Topics: Bankruptcy, Debtor, Liquidation Pages: 12 (3847 words) Published: January 21, 2013
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QUESTION ;1. WHAT IS MEANT BY BANKRUPTCY AND WHAT DO BANKRUPCY PRROCEEDINGS INVOLVE Bankruptcy is the legal status of an individual against whom an adjudication order has been made by the court of competent jurisdiction primarily because of his inability to meet his financial liabilities. From the above definition the following can be concluded

1. Bankruptcy is a question of law. It’s upon an adjudication order (judicial declaration that debtors are insolvent) by a court of law that makes them bankrupt. 2. The court of law making that adjudication order must be a court of competent jurisdiction (high court or magistrate court with extended jurisdiction.) 3. The debtor must be first insolvent (whether or not a person is insolvent is purely a question of fact thus a person can be declared insolvent without being bankrupt but he or she cannot be declared bankrupt without being insolvent.) Bankruptcy is also a legal definition of a debtor inability to meet his debts as and when they fall or become due. It’s governed by the Bankruptcy Act 1967 (REVICED 1988). Basically the Act deals with the entire process by to which an insolvent individual is made bankrupt

According to Blackstone, BANKRUPTCY is a proceeding by which when a debtor cannot pay his or her liabilities or the person to who he or she owes money or incurred liabilities cannot obtain satisfaction of their claims

In a lay man language bankruptcy can also be defined as that unpleasant condition of being where ones assets cannot meet his liabilities which comes upon a debtor by a legal petition either brought by himself or by an unpaid creditor or a group of creditors

Bankruptcy: a person is insolvent if he is unable to pay his debts as they fall due. A creditor may ‘sue for bankruptcy’ in order that a court may declare the person legally bankrupt which will affect his ability to undertake commercial transactions.

Bankruptcy: When a firm or individual goes bust. That simple definition be s complicated in practice: at what point should bankruptcy be declared, how are creditors paid off, can a bankrupt company continue operating, how long should an individual bankrupt be penalized for his past? The British answer to these questions has traditionally been more extreme than the American or continental European approach.

In the United States, companies can file for “Chapter 11 bankruptcy”: by presenting the court with an acceptable plan for recovery, they can be protected from their creditors for a specified period. Japan has bankruptcy laws modeled on America’s, although close relations between firms, banks and shareholders mean that big collapses are rare. In Britain, a firm or its creditors can apply for a bankruptcy order. If granted, the company’s assets come under the control of an official receiver, who appoints a liquidator to sell them and distribute the proceeds.

Bankruptcy: Where a person becomes bankrupt, a trustee in bankruptcy may be appointed and given statutory power to sue for debts due to the bankrupt party. Certain rights of action will not pass to the trustee, however. Thus he may not sue in respect of personal services to be rendered by the bankrupt, nor may the trustee sue in respect of rights of actions which the bankrupt may have in defamation. The trustee may also disclaim onerous contracts which the bankrupt hay have...
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