§ 1Short title and introduction
1 (1) This Act
Bankruptcy Act, 1997
shall be called
(2)It shall come into force on such date as the Government may, by notification in the Official Gazette, specify within the 31st day of December, 1997.
Sections119
LanguageEnglish
The Bankruptcy Act, 1997 provides the legal framework for declaring individuals and business entities insolvent and for the distribution of their assets among creditors in Bangladesh. It applies to individuals, partnerships, and other legal persons who are unable to pay their debts as they fall due, but does not apply to companies governed by the Companies Act, which are wound up under separate insolvency provisions. The Act establishes the Court with jurisdiction over bankruptcy proceedings and sets out the procedure by which a creditor or the debtor may file a bankruptcy petition (Sections 6-8). Key mechanisms include the adjudication of bankruptcy by the Court, the appointment of a Receiver or Trustee who takes control of the bankrupt's property (Section 24), the investigation of the bankrupt's affairs, the realisation and distribution of assets rateably among creditors with preferential payments for certain debts (such as government dues and wages), and the eventual discharge of the bankrupt (Section 34). Notable provisions include the avoidance of fraudulent preferences and undervalued transactions entered into prior to bankruptcy, the examination of the bankrupt by the Court, and penalties for concealment of property or failure to disclose assets. The Act remains the principal insolvency legislation for individuals and partnerships in Bangladesh.
Full text · showing key sections
§ 1Short title and introduction
§ 2Definition
2 Subject to anything contrary to the subject or context, in this Act,—
(1)“exempt property” means the property of a single debtor which is exempt under the provisions of section 32;
(2)“petition” means any petition filed under section 10 for the purpose of obtaining a declaration of bankruptcy, and “petitioner” means the person who files the petition;
(3)“Court” means the Insolvency Court as defined in section 4(3);
(4)“formal claim” means any claim issued in the prescribed form and manner in accordance with the provisions of sub-section (2) of the same section, for the purpose of sub-section (1)(j) of section 9;
(5)“appeal” means an appeal filed under section 96;
(6)“Appellate Court” means the High Court Division of the Supreme Court of Bangladesh;
(7)“compromise settlement” means any compromise settlement proposed or approved under section 43;
(8)“individual” means a person having a natural entity and “individual debtor” means a debtor who is an individual;
(9)“croc” means any croc implemented or enforceable under any provision of this Act in the manner described in section 101;
(10)“declaration order” or “insolvency order” means any order made under section 10 declaring a person bankrupt;
(11)“District Court” means the Chief Civil Court having original jurisdiction over a district;
(12)“Schedule” means the Schedule made under section 38(1);
(13)“Penal Code” means;
Penal Code, 1860
(Act XLV of 1860);
Penal Code, 1860
(Act XLV of 1860);
(14)“claim” means any claim of any kind or nature which is quantifiable by money;
(15)“responsible bankrupt” means a single bankrupt in respect of whom an order of discharge has not been made under the provisions of Chapter V of this Act;
(16)“discharge” means a state in which an order of discharge made under the provisions of Chapter V of this Act in respect of a single bankrupt is discharged from liability for a debt provable against him under section 39;
(17)“charged officer” means the chargeable officer designated under section 24 (1)(a);
(18)“insolvent” means any debtor declared insolvent under section 10 or section 45 or section 46(13);
(19)“insolvency proceedings” means any insolvency proceedings referred to in section 9;
(20)“Code of Civil Procedure” has the meaning
Code of Civil Procedure, 1908
(Act V of 1908);
Code of Civil Procedure, 1908
(Act V of 1908);
(21)“section” means any section of this Act or any section of the Code of Civil Procedure or the Code of Criminal Procedure;
(22)“prescribed” means prescribed by rules made under this Act;
(23)“decree” means decree as defined in section 2(2) of the Code of Civil Procedure;
(24)“committee of creditors” means any committee of creditors constituted under section 36(1) or section 46(11)(g);
(25)“reorganization” means a proposed or approved reorganization in respect of the debt of an eligible debtor under section 46;
(26)“reorganization” means a reorganization proposed or approved under section 43 in respect of the affairs of a debtor;
(27)“revision” means revision under section 99;
(28)“representative” shall include an employee;
(29)“provable debt” means any debt provable against the debtor under section 39;
(30)“administrative expenses” means the fees payable by the receiver under the provisions of this Act and the expenses for the management, administration, sale or distribution of the distributable assets, including the expenses of payment of any claim arising against the said assets after the declaration of bankruptcy;
(31)“Criminal Procedure Code” has the meaning
Code of Criminal Procedure, 1898
(Act V of 1898);
Code of Criminal Procedure, 1898
(Act V of 1898);
(32)“distributable portion” or “distributable portion” means the portion determined in accordance with the provisions of sections 76 to 79 for the purpose of distribution to creditors from the distributable assets;
(33)“distributable assets” means the distributable assets referred to in section 31(2) and any such subject property included as part of the distributable assets in accordance with other provisions of this Act;
(34)“rules” means rules made under this Act;
(35)“Special Manager” means the Special Manager referred to in sub-section (8) or (9) of section 46;
(36)“person” means a company, statutory or otherwise, association and partnership firm;
(37)“bank loan” means any bank company under the Bank Companies Act, 1991 (Act No. 14 of 1991) or
Financial Institutions Act, 1993
(Act No. 27 of 1993) any loan or financial facility provided by any financial institution as defined in section 2(j) thereof, which may be treated as a claim;
Financial Institutions Act, 1993
(Act No. 27 of 1993) any loan or financial facility provided by any financial institution as defined in section 2(j) thereof, which may be treated as a claim;
(38)“qualifying debtor” means a debtor who is not an individual;
(39)“eligible creditor” means a creditor who, individually or jointly, has sent a formal demand to the debtor in accordance with clause (j) of section 9(1) claiming an overdue debt of at least Rs.5,00,000.00;
(40)“receiver” means an interim receiver appointed under section 64 and an interim receiver appointed under section 23(1) or section 46(3) and also includes an official receiver appointed under section 74;
(41)“debtor's property” means the property held by the debtor in his own name and anonymously in the name of his wife, son, daughter and any other person.
§ 3Application of other laws
3 Unless otherwise provided in this Act, its provisions shall not be in derogation of, but in addition to, any other law for the time being in force.
§ 4Bankruptcy Court
4 (1) Subject to other provisions of this Act, the District Court shall be the court having jurisdiction under this Act and the District Judge shall be the judge to try and settle the proceedings arising under this Act in the area under the jurisdiction of the said Court.
(2)The District Judge may empower any Additional District Judge serving in his jurisdiction to try and dispose of proceedings under this Act.
(3)The Court of Judges referred to in sub-sections (1) and (2) shall, for the purposes of this Act, be called the Bankruptcy Court.
§ 5Power of the Court to decide all questions relating to insolvency
5 (1) Subject to the provisions of this Act, the Court shall have full power to decide any question arising in any bankruptcy proceedings, whether of title or priority or of law or fact or of any other nature, which comes to the notice of the Court or which the Court deems expedient and necessary to be disposed of for the purpose of the full justice of the case or the full distribution of the property concerned.
(2)Notwithstanding anything contained in any other law for the time being in force, every decision of the Court shall, subject to the provisions of this Act, be final and binding on the debtor and his distributable estate on the one hand and all persons claiming against him or on the distributable property on the other, or all persons claiming through or under one or more of such persons.
(3)Where the court considers that it is not expedient or necessary to give a decision on any question referred to in sub-section (1) but has reason to believe that the debtor has a salable interest in any property, the court may, without further inquiry, sell the said interest, in such manner and on such terms as it thinks fit.
