Define term “Eligible creditor? Which act will be construed to be act of Bankruptcy under the Bankruptcy Act, 1997? Describe the properties that are exempted from the order of Adjudication.

  Introduction

Bankruptcy is a lawful rank of an insolvent individual or an organization, that is, one that will not repay the liabilities was obliged to creditors. In most jurisdictions bankruptcy is enforced by a court alignment, often started by the debtor. Bankruptcy is not the only lawful rank that an insolvent individual or organization may have, and the period bankruptcy is thus not the identical as insolvency. In Bangladesh bankruptcy is restricted to individuals. This question has three fractions. First one is definition of “Eligible creditor”.  Second one is interpretation of Bankruptcy under the Bankruptcy Act, 1997 and the third one is explanation of the exempted properties from the order of Adjudication. I will explain each and every segment in different perspective to make the topic understandable.

 Eligible creditor

In up to date financial undertakings, most companies and persons manage enterprise utilizing credits that are sophisticated by banks, lending organizations or even individuals. Due to unpredictable enterprise environments and dynamic functions, most companies often find themselves in a state where that they will not repay their debts. Bankruptcy is a status of insolvency where a lawful entity is incapable to yield acquired liabilities as they come due. “Eligible creditor” means a creditor or creditors who, individually or jointly, raised a claim for a matured debt of at least taka 5, 00, 000, 00 by sending a formal demand in accordance with the provisions of clause (i) of section 9(i);[1] .The state of bankruptcy is established through lawful proceedings where a lawful confirmation is made by bankruptcy enclosures asserting that an individual or company is insolvent and thus will not yield its obligations. In most situations an individual or company documents this announcement in a court, whereas creditors may manage this by themselves. Bankruptcy permits a one-by-one or enterprise to lawfully decrease, restructure or absolutely swab out their debts. It boasts a second possibility to start all over afresh by pardoning liabilities that will not be repaid while proposing creditors a possibility to get some assess of repayment that is founded on accessible assets. Some bankruptcy proceedings permit a debtor to stay in enterprise and use income developed to determination his or her debts. However in other proceedings the business is compelled to absolutely close down all procedures and proceeds out of enterprise, a trustee is then nominated to liquidate or deal the company’s assets and the cash is exploited to yield off the liabilities which may encompass the liabilities to creditors and investors.

The lawful method of settling a dispute. The prescribed giving or speaking of a judgment or decree in a court proceeding; furthermore the judgment or conclusion given. The application of a decree by a court in esteem to the parties in a case. It suggests a hearing by a court, after observe, of lawful clues on the factual issue(s) involved. The matching of a determination. It shows that the assertions of all the parties thereto have been advised and set at rest. Adjudication or  order of Adjudication means an attachment means an order made under section 10 declaring a debtor to be a bankrupt; Any of the following acts of the debtor shall be an act of the debtor shall be an act of bankruptcy. A person shall be deemed to have transferred his property or any part thereof with intent to defeat or delay his creditors, if he , without receiving reasonable value there for,  made such transfer at a time when he was unable to pay his debtors;

If , in Bangladesh or elsewhere, he makes any transfer of his property of any part thereof or mortgages , pledges, hypothecates or creates  charge thereon, which would , under this act or any other enactment for the time in force, be void as a fraudulent preference if he were adjudged  bankrupt;

If, with intent to defeat or delay his creditors. If he is imprisoned in execution of a decree of any court for the payment of debt; or if one or more creditor , having a valid and matured debt against the debtor for an amount of not less than TK. 5,00,000.00 has served on such debtor a formal demand under this Act requiring such  debtor to pay the debt or to give security for it to the satisfaction of such creditor or creditors and  within 90 days after service of the demand , the debtor does not comply with the requirements of the demand.

A formal demand under sub section (1) (i) shall be in the prescribed form and shall state the consequences of non compliance therewith, and shall be served in such manner as many be prescribed.

For the purposes of this section, the act of an agent may be considered as the act of the principal.

