Bermuda Consolidated Legislation

BERMUDA
1989 : 58

BANKRUPTCY ACT 1989

ARRANGEMENT OF SECTIONS

1 Short title and commencement

2 Interpretation

PART I
PROCEEDINGS FROM ACT OF BANKRUPTCY TO DISCHARGE

Acts of bankruptcy

3 Acts of bankruptcy

4 Bankruptcy notices

Receiving Order

5 Jurisdiction to make receiving order

6 Conditions on which creditor may petition

7 Proceedings and order on creditor's petition

8 Debtor's petition and order thereon

9 Effect of receiving order

10 Power to appoint interim receiver

11 Power to stay pending proceedings

12 Power to appoint special manager

13 Publishing receiving order

Proceedings consequent on Order

14 First and other meetings of creditors

15 Debtor's statement of affairs

Public Examination of Debtor

16 Public examination of debtor

17 Power to dispense with public examination of debtor

Composition or Scheme of Arrangement

18 Compositions or schemes of arrangement

19 Effect of composition or scheme

Adjudication of Bankruptcy

20 Adjudication of bankruptcy where composition not accepted or approved

21 Vesting in trustee of certain items of excess value

22 Time limit for notice under s. 21

23 Appointment of trustee

24 Committee of inspection

25 Power to accept composition or scheme after bankruptcy adjudication

Control over Person and Property of Debtor

26 Duties of debtor to discovery and realisation of property

27 Arrest of debtor under certain circumstances

28 Re-direction of debtor's letters

29 Enquiry as to debtor's conduct, dealings, and property

30 Discharge of bankrupt

31 Automatic discharge of bankrupt

32 Discharge of bankrupt on application of Official Receiver

33 Fraudulent settlements

34 Effect of order on discharge

35 Power for Court to annul adjudication in certain cases

PART II
ADMINISTRATION OF PROPERTY

Proof of Debts

36 Description of debts provable in bankruptcy

37 Mutual credit and set-off

38 Rules as to proof of debts

39 Priority of debts

40 Debts to spouse

Property available for Payment of Debts

41 Relation back of trustee's title

42 Description of bankrupt's property divisible amongst creditors

Effect of bankruptcy on Antecedent and Other Transactions

43 Restriction of rights of creditor under execution or attachment

44 Duties of Provost Marshal General as to goods taken in execution

45 Avoidance of certain settlements

46 Avoidance of general assignments of book debts

47 Avoidance of preference in certain cases

48 Protection of bona fide transactions without notice

49 Validity of certain payments to bankrupt and assignee

50 Recovery of property transferred without knowledge of receiving order

51 Dealings with undischarged bankrupt

PART III
REALISATION OF PROPERTY

52 Possession of property by trustee

53 Seizure of property of bankrupt

54 Appropriation of portion of pay or salary to creditors

55 Vesting and transfer of property

56 Disclaimer of onerous property

57 Powers of trustee to deal with property

58 Powers exerciseable by trustee with permission of committee of inspection

59 Power to allow bankrupt to manage property

60 Allowance to bankrupt for maintenance or service

61 Right of trustee to inspect goods pawned, etc

62 Limitation of trustee's powers in relation to copyright

63 Protection of Official Receiver and trustees from personal liability in certain cases

Distribution of Property

64 Declaration and distribution of dividends

65 Joint and separate dividends

66 Provision for creditors residing at a distance, etc

67 Right of creditor who has not proved debt before declaration of a dividend

68 Interest on debts

69 Final dividend

70 No action for dividend

71 Right of bankrupt to surplus

PART IV
OFFICIAL RECEIVER AND STAFF

72 Official Receiver

73 Persons performing functions of Official Receiver

74 Status of Official Receiver

75 Duties of Official Receiver as regards the debtor's conduct

76 Duties of Official Receiver as to debtor's estate

PART V
TRUSTEES IN BANKRUPTCY

Official Name

77 Official name of trustee

