i e AT 1 of 1892 THE BANKRUPTCY CODE 1892

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1 i e AT 1 of 1892 THE BANKRUPTCY CODE 1892

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3 The Bankrupty Code 1892 Index i e THE BANKRUPTCY CODE 1892 Index Setion Page PREAMBLE 9 Preliminary 10 1 Short title Commenement of At [Repealed] Interpretation PART I 11 ACTS OF BANKRUPTCY AND PROCEEDINGS CONSEQUENT ON ADJUDICATION 11 Ats of bankrupty 11 5 Ats of bankrupty A Notie under s 5(ee) Bankrupty proeedings to ommene by petition Adjudiation of Bankrupty 13 7 Property of a bankrupt to vest in a trustee Reeiving order Stay of proeedings against a debtor on presentation of a bankrupty petition No priority under exeution after presentation of a bankrupty petition Disharge of Bankrupt Disharge of bankrupt Fraudulent settlements Effet of order of disharge Disharge may be annulled if obtained by fraud Composition or Sheme of Arrangement Composition or sheme of arrangement in substitution of bankrupty AT 1 of 1892 Page 3

4 Index The Bankrupty Code 1892 PART II 20 DISQUALIFICATIONS OF BANKRUPT Disqualifiation of bankrupts and 18 [Repealed] Power for Court to annul adjudiation in ertain ases Meaning of payment of debts in full PART III 22 ADMINISTRATION OF PROPERTY 22 Proof of Debts Desription of debts provable in bankrupty Mutual redit and set-off Partners and supplementary provisions Preferential laim in ase of apprentieship Power to landlord to distrain for rent Property available for Payment of Debts Relation bak of trustee s title Desription of bankrupt s property divisible amongst reditors Effet of Bankrupty on Anteedent Transations and 29 Restrition of rights of reditors under exeution Duties of Coroner as to property taken in exeution Avoidane of voluntary settlements Avoidane of preferenes in ertain ases Protetion of bona fide transations without notie Realisation of Property Possession of property by trustee Seizure of property of bankrupt Sequestration of elesiastial benefie Appropriation of portion of pay or salary Ations by trustee and bankrupt s partners Ations on joint ontrats Proeedings in partnership name Dislaimer of onerous property Powers of trustee to deal with property Powers exerisable by trustee with permission of Court Distribution of Property Delaration and distribution of dividends Joint and separate dividends Provisions for reditors residing at a distane, et Right of reditor who has not proved debt before delaration of dividend Final dividend No ation for dividend Power to allow bankrupt to manage property Page 4 AT 1 of 1892

5 The Bankrupty Code 1892 Index 50 Right of bankrupt to surplus Trustee to furnish list of reditors Statement of aounts to be furnished if required PART IV 37 Trustees in Bankrupty Clerk of the Rolls to appoint offiial trustees Deputy for offiial reeiver Duties of offiial trustee as regards the debtor s ondut Remuneration of Trustee Remuneration of trustee Costs Allowane and taxation of osts Reeipts, Payments, Aounts, Audit Payment of money into bank Trustee not to pay into private aount Aounts of trustee to be filed and audited The trustee to furnish list of reditors Books to be kept by trustees Annual statement of proeedings Release of Trustee Release of trustee Offiial Name Offiial name of trustee Control over Trustee Disretionary powers of trustee and ontrol thereof Appeal to Court against trustee Court may remove a trustee Appeals, et Appeals in bankrupty PART V 43 General Rules, Et General rules to be made A Fees and ommissions Formal Defets Formal defet not to invalidate proeedings The Crown Certain proeedings to bind the Crown Transitory Provisions Transfer of estates on vaany of offie of trustee in liquidation under the Bankrupty At, AT 1 of 1892 Page 5

6 Index The Bankrupty Code Transfer of outstanding property on lose of bankrupty or liquidation Transfer of estates from registrars of Court to offiial reeiver Proeedings under Bankrupty At, 1872, ss 95 and PART VI 44 Relief of Imprisoned Debtors An imprisoned debtor may be disharged on aounting for and surrendering his property PART VII 46 DEED OF ARRANGEMENT Deed of arrangement to whih At applies Registration of deed of arrangement Extension of time for registration Time for registration Deed of arrangement to be onfirmed by the Court Jurisdition of Court as to deed of arrangement Provisions as to trustee in Part IV to be appliable to trustees of deeds of arrangement Part III as to administration of property to apply to property administered under a deed of arrangement PART VIII 48 FRAUDULENT DEBTORS Offenes by debtors Undisharged bankrupt obtaining redit to extent of 20 to be guilty of misdemeanour Penalty for fraudulently obtaining redit, et [Repealed] Debts inurred by fraud Criminal liability after disharge or omposition Form of inditment A magistrate before whom a person is harged may onsider evidene as to guilty intent Power for Court to ommit for trial Punishments under this At umulative SCHEDULE 53 ENDNOTES 55 TABLE OF LEGISLATION HISTORY 55 TABLE OF RENUMBERED PROVISIONS 55 TABLE OF ENDNOTE REFERENCES 55 Page 6 AT 1 of 1892