 According to Wikipedia, the free encyclopedia “Exempt property, under the law of property in many jurisdictions, is property that can neither be passed by will nor claimed by creditors of the deceased in the event that a decedent leaves a surviving spouse or surviving descendants. Typically, exempt property includes a family car, and a certain amount of cash (perhaps $10,000-$20,000), or the equivalent value in personal property”[2].notwithstanding any thing contained in any other provisions of the act the following property of an individual debtor shall not be to be taken over ,or vested under section 23 or 31 respectively and such property shall be known as a exempted property, namely;(a) the tools , if any used by the debtor himself; (b) wearing apparel and house hold furnishing and other like accessories of himself, spouse and children; (c) debtor`s un mortgaged dwelling place or homestead, the area of which is  not exceeding 2500 square feet of land or plinth in one or more than one storied building in the urban area or more then 5000 square feet of land or plinth in one or more than one storied building in any other area; provided that the total value of the articles specified  in clauses (a)  and (b) shall not exceed taka 3,00,ooo[3]

 In addition to the Banking Companies Act, 1991, Bangladesh Bank Order, 1972 also contains a few provisions about regulating some aspects of banking Operation. The Banking companies act, 1991 assigns important role to Bangladesh Bank to regulate as well as supervise the activities of the banks in Bangladesh.

Bankruptcy affirmations meet very tough and exact requirements. They are ruled by a set of directions which groups down the statutes, the method and enclosures that may manage the lawful methods essential to affirm the bankruptcy.

In Bangladesh, bankruptcy is ruled by a government lawful method as delineated in bankruptcy law. It presents for the development of a design to permit debtors to determination their liabilities and to some span to release them from economic obligations he has despite of whether the liabilities have been paid in full or not. In supplement government bankruptcy regulations rule how businesses proceed out of enterprise or reorganize themselves to reorganize themselves or retrieve from severe debts.

The Ministry of Finance is solely responsible for over-seeing the function of the financial organization of the Bangladesh and furthermore designs apply and command public expenditure principles and programs of the Government. Both fiscal and monetary principles cover under its jurisdiction, a number of actions have been attempted by the Government throughout the nineties to reinforce the banking system. These encompass enhancement of lawful and regulatory structure, route of the Bankruptcy Act, 1997 .besides that   Loan Court Amendment Act by Parliament, enforcement of lend classification guide-lines, recapitalization of nationalized financial banks and the formation of Banking Reform Committee.

 Act of Bankruptcy

Any of the following acts of the debtor shall be an act of the debtor shall be an act of bankruptcy, namely: _

(a)     If in Bangladesh or elsewhere , he makes a transfer    of all or substantially all the property kept in his name or in the name of his wife , son or daughter`s name by benami to third person for the benefit of his creditors generally[4]

(b)   If in Bangladesh or elsewhere , he makes a transfer  of his property kept in the  name of his wife , son or daughter`s name by benami  or of any part thereof with intent to defeat or delay his creditors  demand;[5]

(c)    If in Bangladesh or elsewhere , he makes a transfer  of his property  or of any part thereof or  mortgages ,pledges, hypothecates or creates charge thereon, which would , under this act or  any other enactment for the time in force , be void as a fraudulent preference if he were adjudged bankrupt;[6]

(d)   If, with intent to defeat or delay his creditor_[7]

1.                     i.            He departs or remains out Bangladesh ;[8]
2.                   ii.            He departs from his dwelling house or usual place of business or otherwise absents himself[9]
3.                 iii.            He secludes himself so as to deprive his creditors of the means of communicating with him; or[10]
4.                 iv.            Submits collusively or fraudulently  to an adverse decree , judgment or order of any court of  other authority;[11]

(e)    If any of his property  has been sold in execution of a decree of any court for the payment of money;[12]

(f)    If he files plaint  to  the court for being adjudged bankrupt under the provisions of this act;[13]

(g)   If he gives notice to any of his creditor that he has suspended ; or that he is about to suspend, the payment of his debts;[14]

 Bankruptcy procedure

 In Bangladesh, bankruptcy is ruled by a government lawful method as defined in bankruptcy law. It is a statutory regulation in Bangladesh established to make sure uniformity in regulations pertaining bankruptcy in the Bangladesh. This regulation permits debtors to either eradicate or repay their debts. It presents for the development of a design to permit debtors to determination their liabilities and to some span to release them from economic obligations he has despite of if the liabilities have been paid in full or not. In addition government bankruptcy regulations rule how businesses proceed out of enterprise or reorganize themselves to reorganize themselves or retrieve from grave debts.