Appointment

78 Power to appoint joint or successive trustee

79 Proceedings in case of vacancy in office of trustee

Control over Trustee

80 Discretionary powers of trustee and control thereof

81 Control of trustee by the Court

82 Liability of trustee

Remuneration and Costs

83 Remuneration of trustee

84 Allowance and taxation of costs

Receipts, Payments, Accounts, Audit

85 Trustee to furnish list of creditors

86 Trustee to furnish statement of accounts

87 Books to be kept by trustee

88 Annual statement of proceedings

89 Trustee not to pay into private account

90 Trustee in bankruptcy to open account

91 Audit of trustee's accounts

Vacation of Office by Trustee

92 Release of trustee

93 Office of trustee vacated by insolvency

94 Removal of trustee

PART VI
POWERS OF COURT

Jurisdiction

95 Jurisdiction

96 Exercise in chambers of Supreme Court jurisdiction

97 Official Receiver to make payments in accordance with directions of Court

98 General power of Court

99 Notification of bankruptcy of member of the Legislature

Judgment Debtors

100 Judgment debtor's summons to be bankruptcy business

Review and Appeal

101 Review and appeal

Procedure

102 Discretionary powers of Court

103 Consolidations of petitions

104 Power to change carriage of proceedings

105 Continuance of proceedings on death of debtor

106 Power to stay proceedings

107 Power to present petion against some respondents only

108 Power to dismiss petition against some respondents only

109 Property of partners to be vested in same trustee

110 Actions by trustee and bankrupt's partners

111 Actions on joint contracts

112 Proceedings in partnership name

113 Warrants

PART VII
SUPPLEMENTAL PROVISIONS

Application of Act

114 Exclusion of companies

115 Application to limited partnerships

116 Privilege of Legislature

117 Application of Act in case of small estates

118 Administration in bankruptcy of estate of person dying insolvent

119 Outstanding bankruptcies under repealed enactment

General rules

120 Power to make general rules

121 Fees

122 Gazette evidence

123 Evidence of proceedings at meetings of creditors

124 Evidence of proceedings in bankruptcy and swearing of affidavits

125 Death of debtor or witness

126 Certificate of appointment of trustee

127 Formal defect not to invalidate proceedings

128 Exemption from stamp duty

129 Acting of corporations, partners, etc

130 Reference to repealed Act

131 Certain provisions to bind Crown

Unclaimed Funds or Dividends

132 Unclaimed and undistributed dividends or funds under this and repealed Act

PART VIII
BANKRUPTCY OFFENCES

133 Bankrupt absconding with property

134 Fraudulent debtors

135 Undischarged bankrupt obtaining credit

136 Frauds by bankrupts, etc

137 Bankrupt guilty of gambling, etc

138 Bankrupt failing to keep proper accounts

139 False claim, etc

140 Order by Court for prosecution on report of trustee

141 Criminal liability after discharge or composition

142 Trial of offences

143 Setting forth substance of offence charged

144 Assistance to courts of United Kingdom

145 Repeal

146 Amendment of laws

FIRST SCHEDULE
MEETINGS OF CREDITORS

SECOND SCHEDULE
PROOF OF DEBTS

THIRD SCHEDULE
AMENDMENT OF LAWS

[19 December 1989]

[preamble and words of enactment omitted]

Short title and commencement

1 This Act may be cited as the Bankruptcy Act 1989 [commencement provisions omitted].

[This Act was brought into operation on 31 January 1990 by BR 6/1990]

Interpretation

2 In this Act, unless the context otherwise requires —

"available act of bankruptcy" means any act of bankruptcy available for a bankruptcy petition at the date of presenta tion of the peti tion on which the receiving or der is made;

"bankrupt" means an individual who has been adjudged bankrupt and, in relation to a bankruptcy order, it means the individual adjudged bankrupt by that order;

"bankruptcy petition" means a petition to the Court for a bankruptcy order;

"business" includes a trade or profession;

"the Court" means the Supreme Court;