§ 6General Powers of Courts
6 The Court shall, subject to the provisions of this Act, exercise the same powers in respect of any proceedings under this Act as it may exercise in the exercise of its original civil jurisdiction.
§ 7Special powers of the court
7 (1) Where any debtor or any other person fails to comply with any order or direction given by the court or by the receiver or any other officer of the court under the authority delegated under this Act, the court, on its own initiative or on the application of the receiver or the said other officer, may order the said defaulting debtor or the defaulting person to comply with the said order or direction, or if there is sufficient cause, the said defaulting debtor or the defaulting person to be imprisoned in civil prison for such term and under such conditions as may be determined by the court. Can order delivery
(2)No other right or remedy of any person in respect of the said failure shall be impaired by reason of the exercise of the power under sub-section (1), but rather the said power shall be deemed to be in addition to such right or remedy.
§ 8Procedure to be followed by the Court
8 (1) Unless otherwise expressly provided by or under this Act, no provision other than the provisions of section 11 of the Code of Civil Procedure shall apply to any proceedings in a court.
(2)In all proceedings under this Act the Court shall follow the procedure prescribed in this Act and the Rules
§ 9Bankruptcy action
9 (1) Any of the following acts by a debtor shall be an act of insolvency, namely:-
(a) if he transfers to a third person all or nearly all the property held anonymously in the name of himself and his wife, son, daughter in Bangladesh or elsewhere for the benefit of his creditors in general.
(b) if he transfers the property or any part of it in Bangladesh or elsewhere, held anonymously in the name of himself and his wife, son, daughter, with a view to defeating or delaying the claims of his creditors;
Explanation- If a person, being unable to pay his debts, transfers his property or any part of it without reasonable consideration, he shall be deemed to have made the transfer with the intention of defeating or delaying the claims of his creditors;
(c) if he transfers or mortgages or encumbers or encumbers his property or any part thereof in Bangladesh or elsewhere in such a manner that, in the event of his being declared insolvent, such transfer, mortgaging, encumbrance or encumbrance is deemed to be of no effect as a fraudulent preference under this Act or any other law for the time being in force;
(d) with intent to frustrate or delay the claims of his creditors, if he—
(b) leaves Bangladesh or resides outside Bangladesh;
(a) leaves his place of residence or his usual place of business;
(e) conceals himself in such a manner that his creditors are deprived of the opportunity of communicating with him; or
(e) complying with any decree, judgment or order passed by any court or any other authority contrary to his interest by resorting to conspiracy or fraud;
(e) if any of his property has been sold in execution of a decree of any court for the purpose of payment;
(f) if he himself applies to the court under this Act to be declared bankrupt;
(g) if he gives notice in writing to any of his creditors that he has suspended or is about to suspend the payment of his debt;
(h) if he is detained in prison in execution of a decree of a court for inability to pay any debt;
(j) If one or more creditors have sent a formal demand under this Act requesting payment of the said debt or providing necessary security to the creditor's satisfaction against another valid and overdue debt of Rs.
(2)The claim referred to in sub-section (1)(j) shall be issued in the prescribed form and in the prescribed manner and the result of rejection of said claim shall also be mentioned therein.
(3)For the purposes of this section, the work of an agent shall be deemed to be the work of his principal.
§ 10Power to issue declarations
10 If the debtor commits any act of insolvency, one or more eligible creditors or such debtor may, subject to the provisions of this Act, present a petition, and the court may make an order declaring the debtor bankrupt in view of such petition; In this Act, such an order is called a declaration of bankruptcy
§ 11Persons subject to insolvency proceedings
11 (1) Any person other than a person mentioned in sub-section (2) shall be subject to insolvency proceedings under this Act, who-
(a) is a resident of Bangladesh or has the head office of his business in Bangladesh;
(b) was ordinarily resident in Bangladesh at any time during the one year immediately preceding the submission of the application or had a place of residence or place of business in Bangladesh during that period;
(c) usually conducts its business in Bangladesh through a representative
(2)The Court shall not entertain any application against any person or body mentioned below, namely :-
(a) any government body including the National Parliament and the judiciary;
(b) any charitable or religious organization;
(c) statutory bodies whose main purpose is not for profit;
(d) any autonomous institution established by the Government or with the financial assistance of the Government
(a) any government body including the National Parliament and the judiciary;
(b) any charitable or religious organization;
(c) statutory bodies whose main purpose is not for profit;
(d) any autonomous institution established by the Government or with the financial assistance of the Government
§ 12Conditions for presentation of application by creditor
12 (1) No creditor shall be entitled to present an application against the debtor unless he is a proper creditor, and if—
(a) the amount due to the debtor by the said creditor, or if two or more creditors apply jointly, their total amount due does not exceed 5,00,000.00 (Five Lakhs);
(b) prima facie evidence of any insolvency proceedings by the debtor is not produced by said creditor; And
(c) the said insolvency proceedings have not been organized within one year immediately preceding the date of presentation of the petition.
(2)If the said creditor is a secured creditor, he shall mention in his application an estimated value of the said security, otherwise he shall be deemed to have expressed his desire to be considered as an unsecured creditor.
§ 13Conditions for Submission of Petition by Debtor
13 (1) A debtor shall not be entitled to present an application unless he specifically states in the application that he is unable to pay his debt and unless—
(a) He further mentions in the said application that the amount of his debt is at least 20,000.00 (twenty thousand) Taka; or
(b) he is arrested or detained in prison in execution of a decree passed against him by any court on account of his inability to pay any debt; or
(c) an order for attachment of his property is made in execution of such decree and the said order is in force at the time of presentation of the application.
(2)If a person after being declared insolvent under this Act fails to apply for discharge or to take necessary steps in connection with the said application, if the court cancels the relevant declaration order, the said debtor shall not present any application to be declared bankrupt without the permission of the court canceling the said declaration order.
(3)The Court shall not grant the permission referred to in sub-section (2) unless it is satisfied that,—
(a) the debtor was prevented by reasonable cause from making his application for discharge or from taking the necessary steps thereon after the presentation of such application; or
(b) the facts on the basis of which he has applied for declaration of bankruptcy, are different from the facts mentioned in the earlier declaration petition.
(a) the debtor was prevented by reasonable cause from making his application for discharge or from taking the necessary steps thereon after the presentation of such application; or
(b) the facts on the basis of which he has applied for declaration of bankruptcy, are different from the facts mentioned in the earlier declaration petition.
§ 14Submit an application to a court of competent jurisdiction
14 Subject to the provisions of section 4, every application shall be presented to the court within the local limits of which-
(a) the debtor ordinarily resides or carries on business or is personally gainfully employed, or is arrested or detained in prison, or
(b) where the debtor is not an individual, where his principal or registered office is situated
§ 15Application verification
15 Every application under this Act shall be in writing and shall be signed and verified in the manner prescribed in the Civil Procedure Code for signature and verification of plaint.
§ 16Content of the application
16 (1) Every application presented by the debtor shall contain the following particulars, namely:-
(a) a definite statement to the effect that the debtor is unable to pay his debts;
(b) generally the place where he resides or carries on his business or is personally engaged in any gainful activity or, if he is arrested or imprisoned, the place where he is in the custody of any person, or, if the debtor is not a sole proprietor, full particulars of the place where his principal or registered office is situated;
(c) the court which ordered his arrest or imprisonment or attachment of his property, and the decree or judgment in pursuance of which any such order was passed, a description thereof;
(d) the amount, particulars and the names and addresses of the creditors concerned, of all pecuniary claims raised against him, so far as he knows or can with reasonable care or endeavour;
(e) the following particulars including the amount and details of all his property:-
(b) the value of all such property other than money;
(a) a description of the place or places where such property is to be found;
(e) a declaration to the effect that he is willing to surrender to the Court all his property including accounts;
Provided that, in the case of the debtor, his exempted property, if any, shall not be covered by such assignment;
(f) a statement as to whether the debtor has at any time previously presented any petition or application for the purpose of being declared bankrupt in Bangladesh or elsewhere and if any such petition or petition has been presented—
(b) whether the said application or petition has been rejected or not and if so, the reason thereof; or
(a) if he has been declared insolvent thereby, a brief account of his said insolvency together with a statement to the effect whether any previous declaration of insolvency made in respect of him has been revoked and, if so, the reason thereof.