7 The Bankrupty Code 1892 Index AT 1 of 1892 Page 7

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9 The Bankrupty Code 1892 Setion 1 i e THE BANKRUPTCY CODE 1892 Reeived Royal Assent: 28 June 1892 Promulgated: 5 July 1892 Commened: 5 January 1893 AN ACT to amend the Law of Bankrupty and Insolveny. GENERAL NOTES 1. Referenes to the High Court of Justie or any Division thereof are to be onstrued in aordane with the High Court At 1991 Sh Referenes to the Rolls Offie or offie for registry of deeds are to be onstrued in aordane with the General Registry At Referenes to hard labour are to be onstrued in aordane with the Custody At 1995 Sh 3 para See SD352/09 Rules of the High Court of Justie 2009 Sh 15.1 para 2 reprodued below: 2 In any statutory provision a referene (however expressed) to (a) (b) the superior jurisdition or summary jurisdition of the ourt or of the Common Law Division, or the ourt or the Common Law Division exerising superior jurisdition or summary jurisdition, shall be onstrued as a referene to the Civil Division. PREAMBLE Whereas, it is advisable to make general provisions appliable to the administration of the law in bankrupty and insolveny, and to amend suh law. AT 1 of 1892 Page 9

10 Setion 1 The Bankrupty Code 1892 Preliminary 1 Short title This At may be ited as The Bankrupty Code Commenement of At This At shall, exept as therein otherwise provided, ommene and ome into operation on the expiration of six months after the promulgation thereof. 3 [Repealed] 1 4 Interpretation In this At, and the general rules to be made under the authority thereof, unless the ontext otherwise requires The High Court means the High Court of Justie: The Court means the Court for the time being having jurisdition in bankrupty: The Appellate Court means the Staff of Government Division of the High Court: Treasury means the Commissioners of Her Majesty s Treasury: Affidavit inludes statutory delarations and affirmations: The Bank means the bank for the time being having the ustody of moneys paid into the High Court under or subjet to the rules or orders of suh Court: Bankrupt means a person who may be adjudged a bankrupt, and also any debtor, by or against whom a bankrupty petition having been presented, in respet of whose estate a reeiving order under this At may be made, or who has pursuant to this At made a omposition with his reditors in satisfation of the debts due to them by suh debtor, or a sheme of arrangement of his affairs: Bankrupty inludes insolveny, and also any suh omposition and sheme of arrangement: Available At of Bankrupty means any at of bankrupty available for a bankrupty petition, at the date of the presentation of the bankrupty petition: Bankrupty petition means a petition praying that a debtor may be adjudged a bankrupt: Order of adjudiation means an order by whih a debtor is adjudged a bankrupt, whether made by the Court, or by the Appellate Court: Page 10 AT 1 of 1892

11 The Bankrupty Code 1892 Setion 5 Debt provable in bankrupty or provable debt inludes any debt or liability by this At made provable in bankrupty: Creditor inludes any person who is for the time being entitled to enfore a judgment for the payment of money, and also the personal representative of a deeased reditor: Deed of arrangement means a deed or instrument made in respet of the affairs of a debtor for the benefit of the reditors generally as desribed in Part VII of this At: Goods inlude all hattels personal: Property inludes money, goods, things in ation, land, and every desription of property, whether real or personal, and whether situate in this Isle or elsewhere; also, obligations, and every desription of estate, interest, and profit, present or future, vested or ontingent, arising out of or inident to property, as herein defined: Seured reditor means a person holding a mortgage, harge, or lien on the property of the debtor, or any part thereof, as a seurity for a debt due to him from the debtor: Trustee means the trustee in bankrupty of a debtor s estate, and inludes an offiial trustee and a reeiver, or manager of the estate, pending the appointment of a trustee: Coroner inludes lokman and any offier harged with the enforement of any exeution, or with the exeution of any proess: Inditment inludes information: Presribed means presribed by general rules to be made as in this At provided; but where no suh rules apply, as may be presribed by order of the Court. PART I ACTS OF BANKRUPTCY AND PROCEEDINGS CONSEQUENT ON ADJUDICATION Ats of bankrupty 5 Ats of bankrupty [P1914/59/1(g), 2 and 5(4)] A debtor ommits an at of bankrupty in eah of the following ases: (a) If, in this Isle or elsewhere, he makes a deed of arrangement: AT 1 of 1892 Page 11

12 Setion 5 The Bankrupty Code 1892 (b) () (d) (e) (ee) (f) (g) (h) (i) If, in this Isle of elsewhere, he makes a fraudulent onveyane, gift, delivery, or transfer of his property, or of any part thereof, or if he fraudulently reates a harge upon his property: If, in this Isle or elsewhere, he makes any onveyane or transfer of his property or any part thereof, or reates any harge thereon whih would under this or any other At be void as a fraudulent preferene if he were adjudged bankrupt: If, with intent to defeat or delay his reditors, he does any of the following things, namely, departs out of this Isle, or, being out of this Isle, remains out of the same, or departs from his dwellinghouse, or otherwise absents himself, or begins to keep house, or evades the proess of any of the Courts thereof: If, under exeution issued against him, his goods have been seized, and have been either sold or held by the Coroner for fourteen days, without any proeeding having been taken to rehear the ause or appeal from the judgment in respet of whih suh exeution was issued: If a reditor has obtained a final judgment or final order against him for any amount, and, exeution thereon not having been stayed, has served on him in the Isle of Man, or, by leave of the Court, elsewhere, a notie under setion 5A of this At, and he does not within 14 days after servie of the notie, in ase the servie is effeted in the Isle of Man, and in ase the servie is effeted elsewhere, then within the time limited in that behalf by the order giving leave to effet the servie, either omply with the requirements of the notie or satisfy the Court that he has a ounterlaim, set-off or ross-demand whih equals or exeeds the amount of the judgment debt or sum ordered to be paid, and whih he ould not set up in the ation in whih the judgment was obtained. For the purposes of this paragraph and of setion 5A of this At, any person who is, for the time being, entitled to enfore a final judgment or final order, shall be deemed to be a reditor who has obtained a final judgment or final order. 2 If, being a prisoner for debt, he presents a petition to any Court having jurisdition in the matter seeking to be disharged from imprisonment, by reason of his inability to maintain himself or pay the debt: If he presents a petition to the Court to have himself adjudged a bankrupt, or files in the Court a delaration of his inability to pay his debts: If the debtor gives notie to any of his reditors that he has suspended, or that he is about to suspend, payment of his debts: If the debtor be adjudged bankrupt in the United Kingdom. Page 12 AT 1 of 1892

