Security Insolvency

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  UNIVERSITY OF KWA- ZULU NATAL, PIETERMATIZBURG EXAMINATIONS: NOVEMBER 2007 SUBJECT, COURSE AND CODE: SECURITY AND INSOLVENCY (LAWS4SI) DURATION: 2 HOURS TOTAL MARKS: 70 External Examiner: Mr MA Essa Internal Examiners: Ms S Soni STUDENTS ARE REQUESTED, IN THEIR OWN INTERESTS, TO WRITE LEGIBLY SPECIAL INSTRUCTIONS TO STUDENTS: 1. This paper consists of (THREE) 3 pages. Please ensure that you have all pages. 2. This paper consists of three questions. Answer ALL questions. QUESTION 1 (20 MARKS) 1. Write a note on each of the following: (a)   The different types of mortgage bonds (10 marks) (b)   The principal debtor’s obligation to reimburse the surety for discharging the principal debt. (5 marks) (c)   The differences between a mortgage and a pledge. (5 marks)   UNIVERSITY OF KWA- ZULU NATAL, PIETERMATIZBURG EXAMINATIONS: NOVEMBER 2007 SECURITY AND INSOLVENCY PAGE 2 QUESTION 2 (20 MARKS) 2.1 Superman returns from a long and arduous journey to the planet Argon. In a flaming orb he crash lands on the lawn of the law school building. He seems delirious, and as you approach he shouts, “Tell me the differences between an undue preference and a voidable preference… if you don’t, planet Earth will be destroyed!” You have always fancied yourself a hero. Write a note in which you explain to Superman, the differences between a voidable preference and an undue  preference. (5 marks) 2.2   You have just had an insolvency lecture on interrogations. Your brain is completely taxed, and so you head down to the Big Chill to mellow out. A stranger sits down next to you. He introduces himself as Shabby Shake and  proceeds to bore you with the details of his life. Just as you are about to leave, Shabby Shake tells you that he has been summoned to appear at an interrogation at the Master’s office later in the day. He doesn’t know what to expect. He asks you for advice. Write a note on interrogations, in which you discuss the following: (a)   Who will interrogate him? (b)   What procedure the interrogation will follow? (c)   What types of questions Shabby Shake will be asked, as well as questions which he cannot be asked? (d)   Whether he has a right to a list of questions that he will be asked beforehand. (e)   What happens if Shabby doesn’t want to answer a particular question, or if he  just doesn’t appear at the interrogation? (15 marks)   UNIVERSITY OF KWA- ZULU NATAL, PIETERMATIZBURG EXAMINATIONS: NOVEMBER 2007 SECURITY AND INSOLVENCY) PAGE 3 QUESTION 3 (30 MARKS) 3.1 Montana Max’s estate has been sequestrated on application by his creditors. A trustee has been appointed. Montana Max runs an exotic dance club and has a number of employees. The employees are concerned that their employment contracts will be terminated. In light of the situation, advise them as to the  position regarding their employment contracts. (5 marks) 3.2 Write a note in which you list and explain the different types of creditors that exist, and how their claims are ranked. In the course of your answer you must also explain from which part of the estate each creditor receives payment, if at all. (10 marks) 3.3 Write a note on the circumstances in which an insolvent may apply for rehabilitation, and why the court may refuse to grant such an order. In the course of your answer you must refer to  Ex Parte Porrit 1991 (3) SA 866 (N). (15 marks)  
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