Summary
ISR310 STUDY UNIT 1: LECTURE NOTES + TEXTBOOK SUMMARY
- Institution
- University Of Pretoria (UP)
ISR310 STUDY UNIT 1: LECTURE NOTES + TEXTBOOK SUMMARY - VERY DETAILED
[Show more]
Content preview
ISR(IL – Insolvency Law)
Case law
Legislation
Examples
Definitions
Foundational concepts
Overview of total field of insolvency law
IL developed as special debt enforcement procedure to provide fair
distribution of debtor’s assets among creditor’s.
IL = totality of rules regulating the situation where debtor cannot pay
his debts where his total liabilities exceed his total assets.
SA has pro-creditor system:
o Protects creditors who are owed money.
o BUT still systems in place to protected debtor from being
unethically treated.
Secure creditors get paid BEFORE unsecure creditors.
Factual v commercial insolvency
Rules of IL does not apply to ALL who go insolvent.
Factual/actual insolvency:
o ‘balance sheet insolvency’ – for natural person.
o More liabilities than assets.
o Includes voluntary and compulsory sequestration:
Voluntary = debtor goes to court asking to be put in formal
insolvency system.
Compulsory = creditor asks court to put debtor in sequestration
process.
, Commercial insolvency:
o ‘cash flow insolvency’
o More assets than liabilities BUT cash flow is not enough to pay
debt (not enough liquid assets).
o Relates to companies.
Collection process – CREDITOR FOCUSED
When creditor/debtor applies for sequestration of debtor’s estate – it
activates the collective debt enforcement procedure:
o Pays dividend/potion of debts owed to ALL creditors instead of
only paying 1/2 creditors in full.
Sequestration order (SO) from the court initiates legal process of IL –
o SO prevents grab law (where creditors jump to taking everything
away from creditor – like clothes/bedding).
o SO allows court case against debtor to be suspended
(EVERYTHING IS FROZEN).
2 Options for debt collection:
o Individual collection (one-on-one payment) – If judgement debt not paid,
C sells D’s assets in auction
Creditor sues debtor (1 creditor). to satisfy judgment debt, if
C sends D letter If letter of demand C will get auction does not satisfy all
of demand doesn’t work, issues judgement debt debt, D still liable for that
summons shortfall.
Why is there individual debt collection? Sometimes debtor
disputes debt and wants to defend against summons.
Usually, debtor has enough money to pay debt but doesn’t
want to.
o Collective collection –
o Where debtor is insolvent (unable to pay debt) to multiple
creditors.
Distribution of available funds among
creditors (Some C’s might not get paid
due to lack of funds).
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 EFT, 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 this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller kiaradavey. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R50,00. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
51036 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy summaries for 15 years now