Statutory Framework
The winding-up of solvent companies in South Africa is governed primarily by the
Companies Act 71 of 2008 (“the Act”), while the winding-up of insolvent compa-
nies remains regulated by the Companies Act 61 of 1973 (“the 1973 Act”), read
with the Insolvency Act 24 of 1936 where applicable. This dual framework contin-
ues pending the full commencement of Chapter 14 of the 2008 Act.
Section 344 of the 1973 Act sets out the grounds on which a company may be wound
up by the court. Relevant to this matter, section 344(f) provides that a company may
be wound up if it is unable to pay its debts. Section 345 of the 1973 Act defines the
circumstances under which a company is deemed unable to pay its debts, including
where a creditor to whom the company is indebted in a sum exceeding R100 has served
a written demand on the company and the company has failed for 21 days thereafter to
pay, secure, or compound the debt to the reasonable satisfaction of the creditor.
1
College of Law
MCL5903 – Corporate Insolvency Law
Assignment 01
Semester 1, 2026
Due Date: 15 May 2026
Unique Number: 270885
Total Marks: 20
Question Marks Allocated
Question (a) 10 marks
Question (b) 10 marks
Total 20 marks
Module: MCL5903 – Corporate Insolvency Law
Submission: Assignment 01
Semester: 1, 2026
Due Date: 15 May 2026
, MCL5903 – Corporate Insolvency Law Assignment 01 – Semester 1 2026
QUESTION (a) [10 marks]
Question: With reference to the applicable statutory framework and authoritative
case law, provide a detailed analysis of the legal meaning of “solvent” and “insolvent”
for purposes of company liquidation. On this basis, advise Gumdrops (Pty) Ltd on
the likelihood of Banca Ltd succeeding in its application for a winding-up order. (10
marks)
1. Factual Background
Gumdrops (Pty) Ltd (“Gumdrops”) is a confectionery distributor operating across
Gauteng. The company faces liquidity constraints and has fallen into arrears on a loan
advanced by Banca Ltd. Banca Ltd has initiated winding-up proceedings, alleging
indebtedness in an unspecified amount. The parties agree that Gumdrops’ long-term
prospects are poor. Crucially, however, its assets continue to exceed its liabilities.
2. Applicable Statutory Framework
The winding-up of solvent companies in South Africa is governed primarily by the
Companies Act 71 of 2008 (“the Act”), while the winding-up of insolvent compa-
nies remains regulated by the Companies Act 61 of 1973 (“the 1973 Act”), read
with the Insolvency Act 24 of 1936 where applicable. This dual framework contin-
ues pending the full commencement of Chapter 14 of the 2008 Act.
Section 344 of the 1973 Act sets out the grounds on which a company may be wound
up by the court. Relevant to this matter, section 344(f) provides that a company may
be wound up if it is unable to pay its debts. Section 345 of the 1973 Act defines the
circumstances under which a company is deemed unable to pay its debts, including
where a creditor to whom the company is indebted in a sum exceeding R100 has served
a written demand on the company and the company has failed for 21 days thereafter to
pay, secure, or compound the debt to the reasonable satisfaction of the creditor.
1