State of bankruptcy can only be announced by a bankruptcy court. In alignment to document for bankruptcy, companies and partnerships are needed to have an advocate while persons may comprise themselves. Bankruptcy situations should be filed rightly as any accident can sway the debtor’s rights. The directions are very tough and situations are often dismissed on technicalities like falling short to document the correct documents. Such dismissal may influence the privileges of filing another case or loose protections for example self-acting stay. It is thus powerfully suggested to charter a competent advocate as bankruptcy situations have far coming to the economic consequences.

At first debtor have to document in centered else state court saying debtor may be “insolvent” – that entails debtor have no cash else assets (possessions you can vend) to forfeit his or her bills. Secondly debtor has to put all together a repayment design via creditors as well as the court. And at last debtor “discharge” – that entails resolve debtor liabilities via creditors proposed for generally an inferior amount than the genuine bill. This offers the creditors some of their money back.

Bankruptcy has some pros and cons for everyone. Pros are lawful defense as of creditors, takes anxiety of almost all of debtor assets; debtor might get to sustain his or her house, might halt economic impairment, as well as make a likely new start. But, most of time the bankruptcy will be very cooperative for debtor if he or she can get a new start.

Cons are alarming borrowing, have to yield on awful liability, should proceed to court, might misplace his or her possessions, as well as a decrease of privacy that entails normally they turn out bankruptcy in the document. That’s not only an economical difficulty, because it can conceive many of mental force to debtor and debtor`s family. So, this is not the route if he or she has any other alternate answers for his or her economic problems.

 Conclusion

Obviously, bankruptcy may be some one`s last option. It may be harsh, but presents a lawful remedy proposed to advance some one`s economic condition. When somebody made bankrupt, debtors assets (possessions, house, earnings etc) can be utilized to yield his or her debts. Debtors have to acquiesce to certain limits and his or her economic activities will be investigated.

Bankruptcy affirmations meet very tough and exact requirements. They are ruled by a code of directions which set down the statutes, the method and enclosures that may manage the lawful methods essential to affirm the bankruptcy.

Filing for bankruptcy presents two characteristic types of relief. These are liquidation and reorganization. Statistically, a most of bankruptcy filings engage liquidation which is ruled by bankruptcy code. In this filing a trustee is nominated and assembles all debtors’ assets and converts them to cash. This money is then circulated to the creditors in alignment of priority. However not all assets are assembled, regulations of exemptions live which permit debtors to relish some privilege of keeping certain allowance or kinds of property that would else be exposed to liquidation. Laws of exemptions assist to relief the problem of the debtors by allowing him to meet his basic desires and offer him the proficiency to appear from the state of bankruptcy with a new start.

 Bibliography

1. Amin Ullah ,siddique Rahman Mia, Bankruptcy Act 1997(Act no 10 to 1997), 4^th Edition
2. Ali .S.Ashraf,Howlader.R.A ,Banking law and practice,1^st Edition
3. Parameswaran R, Natarajan S, K P Kandasami, Banking Law And Practice, S. Chand Group,                                                ISBN: 8121922356
4. Charles Proctor, the Law and Practice of International Banking, Oxford University Press, October 2010
5. Clarkson E R C, Bankruptcy Legislation, BiblioLife, 20 pages, August 2009, ISBN: 1113426225

6.      Bankruptcy – responsibilities and restrictions, see http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingDebt/Bankruptcy/DG_187344

7.      The New Bankruptcy Law: Changes to Chapter 7 and 13, see http://www.nolo.com/legal-encyclopedia/new-bankruptcy-law-chapter-7-13-30040.html

8.      Understanding the Bankruptcy Rules ,Smartmoney , see  http://www.smartmoney.com/borrow/debt-strategies/understanding-the-bankruptcy-rules-15647/

9.      Bankruptcy – a guide, see http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingDebt/Bankruptcy/DG_187323

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