NAME NYASHADZASHE.GRACE.

SURNAME ZHOU

STUDENT NUMBER 19000703

MODULE CODE LNS 3641

MODULE LAW OF INSOLVENCE

LECTURER DR C. SIMBO

SUBMITION DATE 23NOVEMBER 2021 NOON

TAKE HOME 1
QUESTION ONE:

1. According to the matrimonial property Act when a couple is married of

community of property their property is in a joint estate. Which mean that the
property is subject to both parties. While the law of insolvency aims to
disperse, the insolvent property to the debtors in a uniform manner which will
benefit all creditors. The insolvent is declared insolvent by the court with a
sequestration order. In this case his property is in community of property
hence his wife’s property is subject to the sequestration. Joint estate of
spouses married in community of property is an estate for purposes of
insolvency. Spouses are both debtors and on sequestration of their joint
estate they both become insolvent debtors for purposes of the Act. Separate
estates of both spouses must be sequestrated. Property inherited by a spouse
to a marriage in community of property forms part of insolvent estate, even if
will contains provision specifically excluding property from any community of
property. Section 20 (2) of the Insolvency Act provides that the estate of an
insolvent person shall include all properties which he or she may acquire.
According to section 21(1) Property owned before marriage to the insolvent,
Property acquired under a marriage settlement, property acquired by marriage
settlement during the marriage, property protected under certain other
provisions and property acquired with proceeds of the above can be released
after application to the court on vesting of property.

In the case of Badenhorst v Bekker a beneficial the wife inherited property

when they were married in community of property and her husband was
sequestrated. The court declared the inherited property to form part of the
joint estate even when her father in the will stated that “no hopes and right of
the beneficiary under this will or part thereof shall be attachable by any
creditors vest in the beneficiary trustee on insolvency”. Both parties became
automatically be sequestrated as their estate is joint. the fact that jane
managed the estates differently is irrelevant in the court of law. in the case of
Harksen v Lane it was stated that the wife or husband is supposed to be
aware of what the partner is doing. Hence Jane unless proved that she
obtained the property before marriage and that they changed their
 matrimonial property regime, the creditors must be notified as affected parties.
The spouse must sign a surety for the insolvent party and the solvent spouse
will be called upon to contribute to settling the claims of the creditors. The
claim of changing the marital status must be evaluated by the court. in the
facts provided of jane and Tarzan they never changed their status; she is
subject to the sequestration as they have a joint estate.

QUESTION 2

A liquidator is appointed by the court to evaluate if the creditor’s will take the offer
that is in their disadvantage, the law of insolvency seeks to protect the creditor from
debtors hence their opinion is considered is decision making. If the liquidator
considers that creditors are unlikely to accept the offer, or that he has insufficient
information at his disposal to make a recommendation, he must inform offeror in
writing that the offer is unacceptable and that he doesn’t propose circulating it to the
creditors. When circulating an offer of composition, the liquidator must notify
creditors of the meeting at which the offer will be considered.

At any time after commencement of liquidation of a constitutional court unable to

pay its debts, any person may submit a written offer of composition to liquidator. If
liquidator considers that creditors will probably accept offer, he must send a copy of
the offer, together with his report thereon and an explanation of the effect of the
composition, to every known creditor and Master. The meeting may only be held
once a final winding-up order has been made. Once accepted, the composition binds
every person who had notice and was entitled to vote at the meeting, provided that, it
was accepted by 2 /3 in number and value of creditors who proved claims against
the CC, payment under the composition is made or secured as specified in the offer,
the rights of secured or preferent creditors are not prejudiced unless in writing.
Composition may provide for winding-up to be set aside by court and, if so, the
offeror may apply to court for the relevant order. Onani Peterson must advertise a
notification at least at 3 weeks before application, in the Gazette and serve copies of
application on Master, RCC and liquidator.

However, the offeror’s application may be opposed by a creditor or interested

person on the grounds that, the composition unfairly harms the interests of the
creditor, the meetings for considering the composition involved a material irregularity,
insufficient or materially inaccurate information about the composition was disclosed;
or there is another ground which the court may deem sufficient. Given the fact that
he was in prison on murders charges and his money that he wants to pay debt is a
donation. His career of athletics due to his criminal record has been damaged and
years on prison hence upon evaluation the offer is better even it will harm the
creditors.

QUESTION3.