13 The Bankrupty Code 1892 Setion 6 5A Notie under s 5(ee) 3 (1) A notie under setion 5(ee) of this At shall require the debtor to pay the judgment debt or sum ordered to be paid in aordane with the terms of the judgment or order, or to seure or ompound for it to the satisfation of the reditor or the Court, and shall state the onsequenes of nonompliane with the notie. (2) Servie of a notie under setion 5(ee) of this At shall be in aordane with setion 41 of the Interpretation At (3) A notie under setion 5(ee) of this At (a) (b) may speify an agent to at on behalf of the reditor in respet of any payment or other thing required by the notie to be made to, or done to the satisfation of, the reditor, shall not be invalidated by reason only that the sum speified in the notie as the amount due exeeds the amount atually due, unless the debtor within the time allowed for payment gives notie to the reditor that he disputes the validity of the notie on the ground of suh misstatement; but, if the debtor does not give suh notie, he shall be deemed to have omplied with the notie if within the time allowed he takes suh steps as would have onstituted a ompliane with the notie had the atual amount due been orretly speified therein. 6 Bankrupty proeedings to ommene by petition Proeedings in bankrupty shall, exept where otherwise direted by this At, be ommened by petition, in this At referred to as a bankrupty petition. Adjudiation of Bankrupty 7 Property of a bankrupt to vest in a trustee (1) Where the debtor is adjudged bankrupt, the property of the bankrupt shall beome divisible among his reditors and shall vest in a trustee, to be appointed by the Court; but, until a trustee is appointed, an offiial trustee shall be nominated by the Court to at as the trustee for the purposes of the bankrupty. A person shall be deemed not fit to at as trustee where he has been previously removed from the offie of trustee of a bankrupt for misondut or neglet of duty. (2) The property of the bankrupt shall pass from trustee to trustee, and shall vest in the trustee for the time being during his ontinuane in offie, without any onveyane, assignment, or transfer whatever. (3) An offie opy of the appointment of the trustee shall, as to the law for the time being in fore as to registration or reording of onveyanes or AT 1 of 1892 Page 13

14 Setion 8 The Bankrupty Code 1892 assignments of property, be deemed to be a onveyane or assignment of property, and may be registered and reorded aordingly. 8 Reeiving order The Court may, if it be shown to be neessary for the protetion of the estate, at any time after the presentation of a bankrupty petition, and before an order of adjudiation be made, by order (in this At referred to as a reeiving order), appoint an offiial trustee to be interim reeiver of the property of the debtor, or of any part thereof, and diret him to take immediate possession thereof, or of any part thereof. 9 Stay of proeedings against a debtor on presentation of a bankrupty petition (1) On the making of an order of adjudiation, no reditor to whom the debtor is indebted in respet of any debt provable shall have any remedy against the person or property of the debtor in respet of the debt, or shall ommene any ation or other legal proeedings with respet to the debt, unless with the leave of the Court, and on suh terms as the Court may impose. (2) The ourt may, at any time after the presentation of a bankrupty petition, and before an order of adjudiation be made, stay any ation, judgment, exeution, or other legal proess against the person or property of the debtor, and any Court in whih proeedings are pending against a debtor may, on proof that a bankrupty petition has been presented by or against the debtor, either stay the proeedings, or allow them to ontinue on suh terms as it may think just: (3) But this setion shall not affet the power of any seured reditor to realise, or otherwise deal with his seurity in the same manner as he would have been entitled to realise or deal with it if this setion had not been passed. 10 No priority under exeution after presentation of a bankrupty petition 4 From the time of the presentation of a bankrupty petition no reditor shall thereafter, so long as the bankrupty proeedings under suh petition be pending, gain any priority by reason of his exeution having been in the hands of the oroner of lokman to be exeuted; and in ase the petition be dismissed, the interval of time between the presentation and dismissal of suh petition shall not be inluded in the twenty-one days for the purposes of setion four of an At of Tynwald promulgated upon the 1st day of November 1820, and intituled An At for the better enforing of ommon judgments and exeutions, and for altering and amending the law relative to bail to ations of debt or damage, and for the relief of insolvent debtors in the said Island. Page 14 AT 1 of 1892