(2)Every application presented by a creditor shall contain, to the best of his knowledge, the information relating to the debtor mentioned in sub-section (1) (b) and shall also specify the following information, namely :-
(a) the insolvency proceedings organized by the debtor, and the date of such organisation; And
(b) the amount and particulars of the creditor's claim against the debtor
(a) the insolvency proceedings organized by the debtor, and the date of such organisation; And
(b) the amount and particulars of the creditor's claim against the debtor
§ 17Withdrawal of application
17 No petition shall be withdrawn without leave of the court, whether filed by the debtor or the creditor.
§ 18Consolidation of Proceedings
18 Where two or more petitions are presented against the same debtor, or separate petitions are presented against a joint debtor, the Court may, subject to such conditions as it thinks fit, consolidate all the proceedings based on such petition or any number of them.
§ 19Power to Substitute Petitioning Creditor
19 If a creditor fails to take action on the petition presented by him with due diligence, the court may substitute any other duly qualified creditor in its place.
§ 20Continuance of proceedings after death of debtor
20 On the death of the debtor for or against whom the petition is filed, the proceedings based on the petition shall continue for so long as is necessary for the purpose of recovery and distribution of the property of the said debtor, unless the court orders otherwise by showing cause in writing.
§ 21Application Procedure
21 The procedure prescribed in the Code of Civil Procedure for the admission of applications shall, so far as applicable, be followed in respect of applications presented under this Act:
Provided, however, that if any different procedure is prescribed in this Act and the Rules, the same shall be followed.
§ 22Procedure after submission of application
22 (1) If an application is accepted, the court shall make an order fixing a date for hearing it, which date shall be within 60 (sixty) days after the date of the order.
(2)Notice of an order passed under sub-section (1) shall be issued as follows, namely:-
(a) by giving such notice to the applicant or his attorney or authorized representative in such manner as the Court thinks fit and practicable;
(b) in the case of any person other than the applicant, by publishing the substance of the said application and order in such manner as the Court thinks fit and practicable including in two consecutive issues of at least two Bengali dailies of wide circulation and published from the capital of the country.
(a) by giving such notice to the applicant or his attorney or authorized representative in such manner as the Court thinks fit and practicable;
(b) in the case of any person other than the applicant, by publishing the substance of the said application and order in such manner as the Court thinks fit and practicable including in two consecutive issues of at least two Bengali dailies of wide circulation and published from the capital of the country.
§ 23Appointment of Interim Receiver
23 (1) In passing an order fixing a date for the hearing of an application filed by a creditor, the court may appoint an interim receiver for the debtor's property or any particular part thereof, and shall ordinarily make such appointment on an application filed by the debtor; and direct the receiver not to immediately take possession of the said property; And in view thereof the receiver may, subject to the direction of the court, exercise the powers exercisable by any receiver appointed under the Code of Civil Procedure and including any powers mentioned in sections 65, 66, 67, 68 and 71 of this Act.
(2)In relation to the appointment of an interim receiver, the Court shall follow the conditions set out in section 64(1).
(3)If no interim receiver is appointed as aforesaid, the court may at any time before the declaration of bankruptcy appoint such receiver.
§ 24Interim proceedings against the debtor
24 (1) At any time before passing the order fixing the date of hearing of the petition or passing the declaration of bankruptcy, the court may, on its own initiative or on the application of any creditor, pass any one or more of the following orders, namely:-
(a) an order may be made to any debtor other than a sole debtor that the said debtor shall, within such time as the Court may fix, nominate a single person as his representative and such person shall be called the responsible officer, and if the debtor fails to make such nomination, the court shall appoint one or more persons to be the responsible officer who is or are a partner or director or chief executive of the activities or business of the said debtor, to be called Be that as it may;
(b) order the debtor or, as the case may be, the officer in charge, to collect any property, to do or refrain from doing any necessary transaction, to appear at any relevant meeting or hearing or to take any other action or to file a report in respect of any such property as the court thinks fit;
(c) order the debtor or, as the case may be, the responsible officer to furnish reasonable security for the purpose of securing the appearance of the debtor until the petition is dismissed or the declaration of bankruptcy is made, and in default of such security direct him to be detained in civil prison;
(d) ordering the physical attachment by way of writ of garnishment of all or part of the property, including accounts receivable, in the possession or control of the debtor, other than exempt property, if any;
(e) if the debtor or, as the case may be, the officer in charge fails to comply with any order made under clause (b) or (c), order him to be arrested, with or without bail, and to detain him in civil prison until the petition is dismissed or a declaration of bankruptcy is made, or to release him on reasonable and necessary conditions of bail;
Provided thatno order shall be made under clause (d) or (e) unless the Court is satisfied that the debtor or the officer concerned has failed or delayed the claim of any of his creditors or evaded the warrant or notice of the Court—
(b) is absconding or has gone beyond the local jurisdiction of the Court, or has absconded or has gone beyond the said limits or is staying outside the said limits, or
(a) fails to disclose or conceals or destroys or transfers or removes from the local jurisdiction of the Court any such property, other than exempt property, or any document relating thereto, which may be of use to the creditors or the court during the hearing of the petition or the debtor's bankruptcy, or causes any such act to be done.
§ 25Obligations of the debtor
25 (1) When the order fixing the date of hearing of the application is passed and at any time thereafter as directed by the court or the receiver it shall be the duty of the debtor-
(a) render all his accounts;
(b) produce a list of his assets, a list of his creditors and their debts and a list of his debtors and their debts;
(c) appear to answer the interrogatories of a court or receiver;
(d) executing the necessary documents in respect of his property;
(e) perform all other functions generally required
(2)The debtor shall not institute any civil suit or any legal proceeding for recovery of claims against any of his creditors until the date-fixing order for the hearing of the application is made, until the said application is dismissed, or until the declaration of bankruptcy is made, until it is set aside, or until the court orders otherwise.
§ 26Release of arrested or detained debtor
26 (1) If a debtor is arrested or detained in prison in the execution of a decree relating to the payment of money passed by a court, the court may, at the time of passing the order fixing the date of hearing of the application or at any time thereafter, order the release of the said debtor subject to such conditions as it considers reasonable and necessary.
(2)The Court may at any time order the re-arrest of any person released under this section and his delivery to the same custody or prison from which he was released.