Disposition any transfer or abandonment of rights to property including, inter alia,

sale, lease, pledge, delivery, payment however, not including a disposition in
compliance with a court order.it is movable or immovable property excluding
fideicommissary legatee property. Formerly, it was uncertain whether a repudiation
of an inheritance or insurance benefit was a disposition for the purposes of the Act.
The ad decided that the beneficiary merely has the competence to accept the
inheritance/benefit in question and that until he does so it does not form part of his
estate. A disposition includes a contract for alienation of rights to property which is
called an uncompleted disposition. A disposition in compliance with a court order is
not included in the definition of disposition, for example a pay a contractual debt to
tom tomatoes.

according to section 26 dispositions without value can be set side while in terms of
s29 (1), the court may set aside a disposition made by the insolvent not more than 6
months before sequestration of his estate or on his death if the disposition had the
effect of preferring one creditor above another and immediately after the disposition,
his liabilities exceeded his assets. The trustee has the onus of proving these.in this
case where Charlie the insolvent, instead of paying after 60 days based on the
contract, they demanded payment and he paid the trustee can set aside the
disposition to tom tomato on the ground that it had the effect of preferring one
creditor above insolvent’s other creditors.

s31(1) states that a court can set aside a transaction entered by the debtor before
sequestration in terms of which he, in collusion with another, disposed of his property
in a manner which had the effect of prejudicing his creditors or preferring one above
the other. The element of collusion distinguishes this from voidable and undue
preferences. To succeed with s31 (1) the trustee must prove that the insolvent made
the disposition of his property, and the disposition was made in collusion with
another person. More so the trustee can recover from any person who was a party to
the disposition. Any loss which the disposition caused the insolvent estate and a
penalty in an amount determined by the court but not exceeding the amount by
which the party concerned would have been benefited if the disposition had not been
set aside,
that creditor guilty of colluding forfeits any claim he may have had against the estate.

Tom tomatoes have a defense of section 29 which can only be set aside if it was
made not more than 6 months before sequestration or insolvent’s death. The debtor
can be solvent when he makes it if he goes insolvent immediately thereafter.
Trustee to establish it’s a voidable preference by showing the disposition had the
effect of preferring one creditor above the others.

QUESTION 4.

Rehabilitation enables the insolvent to make a fresh start and free him from his
debts. It may take place automatically, by the lapse of a prescribed period or by
application to the court. When an insolvent isn’t rehabilitated within 10 years by the
court, he is deemed rehabilitated, unless the court, on the application of an
interested party, orders otherwise. If the court orders that an insolvent won’t
automatically be rehabilitated, the registrar must send a copy of the order to every
registrar of deeds and enter a caveat against the transfer of any immovable property.
On the other hand, within 10 years one can be rehabilitated, the Act sets out the
circumstances and procedures where the provisions of the Act have been complied
with the court isn’t obliged to grant rehabilitation. The insolvent has no right to be
rehabilitated, it’s in the discretion of the court.

Circumstances where rehabilitation can be sought:

 Composition of not less than 50c to the rand: the insolvent could seek an
order of rehabilitation, if he got a certificate from the master that the creditors
have accepted the offer of composition, in which payment has been made or
 security has been given of not less than 50c in the Rand for every concurrent
claim proved against the estate.

 Lapse of the prescribed period after confirmation of the 1 st account: the

insolvent can apply for his rehabilitation after 12 months have lapsed from the
confirmation by the master of the 1st account of the estate

 If the insolvents estate has been sequestrated B4, he can only apply
after 3 years

 If the insolvent is convicted of a fraudulent act in relation to his

insolvency or an offence, he can apply after 5 years.

 Insolvent can get an order of rehabilitation after 4 years of the date of

sequestration only if the master has recommended that he be
rehabilitated.

 No claims are proved after 6 months: insolvent can apply for his
rehabilitation after 6 months if:
 At the time of making the application no claim has been proved
against his estate.
 He hasn’t been convicted of any fraudulent act in relation to his
insolvency
 His estate hasn’t been sequestrated before and a full payment of all
the proved claims to the creditors set the insolvent free with a court
order.

Given that she has paid her debt to all creditors and has followed all the conditions in
which the court can rehabilitate her in less than 10 years which is expected to be an
automatic rehabilitation unless the court gives an order does not give the insolvent
automatic rehabilitation.