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Contents Page no.

1. Abstract. 01

2. Historical Background. 01-02

3. Bankruptcy and power of Adjudication. 02-03

4. Act of Bankruptcy. 03

5. Power of Adjudication. 04

6. Relevant provisions regarding act of bankruptcy & 05-09


power of adjudication.

7. Conclusion. 10

Refference:

1. The Bangladesh Bankruptcy Act.1997


(Ss.7,9,10,11,12,13,23,24,28)
2. “Bankrupt” Online Etymology Dictionary
3. Wikipedia
Abstract:

The Bankruptcy Act 1997 nis the legislation that governs bankruptcy in Bangladesh. Not only
individuals but also a company can also become bankrupt; insolvent companies go into
liquidation or administration. Agreements refer specifically to arrangements between creditors
and debtors, whereas The Bangladesh Labour Act.1997 relates to full bankruptcy and is
generally synonymous with "bankruptcy".

A person or debtor can declare himself or herself bankrupt by lodging a debtor's petition with the
judge of Bankruptcy court which is generally the court of District Judge. A person can also be
made bankrupt after a creditor's petition results in the making of an order in the Bankruptcy
Court. To declare bankruptcy or for a creditors petition to be lodged, a minimum debt of
5,00,000 is required, if there are more than one creditor the requirement is that their joint debt
must be at least tk. 5,00,000..

For the duration of their bankruptcy, all bankrupts have certain restrictions placed upon them
under the Act. For example, a bankrupt must obtain the permission of the court to travel
overseas. Failure to do so may result in the bankrupt being stopped at the airport by the Police.
Additionally, a bankrupt is required to provide his or her trustee with details of income and
assets. If the bankrupt does not comply with the Trustee's request to provide details of income,
the trustee may have grounds to lodge an Objection to Discharge, which has the effect of
extending the bankruptcy for a further two years.

Historical Background:

In Ancient Greece, bankruptcy did not exist. If a man owed and he could not pay, he and his
wife, children or servants were forced into "debt slavery", until the creditor recouped losses
through their physical labour. Many city-states in ancient Greece limited debt slavery to a period
of five years; debt slaves had protection of life and limb, which regular slaves did not enjoy.
However, servants of the debtor could be retained beyond that deadline by the creditor and were
often forced to serve their new lord for a lifetime, usually under significantly harsher conditions.
An exception to this rule was Athens, which by the laws of Solon forbade enslavement for debt;
as a consequence, most Athenian slaves were foreigners (Greek or otherwise).

The Statute of Bankrupts of 1542 was the first statute under English law dealing with bankruptcy
or insolvency.[7] Bankruptcy is also documented in East Asia. According to al-Maqrizi, the Yassa
of Genghis Khan contained a provision that mandated the death penalty for anyone who became
bankrupt three times.
A failure of a nation to meet bond repayments has been seen on many occasions. Philip II of
Spain had to declare four state bankruptcies in 1557, 1560, 1575 and 1596. According to
Kenneth S. Rogoff, "Although the development of international capital markets was quite limited
prior to 1800, we nevertheless catalog the various defaults of France, Portugal, Prussia, Spain,
and the early Italian city-states. At the edge of Europe, Egypt, Russia, and Turkey have histories
of chronic default as well.

Bankruptcy & power of adjudication:

Bankruptcy is a legal status of a person or other entity that cannot repay the debts it owes to
creditors. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the
debtor.

Bankruptcy is not the only legal status that an insolvent person or other entity may have, and the
term bankruptcy is therefore not a synonym for insolvency. In some countries, including the
United Kingdom, bankruptcy is limited to individuals, and other forms of insolvency
proceedings (such as liquidation and administration) are applied to companies. In the United
States, bankruptcy is applied more broadly to formal insolvency proceedings. In France, the
cognate French word banqueroute is used solely for cases of fraudulent bankruptcy, whereas the
term faillite (cognate of "failure") is used for bankruptcy in accordance with the law.

