Objectives of bankruptcy laws
Reasons for growth in bankruptcy laws
Proceedings in bankruptcy
Creditor and debtor
Who may be adjudged bankrupt?
2. Insane persons(mentally disordered persons/lunatics)
3. Married women
4. Aliens or persons domiciled abroad
7. Deceased persons
8. Judgment debtor/bankrupt
Acts of bankruptcy
1st act: Conveying all property to a trustee for the benefits of creditors generally
2nd act: Fraudulent conveyance within the meaning of section 3(1)(b) of the Bankruptcy Act.
3rd act: Fraudulent preferences within the meaning of section 3 (1) (c)of the Bankruptcy Act as read with ---49(1).
4th act:Leaving Kenya, keeping house and similar acts
5th act: levy execution against goods
6th act: declaration of inability to pay debts
7th act: bankruptcy notice
8th act: giving notice to creditors of suspension or intention to suspend debt.
Application for a bankruptcy order
APPLICATION BY CREDITOR(S)
- A creditor, who petitions the court for bankruptcy order, may not issue or continue an execution process against the debtor in respect of the property of the debtor to recover a debt on which the application is based. To do this, the creditor needs the approval of the court, and the court has to be satisfied that that the interests of the other creditors will not be detrimentally affected
- To prevent further execution against the debtors property, the debtor himself, or any of the creditors can apply to the court for an order that stops the issue or continuance of any other execution process. The court can issue the order to stop the execution process, or an order allowing the execution process with conditions. It is to be noted that the other creditors are interested in the preservation of the debtor’s property pending the bankruptcy order.
- The execution orders can be issued or stopped by any other court of competent jurisdiction, and not restricted to the high court.
APPLICATION BY DEBTORS
DETERMINATION OF THE COURT
DUTIES OF AN INSOLVENCY PRACTITIONER
APPPOINTMENT OF A TRUSTEE WITH RESPECT TO THE DEBTOR’S PROPERTY
What happens on and after bankruptcy commences
Appointment of bankruptcy trustees
POWERS OF A BANKRUPTCY TRUSTEE
Powers exercised with approval
Powers conferred by the Creditors committee
Duties of a Bankruptcy trustee
- Establish and maintain a bank account in respect of each bankrupt estate administered by him.
- Discharge and refund money to any trainees attached to the bankrupt before he was adjudged bankrupt.
- Seek the directions of the court in matters not provided for in the insolvency Act
- Keep proper accounting records for each bankruptcy in the form and manner prescribed by the insolvency regulations. A creditor or other person who has an interest in a particular bankruptcy is entitled to inspect the bankruptcy trustee’s accounting records relating to the particular bankruptcy. The records can only be disposed of 3 years after the discharge of the bankrupt.
- Prepare and publish a final statementof receipts and payments as soon as practicable after the distribution of the final dividend has been determined
- Present and allow the records, accounts, and all other bankruptcy documents to be inspected by the official receiver from time to time.
Bankrupt’s property after bankruptcy
Provision allowed for bankrupt during bankruptcy
Goods held by bankrupt under credit purchase transaction
Division 14—Duties of bankrupt
Restrictions on bankrupt during bankruptcy
PUBLIC EXAMINATION OF THE BANKRUPT
1. Public examination by the public trustee
Conduct of the examination
Procedure of cancelling irregular transactions
Defences to cancellation of transactions
PROCESSING OF CREDITORS’ CLAIMS AGAINST BANKRUPT’S ESTATE
- A creditor (including a creditor who has a preferential claim) who wishes to claim in the bankruptcy shall submit a creditor’s claim to the bankruptcy trustee before the deadline for submitting claims. It must be in the prescribed form. The creditor is required to bear the costs of proving the debt, unless the Court makes an order as to the creditor’s. The creditor may amend or withdraw the claim, but an amended claim has to comply with the formalities prescribed for the original claim.
- The bankruptcy trustee shall examine each creditor’s claim and the grounds of the debt, unless of the opinion that no dividend will be paid to creditors. After examining a claim, the bankruptcy trustee can (a) wholly or partly allow the claim; (b) wholly or partly reject the claim; (c) require further evidence in support of the claim or an item contained in it.
- As soon as practicable after rejecting a creditor’s claim, or a part of it, the bankruptcy trustee shall give the creditor a notice rejecting the claim or part and specifying the grounds for the rejection.