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MRL3701 Assignment 2 2024| Due 20 Sept 2024
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MRL3701 Assignment 2 2024
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MRL3701ASSIGNMENT 2 2 024
DUE: 20 SEPTEMBER 2024
SEMESTER 2 2024
, ASSIGNMENT 02
OPENS FOR SUBMISSION: 13 September 2024
DUE DATE: 20 September 2024
QUESTION:
Simphiwe owes a total of R3 million to various creditors. His creditors include Tebogo to whom
he owes R400 000. He also owes R1,3 million to BFN Bank.
Last year Simphiwe invested in a get-rich-quick scheme and as a result he lost a lot of money.
This left him in a dire financial situation. By 31 October 2023 his liabilities exceeded his assets
by R800 000. Over the past few months Simphiwe has failed to pay some of his debts. In
particular he failed to pay the R400 000 he owes to Tebogo. This debt was due and payable
on 1 February 2024.
Disappointed at not having been paid back the R400 000 owed to her, Tebogo undertook
an investigation into Simphiwe’s financial situation. The investigation turned up unassailable
proof that Simphiwe had owed R100 000 to his father-in-law, and that Simphiwe repaid
R80 000 to his father-in-law on 3 February 2024. Mindful that he was technically insolvent
and that one of his creditors could apply for the sequestration of his estate at any time,
Simphiwe had wanted to ensure that whatever happened, his father-in-law would at least get
something from his estate. Hence, he repaid the loan that he had obtained from his father-
in-law even though the amount was only due and payable on 30 November 2024.
Tebogo has also established that Simphiwe owns a house in Mamelodi valued at R700 000,
household furniture valued at R300 000 and a motor vehicle valued at R800 000. Tebogo
applies for the compulsory sequestration of Simphiwe’s estate.
(a) Explain the concept of a voidable preference, and also discuss what a trustee
must prove in order to have such a transaction set aside by the court.
(a) Concept of a Voidable Preference
According to the section 29 of the Insolvency Act 24 of 1936, a voidable preference is a
disposition of property by an insolvent that prefers one creditor over others shortly before
the sequestration of the estate.
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