Choose the most correct statement or the best combination of statements as indicated in the options that follow the statements.

Question

A. A sequestration order is a formal declaration that a debtor is insolvent.

B. In order for a person to be financially insolvent, his estate has to be sequestrated.

C. The main objective of a sequestration order is to secure the orderly and equitable distribution of a debtor's assets where they are insufficient to meet the claims of all his creditors.

D. A person is insolvent when he has liquidity problems.

E. The law of insolvency exists primarily for the benefit of creditors.


All the statements are correct.


Statements B, C and E are correct.


Statements A, C and E are correct.


Statements A, C, and D are correct.


Statements B, C and D are correct.

Answer 1

The most accurate option is:

Statements A, C, and E are correct.

• Statement A accurately states that a sequestration order is a formal declaration of a debtor’s insolvency.
• Statement C correctly outlines that the main objective of a sequestration order is to ensure orderly and equitable distribution of a debtor's assets.
• Statement E reflects the principle that insolvency laws primarily exist for the benefit of creditors.

While statements B and D have some truth (insolvency often involves liquidity issues), they are not as universally applicable or precise in the context provided. Thus, the combination of A, C, and E captures the essential elements accurately regarding insolvency.