Insolvency

Question 1

What is insolvency (3 conditions)

Answer 1

1. A financial condition / state
   2.in which a legal persons liabilities exceed their assets.
2. And can no longer meet their debt obligation

Question 2

Bankruptcy?

Answer 2

A legal procedure in which a person or. creditor bile a successfull-application to have them declared bankrupt.
Or via special resolution of that legalI entity bites to be declared bankrupt at the registrars office

Question 3

Sequestration?

Answer 3

Person is declared insolvent by high court who also appoints a trustee who follows the insolvency act and sells the persons assets to pay creditors

Question 4

Liquidation?

Answer 4

Legal procedures in which a company/close corporation is placed under control of a liquidator by the high court.following provisions in the companies act the liquidators job is to sell a companies assets in an orderly and equitable mannerthen dividing the proceeds among creditors

Question 5

‘what are the effects of sequestration?

Answer 5

1. Can’t enter into prohibitedcontracts they are voidable at the instance is voidable -
2. Can earn a living Get not as a trader without the written permission of the trustee can institute and defend legal actions unrelated to assets
3. Estate is vested in the trustee until compromise with creditors is reached or the insolvent is rehabilitated
4. Trustee is nominated at meeting of creditors,who has a responsibly to the masters of the high count ver proper exercises of his responsibilities

Question 6

Trustee has to release which property to solvent - spouse?

Answer 6

Property owned before marriage
Property acquired under marriage settlement
Property acquired via valid title during marriage
Note ( onus of proof is on the spouse or may apply for court relief )

Question 7

For voluntary surrender the court must be satisfied that?

Answer 7

1. The debtors estate is insolvent
2. Cost of sequestration can be met by the free residue of the estate
3. Sequestration will be at the advantage of creditors

Question 8

Acts of insolvency

Answer 8

1. Db is absent with intention to evade payment
   2.Db failed to satisfy judgement
2. Db is disposing or removing assets with intent or in a way that prejudices creditors

Question 9

Ranking of claims of insolvency?

Answer 9

Secured
Preferred
Concurrent

Question 10

Ranking of claims of insolvency of immovable, property

Answer 10

Enrichment lien
Special mortgage band
Debtors and creditors then

Question 11

Ranking of claims of insolvency of movable, property

Answer 11

Enrichment lien i
Pledge
Snb
Debt and cred lien
Sellers hypother

landlands hypother

Question 12

Referent creditor include

Answer 12

• Funeral expenses of insolvent
• death bed fees
• sheriff fees
• sequestration fees
• employee fees
• tax
• g.n.s claims

Question 13

Rehabilitation requirements

Answer 13

1. Compostion - agreement reached with creditor to pay 50CC on the Rand or giving new property as security of future payments
2. Paying off the debt
3. Time lapse of 1⃣0⃣ years with no creditors coming forward brain start of sequestration

Question 14

Give 5 impeachable dispositions (transactions)

Answer 14

1. Transactions with no value.
2. Preferring one creditor- within 6 mouths of sequestration,liabilities exceeded assets after, preferred I creditor over another
3. Intending to prefer- intention to prefer, liabilities exceed assets immediately after -
4. Collusive dispositions that prejudice or prefer- other party knew debtor was insolvent, effect of preferring or prejudice of other creditor
   S. Made in fraud of creditors