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

Question

A. The Insolvency Act applies to aspects of both sequestration and liquidation procedures.

B. The law of insolvency exists primarily for the benefit of the insolvent.

C. When the word insolvent describes a debtor, it carries two possible meanings: either that the debtor's estate was sequestrated or that his liabilities exceed his assets.

D. A sequestration order is 'not an ordinary judgment entitling a creditor to execute against a debtor'.

E. The liquidation process is regulated by the Insolvency Act.


All the statements are incorrect.


Statements A, C and E are correct.


Statements B, C and D are correct.


Statements B, C and E are correct.


Statements A, C, and D are correct.

Answer 1

The best combination of statements is:

Statements A, C, and E are correct.

• Statement A is correct because the Insolvency Act indeed applies to both sequestration (which is generally related to individuals) and liquidation (usually pertaining to companies).
• Statement C is correct, as being insolvent can refer to a situation where liabilities exceed assets or to a formal sequestration of the debtor's estate.
• Statement E is correct because the liquidation process is indeed regulated by the Insolvency Act.

Statements B and D have problems:

• Statement B is less accurate because while the law of insolvency does consider the rights and needs of the insolvent, it also balances the interests of creditors.
• Statement D, while capturing some truth, might be misleading because a sequestration order can be seen as granting certain types of rights to the creditor, so it's not entirely correct to say it is "not an ordinary judgment."

Thus, the combination of A, C, and E presents the most accurate statements regarding insolvency.