"a debtor" includes any person who at the time when any act of bankruptcy was done or suffered by him —

(a) was personally present in Bermuda;

(b) ordinarily resided or had a place of residence in Bermuda;

(c) was carrying on business in Bermuda, personally, or by means of an agent or manager; or

(d) was a member of a firm or partnership which carried on business in Bermuda;

"debt provable in bankruptcy" or "provable debt" includes any debt or liability by this Act made provable in bankruptcy;

"general rules" includes forms;

"goods" includes all chattels personal;

"local bank" means any bank in Bermuda;

"Official Receiver" means the person appointed pursuant to section 72;

"ordinary resolution" means a resolution decided by a major ity in value of the creditors present, personally or by proxy, at a meeting of creditors and voting on the resolu tion;

"personal injuries" includes death and any disease or other impairment of a person's physical or mental condition;

"prescribed" means prescribed by Rules of Court made under this Act;

"property" includes money, goods, things in action, land and every de scription of property wherever situated and also obligations and every description of interest, whether pre sent or future or vested or contingent, arising out of, or incidental to, prop erty;

"records" includes computer records and other non-documentary records;

"Registrar" means the Registrar of the Court;

"resolution" means ordinary resolution;

"secured creditor" means a person holding a mortgage charge or lien on the property of the debtor or any part thereof, as a security for a debt due to him from the debtor;

"special resolution" means a resolution decided by a major ity in number and three-fourths in value of the credi tors present, personally or by proxy, at a meeting of creditors and voting on the reso lution;

"trustee" means the trustee in bankruptcy of a debtor's es tate.

PART I
PROCEEDINGS FROM ACT OF BANKRUPTCY TO DISCHARGE

Acts of Bankruptcy

Acts of bankruptcy

3 A debtor commits an act of bankruptcy in each of the fol lowing cases:

(a) if in Bermuda or elsewhere he makes a conveyance or as signment of his property to a trustee or trustees for the benefit of his creditors generally;

(b) if in Bermuda or elsewhere he makes a fraudulent con veyance, gift, delivery, or transfer of his pro perty, or of any part thereof;

(c) if in Bermuda or elsewhere he makes any conveyance or transfer of his property or any part thereof, or creates any charge thereon, which would under this or any other Act be void as a fraudulent preference if he were adjudged bankrupt;

(d) if with intent to defeat or delay his creditors he does any of the following things, namely, departs out of Bermuda, or being out of Bermuda remains out of Bermuda, or departs from his dwelling-house, or otherwise absents himself, or begins to keep house;

(e) if execution against him has been levied by seizure of his goods under process in an action in any court, or in any civil proceeding in the Court, and the goods have been either sold or held by the Provost Marshal General or other officer for twenty-one days except that, where an in terpleader summons has been taken out in regard to the goods seized, the time elapsing between the date at which the sum mons is taken out and the date at which the proceedings on the summons are finally disposed of, set tled, or abandoned, shall not be taken into ac count in calculating such period of twenty-one days;

(f) if he files in the Court a declaration of his in ability to pay his debts or presents a bankruptcy petition against him self;

(g) if a creditor has obtained a final judgment or final or der against him for any amount, and, execution thereon not having been stayed has served on him in Bermuda, or, by leave of the Court, elsewhere, a bankruptcy notice under this Act, and he does not, within fourteen days after ser vice of the notice, in case the service is effected in Bermuda, and in case the service is effected else where, then within the time limited in that behalf by the order giving leave to effect the service, either comply with the require ments of the notice or satisfy the Court that he has a counter-claim, set off or cross demand which equals or ex ceeds the amount of the judg ment debt or sum ordered to be paid, and which he could not set up in the action in which the judgment was ob tained, or the proceedings in which the order was ob tained; for the purposes of this paragraph and of sec tion 4, any person who is, for the time being, entit led to enforce a final judgment or final order, shall be deemed to be a creditor who has obtained a final judg ment or final order;

(h) if the debtor gives notice to any of his creditors that he has suspended, or that he is about to sus pend, payment of his debts.