(3)In making any order under this section the Court shall record the reasons for it
§ 27Debtor's objection filing and procedure of hearing
27 (1) On the presentation of an application by a duly qualified creditor, the debtor may, within the date fixed by the Court, but before the date of hearing of the application, submit in writing any objections he has to the said application; and the Government may, if necessary, prescribe the form of such objection by rule
(2)On the date fixed for the hearing of the application, or, subject to the provisions of sub-section (3), if the hearing is adjourned, the Court shall direct the following matters to be proved, namely-
(a) the right of the creditor or, as the case may be, the debtor, in respect of filing an application;
Provided, however, that if the debtor has filed an application, for the purpose of proving his liability to pay the debt, he shall be ordered to present such evidence as may be prima facie credible to the court: and if the court is satisfied of the fact, there shall be no obligation to hold an additional hearing on the matter;
(b) if the application is presented by a creditor and the debtor has not already appeared, giving notice to the debtor under section 22(2); And
(c) Insolvency proceedings alleged against the debtor
(a) the right of the creditor or, as the case may be, the debtor, in respect of filing an application;
Provided, however, that if the debtor has filed an application, for the purpose of proving his liability to pay the debt, he shall be ordered to present such evidence as may be prima facie credible to the court: and if the court is satisfied of the fact, there shall be no obligation to hold an additional hearing on the matter;
(b) if the application is presented by a creditor and the debtor has not already appeared, giving notice to the debtor under section 22(2); And
(c) Insolvency proceedings alleged against the debtor
(3)The hearing of the petition shall ordinarily be held continuously on a daily basis, and in no case shall the hearing be adjourned for more than seven days at a time unless the petitioning creditor or creditors otherwise agree:
Provided, however, that the total amount of the period or periods during which the hearing is adjourned shall not exceed 90 (ninety) days.
Provided, however, that the total amount of the period or periods during which the hearing is adjourned shall not exceed 90 (ninety) days.
(4)At the hearing, if the debtor or, as the case may be, the officer in charge is present, the court or, if directed by the judge, the receiver shall, in the presence of the creditors, if any, examine the conduct, transactions and property of the debtor and the creditors may also cross-examine the debtor or the officer in charge.
(5)Subject to the time specified in sub-section (3), the court may grant the debtor or, as the case may be, the responsible officer or any creditor such time as may be necessary for the production of evidence on any matter claimed by them, if the court is satisfied that it is necessary for the proper disposal of the application to receive evidence on the matter.
(6)The Court shall prepare a statement containing the main findings of the facts obtained on the basis of the questioning of the debtor and the oral evidence taken at the hearing and this statement shall form part of the record of the proceedings.
§ 28Dismissal of application
28 (1) An application filed by a creditor shall be dismissed by the Court if—
(a) the court is not satisfied with the proof of the following matters, namely-
(b) the right of such creditor to file an application;
(a) service of notice of order fixing the date of hearing of the application on the debtor under section 22(2); And
(e) the alleged bankruptcy action; or
(b) the debtor may satisfy the court that,—
(b) he is able to pay his debts;
(a) he is not a willful defaulter; or
(c) the court is satisfied that it is not expedient to grant a declaration of bankruptcy for any other reason
Explanation- In this sub-section “voluntary defaulter” means a debtor who, after the issuance of a formal demand, has, for a period of one year, kept a bank-loan in default of at least Rs.5,00,000.00 (five lakhs).
(2)In the case of an application filed by the debtor, the Court shall dismiss the application if it is not satisfied of the right of the debtor to file the said application.
§ 29Payment of compensation
29 (1) If an application filed by a creditor is dismissed under section 28(1) and if the court is satisfied that the application was frivolous or vexatious, the court may, on the application of the debtor, award to the debtor an amount not exceeding Rs. may order the creditor and the compensation shall be recovered in the same manner as a fine
(2)If any compensation is ordered under sub-section (1), no civil or criminal proceedings under any other law shall be instituted to claim any compensation or other relief in respect of the application and proceedings referred to in the said sub-section.
§ 30Bankruptcy declaration
30 (1) If any application is not dismissed, the Court-
(a) issue a declaration of bankruptcy; And
(b) in the case of a single debtor, in the said order—
(b) fix the date on which the discharge of the debtor shall first be considered under section 47(3), and specify that by that date the debtor may apply for his discharge, if the debtor himself has not applied;
(a) shall further state that the debtor may appeal under section 96 against the said declaration after submitting to the court an amount determined by the court, which shall not be less than ten percent of the amount claimed by the eligible creditors.
(2)On sufficient cause being shown, the Court may extend the period within which the debtor may file an application for discharge and in such case shall notify all concerned in such manner as the Court may think fit.
§ 31Consequences of declaring bankruptcy
31 (1) If a declaration of bankruptcy is granted, the bankrupt shall render every assistance to the court in order to recover his subject property and distribute it among his creditors in accordance with the provisions of this Act.
(2)If a declaration of bankruptcy is granted, all the assets of the debtor other than the exempted assets shall be automatically vested in the receiver and in case no receiver is appointed, the same shall be automatically vested in the court, and the said assets shall be distributable among the creditors and the assets so vested shall be termed as distributable assets.
(3)During the pendency of the bankruptcy proceedings, no creditor may claim any other remedy or file any civil suit or other proceeding against the exempt property and distributable assets of the debtor in respect of any debt provable under this Act, unless the court so permits and imposes any conditions that such remedy claim or proceeding may be instituted.
(4)Nothing in this section shall impair the right of any surety creditor to recover his security or take any other action in respect of it but for the provisions of this section.
(5)If a declaration of bankruptcy is granted, it shall be deemed to have taken effect on the date of presentation of the petition.
§ 32Exempt property
32 Notwithstanding anything contained in any other provision of this Act, the possession of the following property of a single debtor shall not be taken under section 23 or vested in a court or receiver under section 31 and such property shall be called exempt property, namely:-
(a) machinery, which the debtor himself uses;
(b) clothing, household utensils and other similar necessaries for the use of the debtor, his wife or, as the case may be, husband and children;
(c) the debtor's (unmortgaged) residence or residence, the floor area or floor area of which does not exceed 2,500 square feet in aggregate on one or more floors in urban areas, and not more than 5,000 square feet in aggregate on one or more floors in other areas:
Provided thatthe total value of the goods mentioned in clauses (a) and (b) shall not exceed Rs.3,00,000.00 (three lakhs).
§ 33Transfer of pending cases etc
33 (1) Notwithstanding anything contained in any other law for the time being in force, if any suit or other proceeding relating to a claim for money or any other property is pending in any court against any debtor, if such court finds evidence that a declaration of bankruptcy has been made against the said debtor under this Act, the said court shall transfer the said suit or proceeding to the court granting the declaration:
Provided, however, that if any appeal or revision arising out of such suit or other proceedings is pending in any superior court, the said superior court shall transfer the appeal or revision to the appellate court mentioned in section 96.
(2)For the purposes of this Act, the courts referred to in sub-section (1) and the proviso thereto shall be deemed to be bankruptcy courts and appellate courts respectively; And if any such court orders or refuses to transfer any suit or proceeding under this section, no question of such order shall lie in any other court except on appeal or revision under the provisions of section 96 or, as the case may be, 99 respectively.
(3)Cases or other proceedings transferred under sub-section (1) shall be disposed of in the manner prescribed by the rules.
§ 34Declaration of publication
34 (1) The court shall cause a notice to be issued in the official gazette and in such other manner as may be prescribed by law, and the notice shall state the name, address and identity of the bankrupt, the date of issuance of the notice, the time limit for filing the debtor's discharge application and the name of the court issuing the notice, and the court may include any other information in the notice.
(2)If, on the application of any creditor, the court orders the publication of the said notice in any newspaper, the court may direct the said creditor to bear the cost of its publication.
§ 35Protective order
35 (1) An insolvent debtor may apply to the Court for security against his arrest or detention for any of his debts, and the Court, if it deems it necessary to give notice to any creditor, may, in its discretion, make such protective order as may be necessary for the security of the said debtor, by giving notice in the proper manner and giving the creditor concerned a reasonable opportunity of being heard.
(2)a security order shall be granted in respect of all the debts of the debtor or any debts determined by the court therein; and the said order shall remain in force for such date and time as may be fixed by the Court and may be revoked or renewed whenever the Court thinks fit.
