Business Law Bankruptcy Act

8/13/2019 Business Law Bankruptcy Act

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B US IN ESS LAW // BANKRUPTCY ACT, 1997

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BANKRUPTCY ACT, 1997

01. What do you understand by Bankruptcy?Bankruptcy is also referred to as the insolvency. It means one unable to pay his debts. It has two conditions;

1. A person is to be debtor who does not have sufficient assets to pay off his debts ,2. He will do any act of insolvency.

02. What are the purposes of the law of bankruptcy?The purposes of the law are as under;

Distribution of assets of the insolvent rationally,

Settlement of all l iabilities of the insolvent to make him liab ility free,To save the interest of creditors,

New life s tarting of the insolvent.

03. Who may or may not be adjudged bankrupt?Or ~ There are certain institutions against which the court will not admit any petition under the Bankruptcy

Act. You are required to list such institutions.

Or ~ Which inst itutions are not subject to bankruptcy proceedings under the Bankruptcy Act, 1997?

Who declared insolvent/bankrupt:

As per Section 11of the Bankruptcy Act, 1997 any person who;

maintains his principa l business office or is domiciled in Bangladesh,

ordinary res ided, had dwelling house, or place of business in Bangladesh at any time with in a year

immediately before filing of the plaint,

generally carries on bus iness in Bangladesh by agent.

Who may not be declared insolvent/bankrupt:

Any Govt. organization or judicial body,

Any charitable or relig ious body,

Such statutory bodies whose principal objective is not financial gain,

Any autonomous body.

04. What are the considerations for filing pla int by debtors?A debtor shall not be entitled to file a plaint unless he specifically mentions in the plaint that he is unable to

pay h is debts and;

Further mention in the plaint that his debts amount to Tk. 20,000;

He is under arrest or imprisonment is execution of decree of court for the payment of debt by h im,

On order of attachment has been made in execut ion of such a decree.


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05. What is meant by discharge of a bankrupt?Discharge of Bankrupt means the insolvent is free from his all debts or claims against him. It requires an

order of the court or an application made to it to the effect that the insolvent is discharged of all debts &

claims etc.

06. Who are official receivers?The Government keeps an approved list of persons as receivers who are to be involved in cases of Section

64 of the Bankruptcy Act, 1997. As per Section 64 of the Bankruptcy Act, 1997; the court appoints official

receiver having general powers as conferred by Section 65 of the Act for administering the property of the

insolvent. The court may itself act as an official receiver under Section 70 of the Act .

07.

Can an infant be insolvent?

No, an infant cannot be declared as an insolvent .

08. What properties of a bankrupt debtor are exempted from attachment and sell under the Insolvency Act,1997?

Or ~ What are the exempted properties of an individual under Section 32 of Bankruptcy Act , 1997?

Exempted property as per Section 32 of Bankruptcy Act, 1997;

Tools used by the debtors,

Wearing apparels, household furnishing or accessories of himself, spouse or children,Debtors un-mortgaged dwelling house, subject to not exceeding 2,500 sft. land area (one or more

than one storied building) in the urban area or 5,000 sft. land area (one or more than one storied

building) in any other area subject to a maximum va lue of Tk 3 00,000.

09. Discus s the length if the following can be insolvent;An infant, foreigner, a married woman, joint debtor, company and a lunatic.

An infant.An infant cannot be declared insolvent.

Foreigner.A foreigner can be declared insolvent. He needs not to stay in Bangladesh at the time of petition

submitted for insolvency.Married woman.A married woman can be declared insolvent if her assets are insufficient to settle her

debts.

Joint debtor.Joint debtor can be declared insolvent by a single application be made to the court by the

creditors.

Company.A company can be declared insolvent.

Lunatic.A lunatic cannot be declared insolvent. But of any debt is created and act of insolvency is done at

the time of his being in sound position then he can be declared insolvent.


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10. What are the acts of insolvency?The acts of insolvency as per Section 9 of the Bankruptcy Act, 1997 are;

Transfer of all or substantially all his property for the benefit of creditors generally,

Transfer of property to anybody to defeat or delay the creditors demand,

Act of fraudulent performance,

Stay outside the country or goes to outside the country,

Absent himself from office or residence,

Escaped/hide himself from communication from the creditors,

Submit application of insolvency by the debtor to court,

If he g ives notice for suspension of payment of debt.

11. Enu merate the different types of debt? Which are entitled to priority in the distribution of the property of aninsolvent?

Out of the assets realized by the sale of the insolvents properties, the o fficial receiver must retrain such

sums as are necessary for meeting the costs, charges and expenses of administering the estate of the

insolvent. The balance is to be distributed among the creditors in the following order;

Payment must be made first to meet the following c laims;

Debts due to the Govern ment or any local authority,

Wages of any clerk, servant or labour employed by the insolvent for services rendered during four

months previous to the presentation of the insolvency petition, subject to the following limits;

Under the Presidency Towns Insolvency Act, Tk. 300 for a clerk and Tk. 100 for eachservant or labour,

Under the Provinc ial Insolvency Act, Tk. 20 for each.Under the Presidency Towns Insolvency Act, arrears of rent of the landlord for one month.

Arrears of co mpensation payable to a workman under the Workmen's Co mpensation Act.

The debts mentioned above rank equally and must be paid in full before any payment can be made for other

debts in full. If any assets are left after paying the preferential claims mentioned above, the balance is

distributed among the unsecured creditors ratably. In case of insufficiency a ll claims abateproportionately.

12. What is order of adjudication? What are the effects of an order of adjudication?

The order of court by which a person is declared to be insolvent is called the order of adjudication. Theorder of adjudicat ion has the following e ffects;

The bankrupt shall assist to the utmost of his capacity in the realization of his property and the

distribution of the proceeds among his creditors in accordance with the provisions of this Act,

All the property of the debtor except the exempted property shall stand vested in the receiver or

where no receiver has been appointed in the court and shall become divisib le among the creditors,

and the property so vested shall be known as the Estate,

The bankrupt is deprived of all powers to enter into transactions which will bind his creditors in

respect of his property, (Contd.)


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After adjudication, the receiver alone is entitled to deal with the bankrupts property and he alone

can give a title to a purchaser,

An order of adjudication shall be deemed to have taken effect from the date on which the petition

was presented.

13. What do you know about relation back, protected transaction, reputed ownership and onerous property?Doctrine of relation back.The insolvency is declared from the date of act of insolvency. The insolvency is

related with the pas t, this rule is known as doctrine of relation back.

Protected transaction.The transaction related with the property of the insolvent is not deemed as illegal

all that do not fall within the scope of official receiver is known as protected transaction.

Doctrine of reputed ownership.Subject to some terms and conditions, the official receiver can re-posses

any property which is kept under the custody of the insolvent. It is known as Doctrine of reputed

ownership.

Onerous property.Not found.

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Business Law Bankruptcy Act