MRL3701 - EXAM PACK.
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OCTOBER / NOVEMBER 2019 EXAMINATION PAPER AND ANSWERS
QUESTION 1 - FILL IN THE BLANKS
(a) The term "debtor" also embraces a partnership, even one whose members are all JURISTIC
persons (2)
(b) The free residue includes the balance of the proceeds of ENCUMBERED
property after discharge of the encumbrances (2)
(c) A "liquidated claim " is a MONEY claim (2)
(d) An application for compulsory sequestration brought by a creditor who Is not at
arm's length Is generally referred to as a " FRIENDLY “sequestration (2)
(e) An insolvent may not without the written consent of the trustee carry on, be employed
in any capacity, or have any direct or indirect interest in the business of a TRADER
who is a general dealer or manufacturer (2)
(f) Dave Is a miner, and his right to a benefit or a GRATUITY o r money paid to him as a
miner, does not form part of his insolvent estate (2)
(g) The solvent spouse must, within 7 days of service, lodge with the Master a
statement of his/her affairs as at the date of sequestration, framed by the necessary
requirements and verified by affidavit (2)
(h) With regard to a contract completed by an insolvent, a right to performance held by
the estate lapses If the other party in good faith, andWITHOUT knowledge of the
sequestration, performs to the insolvent (2)
(I) Section 84(1) of the Insolvency Act provides that, on the sequestration of the buyer's
estate, the seller automatically acquires a HYPOTHEC over the res vend1ta, whereby the
balance outstanding under the agreement 1s secured (2)
(j) A general meeting cannot be convened solely for the purpose of
“INTERROGATING witnesses” (2)
(k) If the Master declines to confirm a party's election or to appoint him as trustee, he
must notify the party in WRITING and state the reasons for so declining (2)
(l) The object of section 26 is simply to prevent a person in insolvent circumstances from
impoverishing his estate by giving away assets without receiving any appreciable ADVANTAGE
in return
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(m) If the other party to a collusive disposition is a CREDITOR,he forfeits any claim that he may
have had against the estate (2)
(n) Under section 29(1), the court may set aside a disposition which the insolvent made at
any time before sequestration If he made the d1spos1t1on with the intention of
preferring one of his creditors above another (2)
(o) Compared to a common-law compromise, the main advantage of a statutory composition is that it
does not depend on the" PARTICIPATION” of all the creditors
(p) Examples of factors which may persuade the court to refuse an order of rehabilitation are
that the insolvent conducted his business in an improper and NEGLIGENT
manner
(q) A sequestration of a partner's estate, ipso ,ure, TERMINATES the partnership (2)
(r) " WINDING UP "means, essentially, the procedure by which a company's assets are sold,
its debts are paid, and any money left over is divided amongst the shareholders
according to their rights (2)
(s) Section 7(k) of the Companies Act 2008 provides for "the efficient rescue and recovery of
financially distressed companies, in a manner that BALANCES the rights and interests of
all relevant stakeholders" (2)
(t) There is always the risk that business rescue e proceedings
ABUSED
may be by a company with
no prospect of financial recovery to obtain a temporary relief from creditors (2)
Question 2
Indicate whether the following statements are true or false
a) An estate is usually conceived of as a collection of assets of a debtor for purposes of
sequestration - FALSE - IT’S A COLLECTION OF ASSETS AND LIABILITIES
b) The "costs of sequestration" only include the costs of surrender FALSE
-
c) The insolvency Act does not deprive a debtor of his contractual capacity generally and accordingly
the retains a general competency to make binding agreements, but subject to certain restrictions
on the debtor’s capacity - TRUE
d) Property inherited by a spouse to a marriage in community of property forms part of the
insolvent estate, unless the will contained a provision that specifically excluded the property
from any community of property – FALSE
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e) Section 21 of the Insolvency Act 24 of 1936 contemplates an existing relationship between
spouses If, prior to sequestration, the relationship between the spouses has been terminated,
then section 21 1s not applicable –TRUE
f) If a trustee elects to repudiate a contract, the opposite party can obtain an order of specific
performance If he has performed his own obligations in full -FALSE. THE OPPOSITE
PARTY IS PRECLUDED FROM OBTAINING AN ORDER OF SPECIFIC PERFORMANCE
g) The Insolvency Act 24 of 1936 provides that the work office of the trustee is the only venue
where the meetings of creditors must be held -FALSE. THE ACT MAKES NO PROVISION
REGARDING THE VENUE
h) To succeed in bringing the act, of Pauliana (a disposition made in fraud of creditors), the plaintiff
must prove that there was an intention to defraud -TRUE
I) If movable property has been delivered to a debtor under an instalment agreement, the seller
acquires, ownership over the property, on sequestration – TRUE
j) An insolvent may apply for his rehabilitation after 12 months have elapsed from the
confirmation by the Master of the first account m the estate. If the insolvent's estate has
previously been sequestrated, period of three years from the date of confirmation of the
first account must elapse before he can apply for rehabilitation - TRUE
k) If the court sequestrates the estate of a partnership, It Is not bound to also sequestrate
the private estate of every member of the partnership – FALSE-IT IS BOUND
l) In Rand Air (pty) Ltd v Ray Bester Investments (Pty) Ltd 1985 (2) SA 345 0N) It was
decided among other things, that a summons Is actually a demand as contemplated by
section 345(1)(a) of the Companies Act - TRUE
m) A close corporation cannot be placed in business rescue. -FALSE - IT CAN
n) During the period of sequestration, only the Master may be compelled to appear to give
information that he considers desirable about the insolvent or his estate or the
administration of the estate or about any claim or demand against the estate F A L S E