(3)No debtor shall be arrested or detained in prison for a debt in respect of which a security order is made, and any debtor arrested or detained in default of such order shall be released forthwith on production of a copy of the said order:
Provided, however, that if the said security order is revoked or the relevant declaration is cancelled, the said security order shall not prejudice the rights of any creditor.
Provided, however, that if the said security order is revoked or the relevant declaration is cancelled, the said security order shall not prejudice the rights of any creditor.
§ 36Committee of Creditors
36 (1) If the number of eligible creditors exceeds ten, the court shall order the receiver to form a creditors' committee in the manner prescribed by the rules or in the absence of such rules, and the committee shall consist of not more than five members as may be prescribed by the court.
(2)The Committee of Creditors constituted under sub-section (1) may give necessary advice to the receiver in the discharge of his duties, and the receiver shall, without prejudice to the provisions of this Act and the Rules, comply with such advice as far as possible.
§ 37Power of arrest after proclamation
37 After the declaration of bankruptcy, on the application of the creditors' committee or the receiver or any creditor, if the court has reasonable grounds to believe that the debtor or, as the case may be, the officer in charge has absconded or gone outside the local jurisdiction of the court for the purpose of evading any obligation imposed or imposed on him under this Act, the court may issue a warrant for his arrest. may, and if he appears or is brought before the Court, if the Court is satisfied that he is absconding or has gone away for the said purpose, it may order his release on bail on such terms as may be reasonably necessary or, failing such bail, order his detention in civil prison for a term not exceeding three months.
§ 38Creditors and dues-schedule
38 (1) When a declaration of bankruptcy is granted, every person claiming a debt provable under this Act against the bankrupt shall, in such form as may be prescribed by law or prescribed by the Court, present a summary statement containing the amount and particulars of the debt claimed and the necessary evidence in support thereof, and the Court shall, by order, determine all persons proving such debt and the amount of their debts and make a schedule containing the particulars of such persons and their debts. will:
Provided that, subject to the provisions of section 39(1), if in the opinion of the court it is not possible to determine the amount of any debt fairly, the court shall make an order to that effect and the said debt shall not be included in the said schedule.
(2)A copy of such schedule shall be affixed on the notice board of the court building or in any other public place.
(3)Notwithstanding the making of the schedule under sub-section (1), any person shall, in the case of a single debtor, at any time before the discharge of the insolvent, and in the case of a debtor other than a single debtor, at any time before the date fixed by the court for that purpose or, if the court does not fix such date by rule, at any time before the date fixed by rule, have his name entered in the schedule as a creditor in respect of a provable debt under this Act. may apply to the court for an order and produce the necessary evidence to prove his debt; and the court shall accordingly grant or reject the application after giving notice to the receiver and the person previously proved to be the creditor and giving them a reasonable opportunity of being heard if they have any objections.
(4)Any application or objection under sub-section (3) shall be filed with brief details in the form prescribed by the rules and in the absence of such rules, shall be filed with brief details in the form prescribed by the court.
§ 39provable debt
39 (1) Any unliquidated claim shall be provable under this Act, unless the Court otherwise orders, except any debt which is not included in the schedule made under section 38 because it is not possible to ascertain the proper value, and any unliquidated claim arising out of any contract or breach of trust.
(2)At any time before the bankruptcy of a debtor other than a single debtor, and at any time before the discharge of a single debtor as an insolvent, all debts and liabilities incurred by him or her, whether present or future or of a certain or contingent nature, shall be deemed to be provable debts under this Act, unless the court orders otherwise. by
§ 40Power to cancel declaration
40 In cases where, in the opinion of the court, it is not proper to declare a debtor bankrupt, or where it is proved to the satisfaction of the court that the debts of the said debtor have been paid in full, the court shall, on the application of the debtor or any other interested person, cancel the said declaration by a written order; and the Court may, on its own initiative or on the application of the receiver or any creditor, also set aside any such declaration of bankruptcy which has been granted on the application of any such debtor who is not entitled to petition under the provisions of section 13(2).
§ 41Power to cancel multiple concurrent declarations against the same debtor
41 In any case, after issuing the declaration of bankruptcy, if it is proved in the court issuing the said order that there is a pending bankruptcy related or other similar proceedings against the same debtor in any other court in Bangladesh or outside of Bangladesh and the property of the debtor can be distributed more conveniently through the said other court, then the court can cancel the said declaration or suspend all related proceedings.
§ 42Proceedings after de-declaration
42 (1) If any declaration of bankruptcy is revoked, all the acts performed by the court or, as the case may be, the receiver debtor's property before the said revocation, the sale or other disposal of the debtor's property, including the payment of any sum due, shall be valid, and subject to such validity, the property of the bankrupt debtor shall be vested in a person appointed by the court, or, if such person is not appointed, any conditions prescribed by the court. Subject to this, the debtor's right and interest in the said property shall revert to the debtor.
(2)Every order revoking a declaration shall be published in the Official Gazette and in such other manner as may be prescribed by law.
§ 43Compromise and Reorganization Plan
43 (1) If any debtor, after the declaration of bankruptcy, presents a composition proposal for the discharge of his debts or a proposal containing a scheme of arrangement for that purpose, hereinafter referred to in this Chapter as a proposal, the Court shall fix a date for the consideration of the proposal and in connection therewith all creditors in such manner as may be prescribed by law and in such manner as may not be prescribed by law. If so, the Court shall give such notice as the Court may think fit, and direct the receiver to prepare and submit a report within the prescribed time on the practicability of the proposal; And then the receiver will submit the said report with his specific opinion
(2)On the basis of the value of all the debts proved in the court and on the basis of the information obtained in the documents, if two-thirds of the creditors attend the court in person or through their lawyers or any other representatives authorized by them and accept the proposal mentioned in sub-section (1) and the court approves it, then all the creditors shall be deemed to have duly accepted the proposal.
(3)During the consideration of the proposal as described in sub-section (2), the debtor may amend the terms of his proposal and the Court may approve such amendment, if in the opinion of the Court the said amendment is in the interest of all the creditors as a whole.
(4)If, after hearing and considering the receiver's report on the proposal and any objections raised by or on behalf of any creditor, the court is of the opinion that the terms of the proposal are not reasonable or will not be beneficial to the creditors as a whole, the court shall refuse approval of the said proposal.
(5)If any matter relating to the motion comes to the notice of the court which, if proved, would require the court to suspend or impose a condition in respect of the debtor's refusal to discharge, the court shall refuse to approve the motion, unless the debtor furnishes reasonable security in the discretion of the court, for the purpose of giving notice to the creditors and after a hearing, for the payment of the debts owed to the creditors:
Provided that, for the purposes of this sub-section, reasonable security shall be deemed to have been given if 15% to 65% of all dues due to unsecured creditors and 25% to 75% of all dues due to bank loan creditors, as determined by the court, are furnished:
Provided further that in determining the said reasonable security, the court shall consider the following circumstances relating to the debtor's debt, namely:-
(a) if the debtor is the victim of a cause wholly beyond his control, the extent of such cause;
(b) if the debtor has accepted money for financing any enterprise, the degree of risk involved with the said enterprise;
(c) Whether the conduct of the debtor is unconscionable or unethical
(6)The court shall not approve any compromise or scheme of arrangement which does not provide for priority payment of debts preferred under section 75 over other debts.
(7)In any other case the Court may approve or reject the motion
§ 44Sanction order and its consequences
44 If any proposal under section 43 is approved—
(a) the Court shall, by an order, prescribe the terms of the sanction;
(b) the court shall specify in the said order the cancellation of the declaration of bankruptcy and the provisions of section 42 shall apply to such cancellation; And
(c) An approved compromise or scheme of arrangement shall be binding on all creditors in respect of all debts due to the debtor and provable under this Act.