15 The Bankrupty Code 1892 Setion 11 Disharge of Bankrupt 11 Disharge of bankrupt (1) A bankrupt may, at any time after being adjudged bankrupt, apply to the Court for an order of disharge, and the Court shall appointed a day for hearing the appliation. The appliation shall be heard in open Court. (2) On the hearing of the appliation the Court shall take into onsideration the bankrupt s ondut and affairs, and may either grant or refuse an absolute order of disharge, or suspend the operation of the order for a speified time, or grant an order of disharge subjet to any onditions with respet to any earnings or inome whih may afterwards beome due to the bankrupt, or with respet to his after-aquired property, or grant an order limited to the release of the bankrupt from imprisonment and liability to imprisonment for any debt provable in bankrupty, save any debt or liability from with the bankrupt is not released by an order of disharge under the provisions in this At ontained: Provided that the Court shall refuse the disharge in all ases where the bankrupt has ommitted any felony or misdemeanour onneted with his bankrupty under this At, or any At for the punishment of fraudulent debtors for the time being in fore; and shall, on proof of any of the fats hereinafter mentioned, either (i) (ii) (iii) (iv) Refuse the disharge; or Suspend the disharge for a period of not less than two years; or Suspend the disharge until a dividend of not less than 50p in the pound has been paid to the reditors; or 5 Require the bankrupt, as a ondition of his disharge, to onsent to a judgment being entered against him by the trustee for any balane or part of any balane of the debts provable under the bankrupty whih is not satisfied at the date of the disharge, suh balane or part of any balane of the debts to be paid out of the future earnings or afteraquired property of the bankrupt, in suh manner and subjet to suh onditions as the Court may diret; but exeution shall not be issued on the judgment without leave of the Court, suh leave may be given on proof that the bankrupt has sine his disharge aquired property or inome available towards payment of his debts: Provided, that if at any time after the expiration of two years from the date of any order made under this setion, the bankrupt shall satisfy the Court that there is no reasonable probability of his being in a position to omply with the terms of suh order, the Court may modify the terms of the order, or of any substituted order, in suh manner and upon suh onditions as it may think fit. AT 1 of 1892 Page 15

16 Setion 11 The Bankrupty Code 1892 (3) The fats hereinbefore referred to are (a) (b) () (d) (e) (f) (g) (h) (i) (j) (k) (l) That the bankrupt s assets are not of a value equal to 50p in the pound on the amount of his unseured liabilities, unless he satisfies the Court that the fat that the assets are not of a value equal to 50p in the pound on the amount of his unseured liabilities has arisen from irumstanes for whih he annot justly be held responsible: 6 That the bankrupt has omitted to keep suh books of aount as are usual and proper in the business arried on by him, and as suffiiently dislose his business transations and finanial position within the three years immediately preeding his bankrupty: That the bankrupt has ontinued to trade after knowing himself to be insolvent: That the bankrupt has ontrated any debt provable in the bankrupty, without having at the time of ontrating it any reasonable or probable ground of expetation (proof whereof shall lie on him) of being able to pay it: That the bankrupt has failed to aount satisfatorily for any loss of assets, or for any defiieny of assets to meet his liabilities: That the bankrupt has brought on or ontributed to his bankrupty by rash and hazardous speulations, or by unjustifiable extravagane in living, or by gambling, or by ulpable neglet of his business affairs: That the bankrupt has put any of his reditors to unneessary expense by a frivolous or vexatious defene to any ation properly brought against him: That the bankrupt has, within three months preeding the date of the reeiving order, or order of adjudiation, inurred unjustifiable expense by bringing a frivolous or vexatious ation: That the bankrupt has, within three months preeding the date of the reeiving order, or order of adjudiation, when unable to pay his debts as they beome due, given an undue preferene to any of his reditors: That the bankrupt has, within three months preeding the date of the reeiving order, or order of adjudiation, inurred liabilities with the view of making his assets equal to 50p in the pound on the amount of his unseured liabilities: 7 That the bankrupt has on any previous oasion been adjudged bankrupt, or made a omposition or arrangement with his reditors: That the bankrupt has been guilty of any fraud or fraudulent breah of trust. Page 16 AT 1 of 1892

17 The Bankrupty Code 1892 Setion 12 (4) For the purpose of this setion, a bankrupt s assets shall be deemed of a value equal to 50p in the pound on the amount of his unseured liabilities, when the Court is satisfied that the property of the bankrupt has realized, or is likely to realize, or with due are in realization might have realized, an amount equal to 50p in the pound of his unseured liabilities. 8 (5) The powers of suspending and of attahing onditions to a bankrupt s disharge may be exerised onurrently. (6) A disharged bankrupt shall, notwithstanding his disharge, give suh assistane as the trustee may require in the realization and distribution of suh of his property as is vested in the trustee, and if he fails to do so he shall be guilty of a ontempt of Court, and for suh ontempt, on the appliation of the trustee, shall be liable to imprisonment for a term not exeeding three months; and, in addition thereto, the Court may, if it thinks fit, revoke his disharge, but without prejudie to the validity of any sale, disposition, or payment duly made or thing duly done subsequent to the disharge, but before its revoation. 12 Fraudulent settlements In either of the following ases (that is to say): (1) In the ase of a settlement made before and in onsideration of marriage or the formation of a ivil partnership where the settlor is not at the time of making the settlement able to pay all his debts without the aid of the property omprised in the settlement; or 9 (2) In the ase of any ovenant or ontrat made in onsideration of marriage or the formation of a ivil partnership for the future settlement on or for the settlor s spouse, ivil partner or hildren of any money or property wherein he had not at the date of his marriage any estate or interest (not being money or property of or in right of his or her spouse or ivil partner); 10 if the settlor is adjudged bankrupt or ompounds or arranges with his reditors, and it appears to the Court that suh settlement, ovenant, or ontrat was made in order to defeat or delay reditors, or was unjustifiable having regard to the state of the settlor s affairs at the time when it was made, the Court may refuse or suspend an order of disharge, or grant an order subjet to onditions, or refuse to approve a omposition or arrangement, as the ase may be, in like manner as in ases where the debtor has been guilty of fraud. 13 Effet of order of disharge (1) An order of disharge shall not release the bankrupt from any debt on a bond or a reognizane to, or to a person on behalf of, or in trust for, the Crown, nor from any debt with whih the bankrupt may be hargeable at the suit of the Crown or of any person for any offene against a statute AT 1 of 1892 Page 17

