Summary
Summary Mercantile Law 193 - Insolvency law Section B (S2)
- Course
- Institution
Complete and detailed summary of the entire section B: Insolvency law which formed part of semester 2.
[Show more]
1 review
By: alexprter • 3 year ago
Seller
Follow
LaurenMcJannet
Reviews received
Content preview
SECTION B – INSOLVENCY LAWCHAPTER 1 – Introduction
Factual insolvency
• Debtor unable to pay debts = commercial insolvency
• Debtors liabilities > assets = factual/technical insolvency
Legal insolvency
• Formal court order = sequestration order
• Debtor’s estate is declared insolvent
Purpose of sequestration order
• Fair and orderly distribution of assets after liquidation
• Meeting of creditors
• NB: Insolvency Act only deals with the insolvency of natural persons
What is being sequestrated?
1. Estate (not debtor himself)
§ Assets and liabilities
§ If only liabilities – compulsory sequestration
2. Marriages in community of property
§ Liabilities of one spouse exceed assets
§ Common estate sequestrated
3. Partnerships
§ Partnership as entity sequestrated
§ And separate estates of individual partners
Whose estate can be sequestrated?
1. Natural person
2. Deceased person
3. Partnership
4. Joint estate
5. Persons unable to take care of own affairs
6. Any institution that can hold property in its own name e.g. trust
• Insolvency act specifically excludes juristic persons e.g. companies
, Where is the state sequestrated?
• Only high court has jurisdiction on insolvency matters
1. Where debtor is domiciled
2. Where debtor owns property
3. Where debtor has usually resided or conducted business within 12 months
preceding the application
CHAPTER 2 – Sequestration of a debtor’s estate
Introduction
• Sequestration = process to dissolve the estate of the debtor i.e. to liquidate (sell)
all the assets and to release (pay) all debt
• Distinguish:
§ Voluntary surrender = debtor applies for sequestration
§ Compulsory sequestration = creditor(s) applies for sequestration of debtor
• Different processes, but same consequences
Voluntary surrender
• Who brings application?
§ Debtor/representative
§ Executor of deceased estate
§ All partners together (partnership’s estate)
§ Both spouses (married in community of property)
§ Curator bonis of a person unable to look after own affairs
• Requirements for application: (debtor must prove)
1. Substantive requirements
⇒ Estate actually insolvent
⇒ Enough funds/assets in free residue to cover sequestration costs
⇒ Sequestration will be to the advantage of creditors as a group
2. Formalities
⇒ Notice of surrender and statement of affairs
Substantive requirements (voluntary surrender)
1. Estate actually insolvent
§ Prepare a statement of affairs
§ List value of all assets and liabilities
§ Show that debts exceed assets
2. Sequestration costs
§ Paid out of free residue
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller LaurenMcJannet. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $3.28. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
50843 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now