INSOLVENCY A2
TOPICS 5-8
DANIELA MICHELE | MERCANTILE LAW 312 | MID- YEAR EXAMS
OVERVIEW
5. Collection of the estate assets (Mr Msutu)
Outcomes: After completion of this theme you should have full knowledge and
understanding of the following:
• The preservation of the estate pending the trustee’s appointment;
• The election of the trustee;
• The duties and powers of the trustee;
• The position in regard to impeachable dispositions;
• The duties of the insolvent.
Compulsory reading:
• Hockly’s chapter 8, paras 10.1 – 10.3 of chapter 10, chapters 11, 12 and 14;
• Cooper and another v Merchant Trade Finance 2000 (3) SA 1009 (SCA);
• Enyati Resources Ltd v Glaum NO & another 1989 (2) SA 314 (C);
• Gainsford and others v Tiffski Property Investments (Pty) Ltd 2012 (3) SA 35 (SCA);
• Gore & Another v Shell South Africa (Pty) Ltd 2004 (2) SA 521 (C);
• Griffiths v Janse van Rensburg & another NNO 2016 (3) SA 389 (SCA);
• Joosab v Ensor NO 1966 (1) SA 319 (A);
• Louw NO and Another v Sobabini CC and Others (3532/13) [2015] ZAECGHC 153 (28
January 2015);
• Pretorius’s Trustee v Van Blommenstein 1949 (1) SA 267 (O);
• Strydom NO & others v Snowball Wealth (Pty) Ltd & others [2022] ZASCA 91 (15
June 2022);
• Van Wyk Van Heerden Attorneys v Gore NO & another [2022] ZASCA 128 (30
September 2022)
6. Creditors and their ranking (Mr Msutu)
Outcomes: After completion of this theme you should have full knowledge and
understanding of the following:
• The meeting of creditors and proof of claims;
• The realisation of the estate assets;
• Creditors’ claims and their rankings;
• The estate accounts and the distribution of the estate.
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Compulsory reading:
• Hockly’s Chapters 9,15,16 and 17;
• Betterbridge (Pty) Ltd v Masilo and Others NNO 2015 (2) SA 396 (GP).
7. Composition and rehabilitation (Mr Msutu)
Outcomes: After completion of this theme you should have full knowledge and
understanding of the following:
• The common law compromise;
• An offer of composition in terms of section 119;
• The acceptance of a section 119-composition;
• The consequences of a section 119-composition;
• What rehabilitation entails: o Automatic rehabilitation;
Rehabilitation by the court;
The effects of rehabilitation;
Declaratory order regarding property.
Compulsory reading:
• Hockly’s Chapters 18 and 19;
• Ex Parte Fourie [2008] (4) All SA 340 (D)
8. Cross-border insolvency (Mr Msutu)
Outcomes: After completion of this theme you should have full knowledge and
understanding of the following:
• Main problems of cross-border insolvency
• South African common law of cross-border insolvency
• Cross-Border Insolvency Act
Compulsory reading:
• Hockly’s Chapter 29;
• Cross-Border Insolvency Act 42 of 2000
• UNCITRAL Model Law on Cross-border Insolvency
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1 IMPEACHABLE DISPOSITIONS
Section 26
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Section 29
Section 30
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Section 31
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Section 34
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In Summary:
What is then, an impeachable disposition?
o A [pre- sequestration] sale or transfer of an asset [property] made by the
debtor which may be set aside by the court
o “Disposition” is defined in S2:
Transfer or abandonment of rights to property
INCLUDES EXCLUDES
Property= Repudiation of inheritance =
- Immovable + movable - SCA: the beneficiary merely has
- Situated within + outside Republic. competence [power] to accept the
- “within” = extend it to property inheritance… until he does, it does
beyond territorial limits of court not form part of his estate
- Includes foreign assets - In repudiating [refusing to accept]
the beneficiary does not abandon
any right to property
A contract providing for the alienation Insurance Benefit =
or abandonment of rights to property = - Change of beneficiary under life
- [“uncompleted disposition”] insurance policy from insured
3rd party does not amount to a
disposition by the insured
- Nomination of 3rd party beneficiary
merely gives him a power
[competence] and is thus not a
transfer or an abandonment of a
right
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A contract of suretyship= Disposition made in compliance with
- Provides for the payment by the order of court=
debtor - Pmt of contractual debt / delivery
of property
- Would only be a disposition if the
court order was obtained by the
creditor by fraud or in collusion
with insolvent + intention of
prejudicing / preferring creditors
(onus on party seeking to set aside
disposition)
Issuing of a cheque by the insolvent=
- Where bank account is in credit ;
and
- Where he has been granted
overdraft facilities
Contract between the insolvent and
party indebted to him
- Party who owes the insolvent is
required to pay the amount of the
debt to a creditor of the insolvent
Arrangement between insolvent and
third party to lend money
- 3rd party required to pay the
amount of the loan into the bank
account of 3rd person
- Purpose is to channel the amount
to a creditor of the insolvent
There exist 5 types of impeachable dispositions:
1. S26: disposition without value
2. S29: Voidable preference
3. S30: Undue preference to creditors
4. S31: Collusive dealings before sequestration
5. S34: Voidable sale of business
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