The question is whether statutory preferences given to certain creditors can be challenged on constitutional grounds related to equality. In South African law, creditors who hold a real security interest in a debtor's asset have priority over the proceeds from its sale, excluding other creditors. However, I argue that laws allowing certain creditors, usually considered equal, to have preference over others raise concerns about potential unfair discrimination against concurrent creditors.
PARAPHRASE AND SUMMARISE:
The question arises whether priorities a¡orded, by statute, to the claims of certain
creditors will withstand possible constitutional challenge on the basis of the right
to equality. In South African law, a creditor to whom the debtor has granted a real
right of security over his or asset, or assets, has a prior claim upon the proceeds of
the sale of such asset, to the exclusion of other creditors. However, I submit that legislation which provides for the claims of certain creditors (who would ordinarily
rank as concurrent creditors) to receive preference over the claims of others, is problematic.49 If such treatment amounts to unfair discrimination against concurrent
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