WHAT TO READ

1. Definition of Banktrupty
2. Qualifications of a Official Receiver
3. Debtors and Creditors Application
4. Annulment of a Bankruptcy Notice
5. Duscharge from Bankruptcy
6. Alternatves to Bankruptcy
7. What other factors does the court consider before adjudging a debtor as bankrupt- Section
17
8. What is the effect of a bankrupt’s death after a bankruptcy order? Section 57
9. What happens to a bankrupt’s property after a bankruptcy order? Section 104
10. When can Interim orders be made? See sec 304-309
11. Duties of a bankrupt- Sections 140.
12. Limitations of a bankrupts activities - Sections 152
13. Bankruptcy Offences Sections 289-296
BANKTRUPTCY
(QUESTION 3 AND QUESTION 5(NOVEMBER 2022))
There are two primary objects of bankruptcy.
a) vest all the property which the debtor has at the commencement of the bankruptcy
or acquires before his discharge in a trustee for distribution amongst his creditors
equitably according to their rights.
b) release the debtor from his liability to those creditors at the end of a specified
period subject to his conduct during the bankruptcy
Declaration for Bankruptcy occurs when the court makes an order on-
a) the application of one or more creditors of the debtor made in accordance with
section 17 - 31 of the Insolvency Act 2015; or
b) on the application of the debtor made in accordance with section 32 - 35.
Debtors Application(Section 32 to 35)
An application is made using a bankruptcy petition and in Form 10 set make application
for out in the First Schedule.
The petition is accompanied by the following documents -
a) A supporting affidavit to the petition in Form 8 set out in the First Schedule;
b) A statement of debtors financial position called a Statement of Affairs in Form 11
set out in the First Schedule; (Sec 18(3) of the Insolvency Regulations) -
particulars of the debtor's creditors and of the debtor's debts and other liabilities and
assets
c) An application for appointment of trustee in Form 9 of the First Schedule
Contents of Bankrupts Notice
(a) the address in which the bankrupt has resided in the proceeding period of twelve
months before the issuance of the bankruptcy order;
(b) the principal trading address, if different from the bankrupt's residential address;
(c) the bankrupt's date of birth;
(d) the bankrupt's occupation;
(e) any other name by which the bankrupt has been known; and
(f) any name or style, other than the bankrupt' s own name, under which—
(i) the bankrupt carried on business; and
(ii) any debt owed to a creditor was incurred
ALTERNATIVES TO BANKRUPTCY
a) Voluntary arrangements (Sec 303-315)
This means a proposal made by a debtor to the debtor’s creditors for a composition in
satisfaction of the debtor’s debts or a scheme of arrangement of the debtor’s financial affairs.
The supervisor is responsible for implementing and supervising a voluntary arrangement Sec 315
A "supervisor" in relation to a voluntary arrangement, means the person who is for the time
being performing the functions imposed as a result of the approval of the arrangement by the
creditors of the debtor.
b) A Summary Instalment Order (Sec 323)
An order made by the Official Receiver directing the debtor to pay the debtor's debts-
I. in instalments or in some other way; and
II. in full or to the extent that the Official Receiver considers practicable in the
particular circumstances of the case.
Who can apply for summary instalment order
The Official Receiver may make a summary instalment order on the application of—
(a) a debtor; or
(b) a creditor with the debtor's consent
While a summary instalment order has effect, a person may not begin or continue proceedings
against the debtor unless—
(a) the Official Receiver gives approval for a creditor to begin or continue
the proceedings; or
(b) the debtor is in default under the order.
The payment of instalments under a summary instalment order can be spread over a period not
exceeding—
(a) three years; or
(b) if justified by 5 yrs
The Official Receiver may make a summary instalment order if satisfied that—
(a) the debtor's total unsecured debts that would be provable in the debtor's bankruptcy do
not exceed the amount prescribed by the insolvency regulations for the purpose of this
section; and
(b) the debtor is unable immediately to pay those debts.
The Official Receiver may not make such an order without having given the debtor and the
creditors an opportunity to make representations with respect to the matter.
c) No Asset Procedure (sec 343)
A No Asset Procedure is entered if-
(a) the debtor has no realisable assets;
(b) the debtor has not previously been admitted to the no-asset procedure;
(c) the debtor has not previously been adjudged bankrupt
(d) the debtor has total debts that are not less than one hundred thousand shillings and not
more than four million shillings; and
(e) the debtor does not have the means to repay any amount towards those debts.
Grounds of denying admission to No Asset Procedure (Section 346)
The Official Receiver shall not admit a debtor to the no-asset procedure if satisfied, on
reasonable grounds, that—
 (a) the debtor has concealed assets with the intention of defrauding the debtor's creditors
(such as by transferring property to a trust);
(b) the debtor has engaged in conduct that would, if the debtor were adjudged bankrupt,
constitute an offence under this Act;
(c) the debtor has incurred a debt or debts knowing that the debtor does not have the
means to repay them; or
(d) a creditor intends to apply for the debtor to be adjudged bankrupt and it is likely that,
if the debtor were to be adjudged bankrupt, the outcome for the creditor would be
materially better than if the debtor were admitted to the no-asset procedure.
b) Conditions or requirements for a creditor applying for bankruptcy order in respect of
debtor (Section 17)
a) the amount of the debt, or the aggregate amount of the debts, is equal to or exceeds the
prescribed bankruptcy level; prescribed bankruptcy level - Regulation 3 states that it is
two hundred and fifty thousand shillings.
b) the debt, or each of the debts, is for a liquidated amount payable to the applicant creditor,
or one or more of the applicant creditors, either immediately or at some certain, future
time, and is unsecured;
c) the debt, or each of the debts, is a debt that the debtor appears either to be unable to pay
or to have no reasonable prospect of being able to pay; and
d) there is no outstanding application to set aside a statutory demand in respect of the debt
or any of the debts.