The word adjudication means to give judgement by a competent court upon adjudging the
plaint. Section.10 of the Bankruptcy Act.1997 provides the power of adjudication upon the
Bankruptcy Court. If a debtor commits a crime, a plaint may be presented either by the debtor
himself or by the eligible creditor or creditrors and the plaint is not rejected, the court may
upon the plaint make an order of adjudication. The plaint may be rejected for some reasons- if
plaint is submitted against such persons who are not subject to this Act, the debtor is not a
bankrupt etc….Any person other than specified in section. 10(2) shall be subjected to
bankruptcy proceeding under this Act.
Act of Bankruptcy:
Any of the following acts 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 4he
property kept in his name or in the name of his wife, son or daughter by benami to a third
person for the benefit of his creditors generally;

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

Explanation.— A person shall be deemed to have transferred his property or any part
thereof with intent to defeat or delay his creditors' demand, if he, without receiving
reasonable value therefore, made such transfer at a time when he was unable to pay his
debts.

(c) if, in Bangladesh or elsewhere, he makes any 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 being in force, be void as a fraudulent
preference if he were adjudged bankrupt;

(d) if, with intent to defeat or delay his creditors' demand—

(i) he departs or remains out of Bangladesh;


(ii) he departs from his dwelling-house or usual place of business or otherwise absents
himself;
(iii) he secludes himself so as to deprive his creditors of the means of communicating with
him;
(iv) submits collusively or fraudulently to an adverse decree, judgment or order of any court
or other authority;
(e) if any of his property has been sold in execution of a decree of any court for the
payment of money;
(f) if he files plaint to the court for being adjudged bankrupt under the provisions of this
Act;
(g) if he gives notice to any of his creditors that he has suspended, or that he is about to
suspend, the payment of his debts;
(i) if one or more creditors, having a valid and matured debt against the debtor for an
amount of not less than Tk. 5,00,000.00 has or have 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.
Power of Adjudication:
Adjudication means to give judgement by a competent court upon adjudging the plaint.
Section.10 of the Bankruptcy Act.1997 provides the power of adjudication upon the
Bankruptcy Court. If a debtor commits a crime, a plaint may be presented either by the debtor
himself or by the eligible creditor or creditrors and the plaint is not rejected, the court may
upon the plaint make an order of adjudication. The plaint may be rejected for some reasons- if
plaint is submitted against such persons who are not subject to this Act, the debtor is not a
bankrupt etc….Any person other than specified in section. 10(2) shall be subjected to
bankruptcy proceeding under this Act who -
(a) Is domiciled, or maintains is principal business of ease in Bangladesh, or
(b) at any time within a tear immediately before filling of the plaint, ordinarily resided in, or
had a dwelling house or a place of business in Bangladesh,
(c) Generally carries on business in Bangladesh by agent.

(1)No plaint shall be accepted by the court against -


(a) any govt. organization including Parliament and a judicial body,
(b) any charitable or religious body,
(c) such statutory bodies whose principal object is not financial
gain,
(d) any autonomous body established by or with the financial
assistance of the Government.

(2)No plaint shall be accepted by the court against -


(e) any govt. organization including Parliament and a judicial body,
(f) any charitable or religious body,
(g) such statutory bodies whose principal object is not financial
gain,
(h) any autonomous body established by or with the financial
assistance of the Government.

Generally the power of adjudication is based on the plaint as the adjudication is given on the
plaint presented on. It may be made by the eligible creditor or creditors or, by the debtor
himself. Plaint is given under sections.12 & 13 of The Bankruptcy Act.1997 respectively.
The provisions of law are given below:
Conditions for filling plaint by creditors:

1.A creditor shall not be entitled to file a plaint against a debtor unless such creditor is an
eligible creditor and -
(a) the debt owing by the debtor to the eligible creditor or, if two or
more eligible creditor joint in the plaint, the aggregate amount of
the debts owing to such creditors amount to tk. 500,000

(b) such creditor have a prima facie case that the debtor has committed
an act of bankruptcy, and

(c) the act of bankruptcy, on the basis of which the plaint is filed, has a
occurred within one year immediately before the presentation of the
plaint.