18 Setion 14 The Bankrupty Code 1892 relating to any branh of the publi revenue; and he shall not be disharged from suh exepted debts unless the Treasury ertify in writing their onsent to his being disharged therefrom; neither shall an order of disharge release the bankrupt from any liability under a judgment against him in an ation for sedution, or under an affiliation order. An order of disharge shall not release the bankrupt from any debt or liability inurred by means of any fraud or breah of trust to whih he was a party, nor from any debt or liability whereof he has obtained forbearane by any fraud to whih he was a party. (1A) Subsetion (1) of this setion shall have effet as if amounts payable under onfisation orders made under Part 2 of the Proeeds of Crime At 2008 were debts exepted under the first sentene of that subsetion. 11 (2) An order of disharge shall release the bankrupt from all other debts provable in bankrupty. (3) An order of disharge shall be onlusive evidene of the bankrupty, and of the validity of the proeedings therein, and in any proeedings that may be instituted against a bankrupt who has obtained an order of disharge in respet of any debt from whih he is released by the order, the bankrupt may plead that the ause of ation ourred before his disharge, and may give this At and the speial matter in evidene. (4) An order of disharge shall not release any person who at the date of the reeiving order was a partner or o-trustee with the bankrupt or was jointly bound or had made any joint ontrat with him, or any person who was surety or in the nature of a surety for him. 14 Disharge may be annulled if obtained by fraud If, at any time after the disharge of a debtor, it appears to the Court, on the appliation of any person interested, that the disharge was obtained by fraud, the Court may by order annul suh disharge. Composition or Sheme of Arrangement 15 Composition or sheme of arrangement in substitution of bankrupty (1) If the debtor, at any time after a reeiving order or order of adjudiation has been made, submit to the Court a proposal for a omposition in satisfation of the debts due to the reditors from the debtor, or a proposal for a sheme of arrangement of the debtor s affairs, the Court may, if it think fit, diret the trustee to summon, in suh manner as the Court may diret, a meeting of the reditors to onsider suh proposal. (2) The omposition or sheme shall not be binding on the reditors unless it is onfirmed by a resolution passed by reditors representing three- Page 18 AT 1 of 1892

19 The Bankrupty Code 1892 Setion 15 fourths in value of all those who have proved their laims, nor unless it be approved by the Court. Any reditor who has proved his laim may assent or dissent from suh omposition or sheme by a letter addressed to the trustee in the presribed form, and attested by a witness, so as to be reeived by the trustee not later than the day preeding suh meeting, and suh reditor shall be taken as being present and voting thereat. (3) If the omposition or sheme of arrangement is aepted by the reditors at suh meeting, or any adjournment thereof (suh aeptane being embodied in a resolution of the meeting, verified by the trustee), the trustee or the debtor may apply to the Court to approve it, and notie of the time appointed for hearing the appliation shall be given in the presribed manner, or, if no manner be presribed, as the Court may diret. (4) The Court shall, before approving a omposition or sheme, onsider the terms thereof, and the ondut of the debtor, and also any objetions whih may be made by and on behalf of any reditor. (5) If the Court is of opinion that the terms of the omposition or sheme are not reasonable, or are not alulated to benefit the general body of reditors, or in any ase in whih the Court is required under this At where the debtor is adjudged bankrupt to refuse his disharge, the Court shall, or if any suh fats are proved as would under this At justify the Court in refusing, qualifying, or suspending the debtor s disharge, the Court may, in its disretion, refuse to approve the omposition or sheme. (6) If the Court approve the omposition or sheme, the approval shall be testified by an order of the Court, and, if the debtor has been previously adjudged bankrupt, the Court may make an order annulling the bankrupty, and vesting the property in the debtor, or suh other person as the Court may appoint, on suh terms and subjet to suh onditions, if any, as the Court may delare. (7) A omposition or sheme aepted and approved in pursuane of this setion shall be binding on all the reditors so far as relates to any debts due to them from the debtor and provable in the bankrupty. (8) The provisions of a omposition or sheme under this setion may be enfored by the Court on appliation by any person interested, and any disobediene of an order of the Court made on suh appliation shall be deemed a ontempt of ourt, and shall be punishable, on further appliation by suh person, with imprisonment for any period not exeeding three months. (9) If default is made in the payment of any sum of money, or instalment, due in pursuane of the omposition or sheme, or if it appears to the Court on satisfatory evidene that the omposition or sheme annot, in AT 1 of 1892 Page 19

