STUDY UNIT 10

Question 1

TYPES OF CREDITORS:

Answer 1

1. Concurrent Creditors
2. Secured Creditors
3. Preferent Creditors

Question 2

1. CONCURRENT CREDITORS:

Answer 2

-concurrent creditors do not enjoy any advantage over other creditors of the insolvent.
-they are paid out of the free residue after any preferent creditors have been paid.
-concurrent creditors all rank equal, if the free residue is insufficient to meet their claims, each receives an equal portion of his claim by way of a dividend.

Question 3

FREE RESIDUE:

Answer 3

means that portion of the estate that is not subject to any right of preference by reason of any special mortgage, legal hypothec, pledge or right of retention.

Question 4

2. SECURED CREDITORS:

Answer 4

-holds security for his claims in the form of a special mortgage, landlord’s hypothec, pledge or right of retention.
-is entitled to be paid out of the proceeds of the property under security, payment of certain expenses and any secured claims which rank before his.

Question 5

3. PREFERENT CREDITORS:

Answer 5

-the term preferent creditor may be used in the wide sense to refer to any creditor who is entitled to receive payment before other creditors.
-the term preferent creditor is reserved for a creditor whose claim is not secured but nevertheless ranks above the claims of concurrent creditors.

Question 6

WHOSE PREFERENCE IS CREATED IN TERMS OF THE ACT:

Answer 6

• S96 Funeral and death-bed expenses
  -S97 Costs of sequestration
  -S98 Costs of execution
  -S98A Salaries/wages of former employees of the insolvent
  -S99 Certain statutory obligations
  -S101 Income Tax

Question 7

TYPES OF SECURITY THAT GIVE PREFERENCE

Answer 7

1. Special mortgage
2. Landlord’s hypothec
3. Pledge
4. Right of retention
5. Installment agreement hypothec

Question 8

1. SPECIAL MORTGATE:

Answer 8

Section 88 lays down that a bond gives no security or preference if:
-the estate of the debtor was sequestrated within 6 months after the lodging of the
-bond with the Registrar of Deeds for registration;
-debts were incurred more than two months prior to the lodging of the bond, and
-the debts were not previously secured.

Question 9

2. LANDLORD’S HYPOTHEC:

Answer 9

a landlord owed rent has a hypothec over the movable property brought into the leased premises for use by the tenant and over all crops raised by the tenant in the premises.

Question 10

3. PLEDGE:

Answer 10

a valid pledge 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 is satisfied.

Question 11

4. RIGHT OF RETENTION:

Answer 11

a party has a right of retention over specific property belonging to another if he has expanded labour or incurred expenses in respect of the property.

Question 12

TWO TYPES OF LIENS:

Answer 12

1. Enrichment liens
   TWO KINDS: Salvage and Improvement liens
2. Debtor and creditor liens

Question 13

5. INSTALLMENT AGREEMENT HYPOTHEC:

Answer 13

if movable property is delivered to the debtor, the seller acquires on sequestration, a hypothec over the property that secures his claims for the outstanding balance under the property-s84(1).