§ 45Power to re-declare debtor bankrupt
45 (1) If the debtor fails to pay any installments in accordance with the approved plan of compromise or reorganization, or if it appears to the Court that the said plan of compromise or reorganization cannot be implemented without injustice or undue delay to the creditor, or if the approval of the Court has been fraudulently obtained therefor, then the court may, if it considers it appropriate having regard to the existing circumstances, re- declare bankruptcy and cancel the plan of compromise or reorganization, but this shall not invalidate any transfer or payment or anything else duly effected pursuant to the plan of compromise or reorganization.
(2)If a debtor is again declared insolvent under sub-section (1) and any debt incurred by him before the said declaration, the same shall be provable in the bankruptcy proceedings.
§ 46Restructuring order
46 (1) At any time before or after the declaration of bankruptcy, an eligible debtor may apply to the Court for reorganization of his debts and in such application shall submit a plan of reorganization together with the reasons for the reorganization.
(2)If, on receipt of an application under sub-section (1), the Court is satisfied that the applicant is a proper debtor, the Court shall fix a date for hearing thereon within 90 (ninety) days of the receipt of the application; and shall give notice of the date of the hearing of the application to any receiver, if any, and to such creditors as may be found in the records of the court, in the manner prescribed by the rules or, in the absence of such rules, in such manner as the court thinks fit.
(3)At the time of fixing the date of hearing under sub-section (2), the court shall appoint an interim receiver, if no receiver or interim receiver has been appointed.
(4)After fixing the date for the hearing of the application the Court shall, if it thinks fit—
(a) exercise any of the powers referred to in clauses (a) and (b) of section 24(1) and make any order thereunder; And
(b) may direct the receiver to examine the plan of reorganization in the light of the information on his record and to prepare a report on the plan within such date as may be fixed by the Court, which shall not be later than the date of hearing fixed under sub-section (2); and in accordance with such direction the receiver shall submit a report on the said plan, together with his opinion as to the practicability of the proposed plan.
(a) exercise any of the powers referred to in clauses (a) and (b) of section 24(1) and make any order thereunder; And
(b) may direct the receiver to examine the plan of reorganization in the light of the information on his record and to prepare a report on the plan within such date as may be fixed by the Court, which shall not be later than the date of hearing fixed under sub-section (2); and in accordance with such direction the receiver shall submit a report on the said plan, together with his opinion as to the practicability of the proposed plan.
(5)The eligible creditors and the receiver may submit their written objections or suggestions to the proposed reorganization before the date of hearing of the petition; and the Court may, after hearing the report, if any, filed by the receiver under sub-section (4)(b), and the said application and any objections or suggestions filed thereon, may pass a reorganization order having regard to the following matters, namely:-
(a) national interest;
(b) the interests of creditors;
(c) Debtor's interest:
Provided, however, that if two-thirds of the creditors, personally or through their authorized representatives, on the basis of the value of all the debts proved in court, do not give written consent to the said reorganization plan, no reorganization order shall be passed;
It is further provided that the court, in passing the reorganization order, may, subject to the provisions of the rules, impose necessary conditions in the said plan with necessary modifications for the purpose of protecting the interests of such creditors or different classes of creditors who have not consented to the said plan, and such modifications and conditions shall form part of the plan.
(a) national interest;
(b) the interests of creditors;
(c) Debtor's interest:
Provided, however, that if two-thirds of the creditors, personally or through their authorized representatives, on the basis of the value of all the debts proved in court, do not give written consent to the said reorganization plan, no reorganization order shall be passed;
It is further provided that the court, in passing the reorganization order, may, subject to the provisions of the rules, impose necessary conditions in the said plan with necessary modifications for the purpose of protecting the interests of such creditors or different classes of creditors who have not consented to the said plan, and such modifications and conditions shall form part of the plan.
(6)The order shall be binding on the debtor and all creditors in respect of all debts provable under this Act, including debts due before the date of the order of reorganization.
(7)If any reorganization order is passed under sub-section (5), the declaration of bankruptcy, if any, previously granted shall automatically be cancelled; But such cancellation shall not impair the validity of any transfer or payment or anything else duly executed under this Act after the said declaration has been given.
(8)If a reorganization order is granted under sub-section (5), the distributable assets (Estate) of the debtor shall automatically be vested in the receiver, and the debtor, subject to the provisions of this Act and the supervision of the receiver, shall be the special manager (special manager) of his distributable assets and any related business.
(9)Court—
(a) on its own initiative or on the application of the receiver or any duly qualified creditor, and
(b) after giving notice to the person against whom the application is made or, as the case may be, to the duly qualified creditor or receiver or to the debtor and giving a reasonable opportunity of hearing the matter;
The receiver or a third person may appoint a special administrator, hereinafter called the substitute administrator, in place of the debtor.
(a) on its own initiative or on the application of the receiver or any duly qualified creditor, and
(b) after giving notice to the person against whom the application is made or, as the case may be, to the duly qualified creditor or receiver or to the debtor and giving a reasonable opportunity of hearing the matter;
The receiver or a third person may appoint a special administrator, hereinafter called the substitute administrator, in place of the debtor.
(10)The other provisions of this Act shall, subject to the provisions of this section, apply to reorganization proceedings in the same manner as they apply to any insolvency proceedings.
(11)In cases where a reorganization order is passed,—
(a) all assets acquired by or vested in the debtor at any time after the date of the petition and before the date of the reorganization order shall be included in the distributable assets;
(b) any creditor may prove his claim within such time as may be prescribed by law or, in the absence of such provision, at any time before such date as may be fixed by the Court;
(c) if the debtor incurs any debt after the filing of the application, it shall be deemed to be an administrative claim;
(d) discharge the debtor in accordance with the terms of the approved reorganization plan, if the Court so orders;
(e) Notwithstanding anything contained in section 47, if the debtor is in possession of any property and the immediate use of such property is necessary for the purpose of reorganization, he may continue in possession of such property, notwithstanding that such property is subject to any lien or mortgage or otherwise encumbered with security;
(a) all assets acquired by or vested in the debtor at any time after the date of the petition and before the date of the reorganization order shall be included in the distributable assets;
(b) any creditor may prove his claim within such time as may be prescribed by law or, in the absence of such provision, at any time before such date as may be fixed by the Court;
(c) if the debtor incurs any debt after the filing of the application, it shall be deemed to be an administrative claim;
(d) discharge the debtor in accordance with the terms of the approved reorganization plan, if the Court so orders;
(e) Notwithstanding anything contained in section 47, if the debtor is in possession of any property and the immediate use of such property is necessary for the purpose of reorganization, he may continue in possession of such property, notwithstanding that such property is subject to any lien or mortgage or otherwise encumbered with security;
Provided thatthe court may permit a secured creditor to take possession of such property, if the court is satisfied that his interest in the said property has not been properly protected during the pendency of the reorganization or the debtor has no other equity in the said property;
(f) the receiver shall be entitled to receive fees at the rate prescribed in section 66;
(g) the receiver shall, within such time as may be prescribed by law or, in the absence of such law, within such time as may be prescribed by the Court, constitute a creditors' committee consisting of not more than seven members; However, the members should be such creditors that their dues are unsecured and maximum in amount and they are willing to be included as members in the committee.