20 Setion 16 The Bankrupty Code 1892 onsequene of legal diffiulties, or for any suffiient ause, proeed without injustie or undue delay to the reditors or to the debtor, or that the approval of the Court was obtained by fraud, the Court may, if it thinks fit, on appliation by any reditor, adjudge the debtor bankrupt, and annul the omposition or sheme, but without prejudie to the validity of any sale, disposition, or payment duly made, or thing duly done under or in pursuane of the omposition or sheme. Where a debtor is adjudged bankrupt under this subsetion any debt provable in other respets, whih has been ontrated before the date of the adjudiation, shall be provable in the bankrupty. (10) If under or in pursuane of a omposition or sheme, a trustee is appointed to administer the debtor s property or manage his business, Part IV of this At shall apply to the trustee as if he were a trustee in the bankrupty, and as if the terms bankrupty, bankrupt, and order of adjudiation inluded respetively a omposition or sheme of arrangement, a ompounding or arranging debtor, and order approving the omposition or sheme. (11) Part III of this At shall, so far as the nature of the ase and the terms of the omposition or sheme admit, apply thereto, the same interpretation being given to the words trustee, bankrupty, bankrupt, and order of adjudiation, as in the last preeding sub-setion. (12) No omposition or sheme shall be approved by the Court whih does not provide for the payment in priority to other debts of all debts direted to be so paid in the distribution of the property of a bankrupt. (13) Notwithstanding the aeptane and approval of a omposition or sheme suh omposition or sheme shall not be binding on any reditor so far as regards a debt or liability from whih, under the provisions of this At, the debtor would not be disharged by an order of disharge in bankrupty, unless the reditor assents to the omposition or sheme. (14) The order of the Court approving of a omposition or sheme shall be onlusive evidene of the meeting of the reditors having been duly held, and of the resolution of suh meeting having been duly arried and passed thereat. PART II DISQUALIFICATIONS OF BANKRUPT 16 Disqualifiation of bankrupts (1) Where a debtor is adjudged bankrupt he shall, subjet to the provisions of this At, be disqualified for (a) [Repealed] 12 Page 20 AT 1 of 1892

21 The Bankrupty Code 1892 Setion 19 (b) Being appointed, or ating, as a justie of the peae; () [Repealed] 13 (d) [Repealed] 14 (2) The disqualifiations to whih a bankrupt is subjet under this setion shall be removed and ease if and when (a) (b) () the adjudiation of bankrupty against him is annulled; or he obtains from the Court his disharge, with a ertifiate to the effet that his bankrupty was aused by misfortune without any misondut on his part; or on the expiration of five years from the date of his disharge. The Court may grant or withhold a ertifiate under this setion as it thinks fit, but any refusal of suh ertifiate shall be subjet to appeal. 17 and 18 [Repealed] Power for Court to annul adjudiation in ertain ases (1) Where, in the opinion of the Court, a debtor ought not to have been adjudged bankrupt, or where it is proved to the satisfation of the Court that the debts of the bankrupt are paid in full, the Court may, on the appliation of any person interested, by order annul the adjudiation. (2) When an adjudiation is annulled under this setion, all sales and dispositions of property and payments duly made, and all ats theretofore done, by the trustee, or other person ating under his authority, or by the Court, shall be valid; but the property of the debtor who was adjudged bankrupt shall vest in suh person as the Court may appoint, or in default of any suh appointment revert to the debtor for all his estate, or interest therein, on suh terms and subjet to suh onditions, if any, as the Court may delare by order. 20 Meaning of payment of debts in full For the purposes of the last preeding setion, any debt disputed by a debtor shall be onsidered as paid in full, if the debtor enters into a bond, in suh sum and with suh sureties as the Court approves, to pay the amount to be reovered in any proeeding for the reovery of or onerning the debt, with osts, and any debt due to a reditor who annot be identified shall be onsidered as paid in full if paid into Court. AT 1 of 1892 Page 21

22 Setion 21 The Bankrupty Code 1892 PART III ADMINISTRATION OF PROPERTY Proof of Debts 21 Desription of debts provable in bankrupty (1) Demands in the nature of unliquidated damages arising otherwise than by reason of a ontrat, promise, or breah of trust, shall not be provable in bankrupty. (2) A person having notie of any at of bankrupty available against the debtor shall not prove under the order for any debt or liability ontrated by the debtor subsequently to the date of his so having notie. (3) Save as aforesaid, all debts and liabilities, present or future, ertain or ontingent, to whih the debtor is subjet at the date of the order of adjudiation, or to whih he may beome subjet before his disharge, by reason of any obligation inurred before the date of suh order, shall be deemed to be debts provable in bankrupty. (4) An estimate shall be made by the trustee, or as the Court may diret, of the value of any debt or liability provable as aforesaid whih, by reason of its being subjet to any ontingeny or ontingenies, or for any other reason, does not bear a ertain value. (5) If, in the opinion of the Court, the value of the debt or liability is inapable of being fairly estimated, the Court may make an order to that effet, and thereupon the debt or liability shall, for the purposes of this At, be deemed to be a debt not provable in bankrupty. (6) If, in the opinion of the Court, the value of the debt or liability is apable of being fairly estimated, the Court may diret the value to be assessed before the Court itself, without the intervention of a jury, and may give all neessary diretions for this purpose and the amount of the value when assessed shall be deemed to be a debt provable in bankrupty. (7) Liability shall, for the purposes of this At, inlude any ompensation for work or labour done, any obligation, or possibility of an obligation, to pay money or money s worth on the breah of any express or implied ovenant, ontrat, agreement, or undertaking, whether the breah does or does not our, or is or is not likely to our, or apable of ourring, before the disharge of the debtor, and generally it shall inlude any express or implied engagement, agreement, or undertaking, to pay, or apable of resulting in the payment of, money, or money s worth, whether the payment is, as respets amount, fixed or unliquidated; as respets time, present or future, ertain or dependent on any one ontingeny, or on two or more ontingenies; as to mode of valuation apable of being asertained by fixed rules, or as matter of opinion. Page 22 AT 1 of 1892