2.If the said creditor is a secured creditor, he shall, in his plaint, give an estimate of the value
of the security, failing which he shall be deemed to have opt to be treated as an unsecured
creditor.

Conditions of filling plaint by debtor:

1.A debtor shall be entitled to file a plaint unless he specifically mentions in the plaint that he
is unable to pay his debts and -
(a) further mentions in the plaint that his debt amounts to tk 20,000 or

(b) he is under arrest or imprisonment in execution of a decree of any


Court for the payment of debt, or

(c) an order of attachment in the execution of such a decree has been


made, and is sub-sisting against his property at the time if filling the
plaint.

(d) aggregate amount of the debts owing to such creditors amount to tk


500,000

(e) such creditor have a prima facie case that the debtor has committed
an act of bankruptcy, and
(f) the act of bankruptcy, on the basis of which the plaint is filed, has a
occurred within one year immediately before the presentation of the
plaint.

(2) If the said creditor is a secured creditor, he shall, in his plaint, give an estimate of the
value of the security, failing which he shall be deemed to have opt to be treated as an
unsecured creditor.

(3) The Court shall not grant leave under sub-section(2) unless it is satisfied that -

(a) the debtor was prevented by any reasonable cause from


presenting or prosecuting his plaint as the case may be or

(b) the plaint is based on facts substantially different from those


contained in plaint on which the order of adjudication was made.

Subject to the provision of section (4), every plaint shall be presented to the Court having
jurisdiction in accordance with the section, in the local limits of which -the debtor ordinarily
resides or carries on business, or personally works for gain, or if he has been arrested or is in
custodyin the case of a debtor not being an individual, its head office or registered office is
situated. After the receipt of the plaint not being rejected the court have some interim
proceeding even if it thinks necessary or by the application of any of the party. In generally
in the following cases the court may appoint an interim receiver

Appointment of interim Receiver:


1) The Court may when making an order, fixing a date of hearing a plaint filed by
creditor and where the debtor is plaintiff, ordinarily shall, appoint an Interim Receiver
of the property of the debtor or of any part thereof, and may direct the Receiver to
take immediate possession thereof, and the receiver shall exercise such powers
specified in Code of Civil Procedure and also in this Act specified in section 65 – 69
and 71.

2) In appointing an Interim Receiver, the Court shall follow the condition set forth in
section 64(1).
3) If and Interim Receiver is not so appointed, the Court may make such appointment at
any subsequent time but before adjudication.

Interim Proceeding against debtor:


At the time of making an order fixing a date for hearing the plaint or at any subsequent time
before adjudication, the Court may, either of it’s own notion or on the application of any
creditor, make one or more of the following orders namely -
a) in the case of a debtor other than an individual debtor order, to
designate an individual as his representative to be called the
Responsible officer within specified time, and where the said debtor
defaults in so designating the Court shall designate one or more
Responsible officers who are owners of, or the case maybe,
directors or chief executive by whatever name called, in relation to
the activities or business of that debtor.

b) Responsible officer by order prepare such reports, gather such


property enter into or refrain from such transaction, appear at such
meetings or hearing and other actions as the Court deems
appropriate.
c) Order the debtor or the Responsible officer to give reasonable
security for his appearance until the plaint is dismissed.

d) Order the attachment by actual seizure of whole or any part of the


property in the possession of the debtor but excluding his exempted
property, order of warrant to issue with or without bail for the arrest
of the debtor or the responsible officer who has failed to comply
with any order given clause (b) (c) be detained in civil prison until
the plaint is dismissed.