(12)Subject to the provisions of any rule made for this purpose, the Court shall determine the following matters in the reorganization order, namely:-
(a) the powers and duties of the debtor and the restrictions imposed on him in relation to the distributable assets and the management of the business related thereto;
(b) the method of monitoring by the receiver of such management;
(c) areas of advice to the receiver by the Committee of Creditors;
(d) the receiver's powers and responsibilities in relation to such management and advice;
(e) time frame and direction applicable to implementation of restructuring plan
(a) the powers and duties of the debtor and the restrictions imposed on him in relation to the distributable assets and the management of the business related thereto;
(b) the method of monitoring by the receiver of such management;
(c) areas of advice to the receiver by the Committee of Creditors;
(d) the receiver's powers and responsibilities in relation to such management and advice;
(e) time frame and direction applicable to implementation of restructuring plan
(13)If, after making a reorganization order, the court, on its own initiative or on the application of the receiver or any duly qualified creditor, decides, stating reasons in writing, that the reorganization order is not appropriate or that the said order should be modified or revoked in the changed circumstances, or that the special administrator or substitute administrator is unable to implement the reorganization plan within a time acceptable and reasonable to the court and the creditors, then the court, either the reorganization order, amend or cancel it, as it thinks fit; In case of such revocation, the court shall proceed to grant a declaration of bankruptcy and such order shall be deemed to have taken effect on the date of the filing of the petition, and accordingly the provisions of this Act other than this Chapter shall apply to the proceedings concerned:
Provided, however, that such amendment or cancellation shall not invalidate any transfer or payment duly made under the previously approved reorganization plan or anything else.
Provided, however, that such amendment or cancellation shall not invalidate any transfer or payment duly made under the previously approved reorganization plan or anything else.
§ 47impunity
47 (1) The Court may make an order of discharge in respect of any individual bankrupt, and by such order the bankrupt shall be discharged from all claims, debts and liabilities provable under section 39, unless the order specifically provides otherwise.
(2)If the debtor files an application, he shall be deemed to have prayed for his discharge in the said application, and where one or more eligible creditors file such application, the debtor shall apply for his discharge before the date fixed under section 30(1)(b)(a).
(3)At the time of making a declaration of bankruptcy, the court shall fix a date in the said order at which the purpose of the hearing shall be to first consider whether the debtor shall be discharged, and such date shall be a date not later than 60 (sixty) days after the date of making the said order:
Provided, however, that if the inquiry of the bankrupt has not been completed in accordance with section 27(3), such hearing shall be adjourned.
Provided, however, that if the inquiry of the bankrupt has not been completed in accordance with section 27(3), such hearing shall be adjourned.
(4)If, at the hearing under sub-section (3), the court is satisfied that the insolvency of the debtor was not caused by moral lapses or negligence, but by causes entirely beyond his control, the court shall forthwith order his discharge.
(5)If no order of discharge is made under sub-section (4), the insolvent may make an individual application to the Court for his discharge and the Court shall fix a date for a hearing thereon, but such hearing shall not be held until the examination of the debtor under section 27(3) is completed.
(6)If the debtor resides outside Bangladesh and the court considers that he is unable to return to Bangladesh for lack of conformity or for any other satisfactory reason, or if the debtor is a lunatic or if the court considers that the debtor is suffering from any physical or mental illness or disability that makes him unfit to attend the public inquiry, the court may exempt him from the inquiry or may direct him to be interrogated under such conditions, manner and place as he thinks fit
(7)Notice shall be given to every creditor recorded in the court record for the hearing of the application for discharge in the manner prescribed by the rules and in the absence of such rules in the manner directed by the court.
(8)At the hearing the court shall necessarily hear the receiver and may also hear the statement of any creditor, and may, if the court thinks fit, ask the debtor any questions and take evidence.
§ 48Factors that may affect immunity
48 (1) On the hearing of an application filed under section 47(5), the Court shall—
(a) direct the receiver to prepare and file a report on the conduct of the debtor including his general conduct and activities during the pendency of the insolvency proceedings;
(b) may, in consideration of the report, grant or refuse an order of unconditional discharge or may order the discharge subject to any condition as to any income or gain received or accruing by the debtor subsequent to the grant of the order of discharge.
(2)The Court may refuse an application for an order of immunity or, if such order is made, suspend its operation for a specified period, if the Court is satisfied that—
(a) the debtor has committed an offense under this Act, or under section 421, 422, 423 or 424 of the Penal Code; or
(b) any of the facts mentioned in sub-section (4) is proved:
(a) the debtor has committed an offense under this Act, or under section 421, 422, 423 or 424 of the Penal Code; or
(b) any of the facts mentioned in sub-section (4) is proved:
Provided thatthe court may order the lifting of the stay subject to the deposit by the debtor to the court of at least 50% of the total debt recorded in its records.
(3)If, at any time after the expiration of two years from the date of the passing of any conditional order made under this section, the Court is satisfied in respect of the liable bankrupt concerned that he is not likely to be in a position to comply with the conditions of the said order, the Court may, in its discretion, modify the said order or any subsequent order in such manner and subject to conditions.
(4)The events referred to in sub-section (2) (b) occur that,-
(a) during the three years immediately preceding the granting of the declaration of bankruptcy, or such shorter period as may be determined by the Court having regard to existing circumstances, the debtor has not maintained books of account giving sufficient information about his business transactions and financial condition;
(b) the debtor continued to carry on his business despite knowing himself to be insolvent or having reasonable cause to believe so;
(c) the debtor has contracted a debt which he had no reasonable cause to expect at the time of the contract to repay; The onus is on the debtor to prove the reasonableness of expecting such payment;
(d) the debtor's rash speculation, or intemperate living, or rashness, or want of reasonable care and attention in business and affairs, has made him bankrupt, or contributed to the bankruptcy;
(e) the debtor has delayed the settlement of the said suit or proceeding by making frivolous or vexatious objections to any suit or other proceeding duly instituted against the bankrupt or has caused his respective creditor to incur unnecessary expenses;
(f) the debtor has given illegal priority to any of his creditors within three months immediately preceding the date of filing of the application;
(g) the debtor has previously been declared insolvent in Bangladesh or elsewhere, or any compromise or restructuring plan or restructuring plan has been approved in respect of the payment of his debt;
(h) the debtor has been convicted of any fraud;
(j) within three months immediately preceding the date of filing of the application, the debtor has shipped any goods outside Bangladesh in such circumstances that there are reasonable grounds to believe that the shipment of such goods was not a bona fide commercial transaction;
(j) the value of the debtor's distributable assets is not equal to 50% of his unsecured liabilities, unless he can satisfy the court that he cannot fairly be held responsible for the situation arising.
(a) during the three years immediately preceding the granting of the declaration of bankruptcy, or such shorter period as may be determined by the Court having regard to existing circumstances, the debtor has not maintained books of account giving sufficient information about his business transactions and financial condition;
(b) the debtor continued to carry on his business despite knowing himself to be insolvent or having reasonable cause to believe so;
(c) the debtor has contracted a debt which he had no reasonable cause to expect at the time of the contract to repay; The onus is on the debtor to prove the reasonableness of expecting such payment;
(d) the debtor's rash speculation, or intemperate living, or rashness, or want of reasonable care and attention in business and affairs, has made him bankrupt, or contributed to the bankruptcy;
(e) the debtor has delayed the settlement of the said suit or proceeding by making frivolous or vexatious objections to any suit or other proceeding duly instituted against the bankrupt or has caused his respective creditor to incur unnecessary expenses;
(f) the debtor has given illegal priority to any of his creditors within three months immediately preceding the date of filing of the application;
(g) the debtor has previously been declared insolvent in Bangladesh or elsewhere, or any compromise or restructuring plan or restructuring plan has been approved in respect of the payment of his debt;
(h) the debtor has been convicted of any fraud;
(j) within three months immediately preceding the date of filing of the application, the debtor has shipped any goods outside Bangladesh in such circumstances that there are reasonable grounds to believe that the shipment of such goods was not a bona fide commercial transaction;
(j) the value of the debtor's distributable assets is not equal to 50% of his unsecured liabilities, unless he can satisfy the court that he cannot fairly be held responsible for the situation arising.