23 The Bankrupty Code 1892 Setion Mutual redit and set-off Where there have been mutual redits, mutual debts, or other mutual dealings between a debtor against whom an order of adjudiation shall be made under this At, and any other person proving or laiming to prove a debt under suh order, an aount shall be taken of what is due from the one party to the other in respet of suh mutual dealings, and the sum due from the one party shall be set off against any sum due from the other party, and the balane of the aount, and no more, shall be laimed or paid on either side respetively; but a person shall not be entitled under this setion to laim the benefit of any set-off against the property of a debtor in any ase where he had, at the time of giving redit to the debtor, notie of an at of bankrupty ommitted by the debtor, and available against him. 23 Partners and supplementary provisions (1) [Repealed] 16 (2) In the ase of partners the joint estate shall be appliable in the first instane in payment of their joint debts, and the separate estate of eah partner shall be appliable in the first instane in payment of his separate debts. If there is a surplus of the separate estates it shall be dealt with as part of the joint estate. If there is a surplus of the joint estate it shall be dealt with as part of the respetive separate estates in proportion to the right and interest of eah partner in the joint estate. (3) Where a debt inludes interest, or any peuniary onsideration in lieu of interest, suh interest or onsideration, shall, for the purposes of dividend, be alulated at a rate not exeeding five per entum per annum, without prejudie to the right of a reditor to reeive out of the estate any higher rate of interest to whih he may be entitled after all the debts proved in the estate have been paid in full. (4) If there is any surplus after payment of the debts, it shall be applied in payment of interest from the date of the reeiving order at the rate of four pounds per entum per annum on all debts proved in the bankrupty. 24 Preferential laim in ase of apprentieship (1) Where, at the time of the presentation of the bankrupty petition, any person is apprentied or is an artiled lerk to the bankrupt, the adjudiation of bankrupty shall, if either the bankrupt or apprentie or lerk gives notie in writing to the trustee to that effet, be a omplete disharge of the indenture of apprentieship or artiles of agreement; and if any money has been paid by or on behalf of the apprentie or lerk to the bankrupt as a fee, the trustee may, on the appliation of the apprentie or lerk, or of some other person on his behalf, pay suh sum as the trustee, subjet to an appeal to the Court, thinks reasonable, out of AT 1 of 1892 Page 23

24 Setion 25 The Bankrupty Code 1892 the bankrupt s property, to or for the use of the apprentie or lerk, regard being had to the amount paid by him or on his behalf, and to the time during whih he served with the bankrupt under the indenture or artiles before the ommenement of the bankrupty, and to the other irumstanes of the ase. (2) Where it appears expedient to a trustee, he may, on the appliation of any apprentie or artiled lerk to the bankrupt, or any person ating on behalf of suh apprentie or artiled lerk, instead of ating under the preeding provisions of this setion, transfer the indenture of apprentieship or artiles of agreement to some other person. 25 Power to landlord to distrain for rent Nothing in this At ontained, nor any dislaimer under the 39th setion of this At, shall affet the right of any landlord under the provisions of the At intituled An At to indemnify Landlords in their Rents, promulgated in 1753, to arrest goods and effets for rent, or his right of preferene to payment of the whole of the urrent year s rent. Property available for Payment of Debts 26 Relation bak of trustee s title The bankrupty of a debtor, whether the same takes plae on the debtor s own petition or upon that of a reditor or reditors, shall be deemed to have relation bak to, and to ommene at, the time of the at of bankrupty being ommitted on whih an order of adjudiation is made against him, or, if the bankrupt is proved to have ommitted more ats of bankrupty than one, the bankrupty shall be deemed to have relation bak to, and to ommene at, the time of the first of the ats of bankrupty proved to have been ommitted by the bankrupt within three months next preeding the date of the presentation of the bankrupty petition; but no bankrupty petition or adjudiation shall be rendered invalid by reason of any at of bankrupty anterior to the debt of the petitioning reditor. 27 Desription of bankrupt s property divisible amongst reditors The property of the bankrupt divisible amongst his reditors, and in this At referred to as the property of the bankrupt, shall not omprise the following partiulars (1) Suh wearing apparel, furniture, bedding and household equipment of the bankrupt as appear to the trustee to be essential for the domesti purposes of the bankrupt, his spouse, his ivil partner and his dependents residing with him, or any of them: 17 Page 24 AT 1 of 1892