Provided that an order under clause (d) or (e) shall not be made unless the Court is satisfied.
That the debtor or the Responsible officer with intent to defeat or delay his creditors or to
avoid any process of the Court he has absconded or about to abscond from the local limits of
the Courts jurisdiction has failed to disclose or about to conceal, destroy, transfer, or remove
such limits, any property other than his exempted property or any documents likely to be of
use to his creditors or the Court in course of hearing or during the period of bankruptcy of the
debtor. at the time of making an order fixing a date for hearing the plaint or at any
subsequent time before adjudication, the Court may, either of it’s own notion or on the
application of any creditor, make one or more of the following orders namely -in the case of
a debtor other than an individual debtor order, to designate an individual as his
representative to be called the Responsible officer within specified time, and where the said
debtor defaults in so designating the Court shall designate one or more Responsible officers
who are owners of, or the case maybe, directors or chief executive by whatever name called,
in relation to the activities or business of that debtor.
Responsible officer by order prepare such reports, gather such property enter into or refrain
from such transaction, appear at such meetings or hearing and other actions as the Court
deems appropriate.Order the debtor or the Responsible officer to give reasonable security for
his appearance until the plaint is dismissed.the attachment by actual seizure of whole or any
part of the property in the possession of the debtor but excluding his exempted property.
Order of warrant to issue with or without bail for the arrest of the debtor or the responsible
officer who has failed to comply with any order given clause (b) (c) be detained in civil
prison until the plaint is dismissed.

The plaint may be rejected for the following causes which are mentioned in section.28 of the
Bankruptcy Act.1997-

(1)court shall dismiss a plaint presented by creditors if


a) The Court is not satisfied with the proof of -

i. Such creditors right to present the plaint

ii. the service on the debtor of a notice of the order fixing a date for
hearing the plaint in accordance with section 22 (2)

iii. The alleged act of Bankruptcy, or

b) The debtor can satisfy the Court that -

i. He is able to pay his debts

ii. he is not a willful defaulter or,

c) The Court is satisfied that for any other cause, it is expedient that no order
of adjudication should be made,

2) In this case of a Plaint presented by a debtor, the court shall dismiss the Plaint if it is
not satisfied about his right to present the Plaint.
Conclusion:

Bankruptcy is a procedure under the Bankruptcy and Insolvency Act (the “BIA”), which is
designed to provide financial relief to individuals, corporations, partnerships and certain trusts
with overwhelming debt burdens, by halting the legal actions of creditors (also known as a stay
of proceedings). This stay of proceedings against creditors is implemented to prevent any unfair
advantages of one creditor over another.

Bankruptcy is considered a suitable solution when it is determined that the debtor’s operations
are not viable or cannot be restructured in order to provide greater value to the stakeholders, or
all other options have been exhausted.

A Bankruptcy process usually begins with a company voluntarily making an assignment of its
property for the benefit of its creditors (“Assignment in Bankruptcy”). A company may also be
petitioned into Bankruptcy by one or more creditors making an application to Court to have the
company declared Bankrupt. A Trustee in Bankruptcy (“Trustee”) is appointed in conjunction
with the assignment or petition in Bankruptcy.

The Trustee is an independent third party appointed by the Official Receiver (a representative of
the Office of the Superintendent of Bankruptcy) to manage the bankruptcy process. Trustees are
licensed by the Office of the Superintendent of Bankruptcy.

At the time of its appointment, all property of the Bankrupt passes to the Trustee, including
property located outside Canada and property of the Bankrupt in the possession of third parties.

The Trustee will initially take possession of and secure the Bankrupt’s property. The property
will be sold and the proceeds distributed, subject to the rights and actions of secured creditors (as
a secured creditor may choose to appoint a Receiver in order to realize upon assets on its
security).

In order to participate in any distribution, creditors must submit a Proof of Claim to the Trustee. The
Proof of Claim sets out what is owed to the creditor and is reviewed by the Trustee and the company.