(5)For the purposes of this section, the report of the receiver shall be deemed to be prima facie evidence in respect of the facts mentioned therein.
(6)In respect of a debt provable in bankruptcy proceedings which remains unpaid at the date of the order of discharge or part thereof, the Court may, as one of the conditions imposed under this section, direct the debtor to comply with the receiver's decision in respect of the said unpaid debt or part thereof.
(7)If the debtor consents to any decision of the receiver under the provisions of sub-section (6), no proceedings shall be taken for the recovery of the unpaid debt referred to in the said sub-section, or any part thereof, without the leave of the court; and the court may grant such permission, if it is proved that the property or income acquired by the debtor after his discharge is sufficient to pay the said debt or part thereof.
(8)For the purposes of this section the following presumptions shall apply, namely:-
(a) if the debtor appears in court at any stage of the insolvency proceedings and, whether before or after such appearance, is declared insolvent in the said proceedings, it shall be presumed that he knew himself to be insolvent or had reason to believe that he was so;
(b) If the receiver reports to the court that the estimated value of the recovered and recoverable assets in the distributable assets of the debtor is not sufficient to pay 50% of the proven debts, the court shall, unless the contrary is proved, presume that the debtor has continued to carry on his business despite knowing himself to be insolvent or having reason to believe so. :
Provided, however, that in determining whether the debtor knew himself to be insolvent on a particular date, or whether he had reason to believe so, all debts outstanding on that date for more than two months shall be deducted from the value of the aforementioned assets;
(c) a debtor shall be deemed to have carried on his business, notwithstanding that he has declared himself to be insolvent, or has reason to believe that he is so, if he has in fact continued to carry on his business after being declared bankrupt, and he—
(b) fails to satisfy the court that there were reasonable grounds for believing himself to be solvent, or
(a) fails, without reasonable cause, to file the balance sheet of his business for each of the three years immediately preceding the date of filing of the application; The onus of proving such reasonable cause shall be on him;
(d) Any preference granted by the debtor to any of his creditors within three months immediately preceding the date of the filing of the petition shall, unless the contrary is proved, be deemed to have been granted unreasonably.
(a) if the debtor appears in court at any stage of the insolvency proceedings and, whether before or after such appearance, is declared insolvent in the said proceedings, it shall be presumed that he knew himself to be insolvent or had reason to believe that he was so;
(b) If the receiver reports to the court that the estimated value of the recovered and recoverable assets in the distributable assets of the debtor is not sufficient to pay 50% of the proven debts, the court shall, unless the contrary is proved, presume that the debtor has continued to carry on his business despite knowing himself to be insolvent or having reason to believe so. :
Provided, however, that in determining whether the debtor knew himself to be insolvent on a particular date, or whether he had reason to believe so, all debts outstanding on that date for more than two months shall be deducted from the value of the aforementioned assets;
(c) a debtor shall be deemed to have carried on his business, notwithstanding that he has declared himself to be insolvent, or has reason to believe that he is so, if he has in fact continued to carry on his business after being declared bankrupt, and he—
(b) fails to satisfy the court that there were reasonable grounds for believing himself to be solvent, or
(a) fails, without reasonable cause, to file the balance sheet of his business for each of the three years immediately preceding the date of filing of the application; The onus of proving such reasonable cause shall be on him;
(d) Any preference granted by the debtor to any of his creditors within three months immediately preceding the date of the filing of the petition shall, unless the contrary is proved, be deemed to have been granted unreasonably.
§ 49Consequences of not applying immunity, etc
49 (1) If—
(a) the debtor fails to appear on the date fixed under section 30(1) (b) (a) or, subject to the provisions of section 50(1), on any later date fixed by the Court, for the hearing of his discharge, or
(b) the debtor does not present his application for discharge before the date fixed under section 50(1), or
(c) if, after hearing such application of the debtor, the court decides that it would not be appropriate to grant an order of discharge;
If so, the court shall issue an order declaring the said debtor to be insolvent
(2)If any debtor under this Ordinance is declared insolvent under sub-section (1) after his release from prison or any other custody, and the Court may, if it thinks fit, re-commit the debtor to the said prison or custody and the officer in charge of the said prison shall accordingly be bound to receive the debtor for the purpose of keeping him in custody; In such a case, the order which was in force regarding the physical detention of the debtor before his release, shall be deemed to be in force even after the re-delivery.
§ 50Insolvent bankruptcy
50 (1) Where any declaration of bankruptcy is granted,—
(a) the bankrupt shall, within 60 (sixty) days after the date of the said order, apply to the Court, for his discharge;
(b) if the application is made within the said period, the court shall, within 30 (thirty) days after the expiry of the said period, fix a date for hearing the application and give notice thereof to the receiver and the creditors recorded in the court records, in the manner prescribed by the rules or in the absence of such rules, in such manner as the court thinks fit;
(c) the Court may, after giving reasonable opportunity of being heard to the parties concerned in attendance, make an order of discharge of the insolvent;
(d) Unless an order of discharge is granted, the debtor shall remain a liable insolvent.
(2)An insolvent insolvent—
(a) submit to the receiver once in every 6 (six) months an account of all the money and property received or acquired by the debtor during the said 6 (six) months, and the debtor shall hand over to the receiver the remaining money and property except the money spent for the maintenance of himself and his family members;
(b) Do not leave Bangladesh without the prior permission of the Court
(a) submit to the receiver once in every 6 (six) months an account of all the money and property received or acquired by the debtor during the said 6 (six) months, and the debtor shall hand over to the receiver the remaining money and property except the money spent for the maintenance of himself and his family members;
(b) Do not leave Bangladesh without the prior permission of the Court
(3)any insolvent bankrupt—
(a) fails to comply with the provisions of sub-section (2)(a), shall be punishable with imprisonment for a term which may extend to one year or with fine or with both;
(b) contravention of the provisions of sub-section (2)(b), shall be punishable with imprisonment for a term which may extend to two years or with fine or with both.
(a) fails to comply with the provisions of sub-section (2)(a), shall be punishable with imprisonment for a term which may extend to one year or with fine or with both;
(b) contravention of the provisions of sub-section (2)(b), shall be punishable with imprisonment for a term which may extend to two years or with fine or with both.
The Bankruptcy Act, 1997 provides the legal framework for declaring individuals and business entities insolvent and for the distribution of their assets among creditors in Bangladesh. It applies to individuals, partnerships, and other legal persons who are unable to pay their debts as they fall due, but does not apply to companies governed by the Companies Act, which are wound up under separate insolvency provisions. The Act establishes the Court with jurisdiction over bankruptcy proceedings and sets out the procedure by which a creditor or the debtor may file a bankruptcy petition (Sections 6-8). Key mechanisms include the adjudication of bankruptcy by the Court, the appointment of a Receiver or Trustee who takes control of the bankrupt's property (Section 24), the investigation of the bankrupt's affairs, the realisation and distribution of assets rateably among creditors with preferential payments for certain debts (such as government dues and wages), and the eventual discharge of the bankrupt (Section 34). Notable provisions include the avoidance of fraudulent preferences and undervalued transactions entered into prior to bankruptcy, the examination of the bankrupt by the Court, and penalties for concealment of property or failure to disclose assets. The Act remains the principal insolvency legislation for individuals and partnerships in Bangladesh.