25 The Bankrupty Code 1892 Setion 27 (2) The tools and implements of the bankrupt s trade to the value of 100, or of suh greater amount as may be presribed in enforement rules made under Part II of the Administration of Justie At 1981: 18 (3) Any property held by the bankrupt in trust for, or on behalf of, any other person or body: 19 But it shall omprise the following partiulars: (i) (ii) (iii) All suh property as may belong to or be vested in the bankrupt at the ommenement of the bankrupty, or may be aquired by or devolve on him before his disharge; and The apaity to exerise and to take proeedings for exerising all suh powers in or over or in respet of property as might have been exerised by the bankrupt for his own benefit at the ommenement of his bankrupty or before his disharge, exept the right of nomination to a vaant elesiastial benefie; and All goods being, at the ommenement of the bankrupty, in the possession, order, or disposition of the bankrupt, in his trade or business, by the onsent and permission of the true owner, under suh irumstanes that he is the reputed owner thereof: Provided that things in ation, other than debts due or growing due to the bankrupt in the ourse of his trade or business, shall not be deemed goods within the meaning of this setion. Effet of Bankrupty on Anteedent Transations 28 and 29 Restrition of rights of reditors under exeution (a) (b) Where a reditor has obtained exeution whih an be enfored against the property of a debtor, he shall not be entitled to retain the benefit of the exeution against the trustee unless the exeution has been ompleted by seizure and sale, or by the reeipt or reovery by the oroner or lokman of the full amount of the levy, and unless suh exeution has obtained priority in law before the date of the order of adjudiation and before notie of the presentation of any bankrupty petition by or against the debtor or of the ommission of any available at of bankrupty by the debtor. Where any property of a debtor is taken in exeution, and before suh exeution has been ompleted by the sale of suh property, or by the reeipt or reovery of the full amount of the levy, or when, before suh exeution has obtained priority in law, notie is served on the oroner or lokman holding the exeution that an order of adjudiation has been made against the debtor, or a AT 1 of 1892 Page 25

26 Setion 30 The Bankrupty Code 1892 () (d) bankrupty petition presented by or against the debtor, suh oroner or lokman shall, on request, deliver to the trustee the property seized, or any money reeived in part satisfation of the exeution; but the osts of enforing the exeution shall be a first harge on the property seized or money delivered, and the trustee may sell the property, or an adequate part thereof, for the purpose of satisfying the harge. Where, under an exeution in respet of a judgment for a sum exeeding twenty pounds, the property of a debtor is sold or money is paid in order to avoid sale, the oroner or lokman shall dedut his osts of the exeution from the proeeds of sale or the money paid, and retain the balane for fourteen days, and if within that time notie is served on him of a bankrupty petition having been presented against or by the debtor, and an order of adjudiation is made against the debtor thereon, or on any other petition of whih suh oroner or lokman has notie, suh oroner or lokman shall pay the balane to the trustee, who shall be entitled to retain the same as against the exeution reditor. An exeution levied by seizure and sale on the property of a debtor shall not be invalid by reason only of its being an at of bankrupty, and a person who purhases the goods in good faith under a sale by the oroner or lokman shall in all ases aquire a good title to them against the trustee in bankrupty. (e) In paragraphs (a) to (d) above (a) (b) exeution shall have the meaning assigned to exeution order in setion 26(1) of the Administration of Justie At 1981; and referenes to seizure and sale shall be onstrued as referenes to arrest and sale pursuant to Part II of, and Shedules 1 and 2 to, that At. 20 Duties of Coroner as to property taken in exeution 30 Avoidane of voluntary settlements (1) Any settlement of property, not being a settlement made before and in onsideration of marriage or the formation of a ivil partnership, or made in favour of a purhaser or enumbraner in good faith and for valuable onsideration, or a settlement made on or for the spouse or ivil partner and hildren of the settlor of property whih has arued to the settlor after marriage or the formation of a ivil partnership in right of his spouse or ivil partner, shall, if the settlor beomes bankrupt within two years after the date of the settlement, be void against the trustee, and shall, if the settlor beomes bankrupt at any subsequent time within ten years after the date of the settlement, be void against the trustee unless Page 26 AT 1 of 1892

27 The Bankrupty Code 1892 Setion 31 the parties laiming under the settlement an prove that the settlor was at the time of making the settlement able to pay all his debts without the aid of the property omprised in the settlement, and that the interest of the settlor in suh property had passed to the trustee of suh settlement on the exeution thereof. 21 (2) Any ovenant or ontrat made in onsideration of marriage or the formation of a ivil partnership, for the future settlement on or for the settlor s spouse or ivil partner or hildren, of any money or property wherein he had not at the date of his marriage or ivil partnership any estate or interest, whether vested or ontingent in possession or remainder, and not being money or property of or in right of his spouse or ivil partner, shall, on his beoming bankrupt before the property or money has been atually transferred or paid pursuant to the ontrat or ovenant, be void against the trustee. 22 (3) Settlement shall, for the purposes of this setion, inlude any onveyane or transfer of property. 31 Avoidane of preferenes in ertain ases (1) Every onveyane or transfer of property, or harge thereon made, every payment made, every obligation inurred and every judiial proeeding taken or suffered by any person unable to pay his debts as they beome due from his own money in favour of any reditor, or any person in trust for any reditor, with a view of giving suh reditor a preferene over the other reditors, shall, if the person making, taking, paying, or suffering the same is adjudged bankrupt on a bankrupty petition, presented within four months after the date of making, taking, paying, or suffering the same, be deemed fraudulent and void as against the trustee; and, for the purposes of this setion, any suh onveyane, transfer, or harge, shall be deemed to have been made on the day of the atual delivery thereof to the reditor, or a person in trust for him; or on the day of the same being reorded, if there has been no previous atual delivery, it being hereby delared that, as against the trustee, no suh onveyane, transfer, or harge shall be valid by reason only of it being stated in the attesting lause that suh onveyane, transfer, or harge had been delivered, or of the same having been aptioned, or of onstrutive delivery merely. (2) This setion shall not affet the rights of a purhaser, payee, or inumbraner, or any person making title in good faith and for valuable onsideration through or under a reditor of the bankrupt. 32 Protetion of bona fide transations without notie Subjet to the foregoing provisions of this At with respet to the effet of bankrupty on an exeution, and with respet to the avoidane of ertain AT 1 of 1892 Page 27