Bankruptcy notices

4 (1) A bankruptcy notice under this Act —

(a) shall be in the prescribed form;

(b) shall require the debtor to pay the judgment debt or sum or dered to be paid in accordance with the terms of the judg ment or order, or to secure or compound for it to the satis faction of the creditor or the Court;

(c) shall state the consequences of non-compliance with the notice; and

(d) shall be served in the prescribed manner.

(2) A bankruptcy notice —

(a) may specify an agent to act on behalf of the credi tor in re spect of any payment or other thing re quired by the no tice to be made to, or done to the satisfaction of, the creditor;

(b) shall not be invalidated by reason only that the sum specified in the notice as the amount due exceeds the amount actu ally due, unless the debtor within the time allowed for payment gives notice to the creditor that he disputes the validity of the notice on the ground of the mis statement; but, if the debtor does not give such notice, he shall be deemed to have complied with the bankruptcy notice if within the time allowed he takes such steps as would have consti tuted a compliance with the notice had the actual amount due been correctly specified therein.

Receiving Order

Jurisdiction to make receiving order

5 Subject to the conditions specified in this Act, if a debtor commits an act of bankruptcy the Court may, on a bankruptcy petition being presented ei ther by a creditor or by the debtor, make an order, in this Act called a re ceiving order, for the protection of the estate.

Conditions on which creditor may petition

6 (1) A creditor is not entitled to present a bankruptcy peti tion against a debtor unless—

(a) the debt owing by the debtor to the petitioning credi tor, or, if two or more creditors join in the petition, the ag gregate amount of debts owing to the several petitioning creditors, amounts to five thousand dollars, and

(b) the debt is a liquidated sum, payable either immedi ately or at some future time, and

(c) the act of bankruptcy on which the petition is grounded has oc curred within three months before the presentation of the petition, and

(d) the debtor is domiciled in Bermuda or within a year be fore the date of the presentation of the petition has ordi narily resided, or had a dwelling-house or place of busi ness, in Bermuda, has carried on busi ness in Bermuda, per sonally or by means of an agent or manager, or is or within the said period has been a member of a firm or partnership of persons which has carried on business in Bermuda by means of a partner or partners, or an agent or manager,

nor, where a deed of arrangement has been executed, is a creditor entitled to present a bankruptcy petition founded on the execution of the deed, in cases where he is pro hibited from so doing by the law for the time being in force relating to deeds of arrangement.

(2) If the petitioning creditor is a secured creditor, he must in his petition either state that he is willing to give up his security for the benefit of the creditors in the event of the debtor being adjudged bankrupt, or give an es timate of the value of his security, and in the latter case, he may be admitted as a petitioning creditor to the extent of the balance of the debt due to him, after deducting the value so estimated in the same manner as if he were an unse cured creditor.

Proceedings and order on creditor's petition

7 (1) A creditor's petition shall be verified by affidavit of the creditor, or of some person on his behalf having knowledge of the facts, and served in the prescribed manner.

(2) At the hearing the Court shall require proof of the debt of the petitioning creditor, of the service of the pe tition, and of the act of bankruptcy, or, if more than one act of bankruptcy is alleged in the petition, of some one of the alleged acts of bankruptcy, and if satisfied with the proof, may make a receiving order in pursuance of the peti tion.

(3) If the Court is not satisfied with the proof of the peti tioning
creditor's debt, or of the act of bankruptcy, or of the service of the peti tion, or is satisfied by the debtor that he is able to pay his debts, or that for other sufficient cause no order ought to be made, the Court may dismiss the petition.

(4) When the act of bankruptcy relied on is non-compli ance with a bankruptcy notice to pay, secure, or compound for a judgment debt, or sum or dered to be paid, the Court may, if it thinks fit, stay or dismiss the peti tion on the ground that an appeal is pending from the judgment or order.

(5) Where the debtor appears on the petition, and denies that he is indebted to the petitioner, or that he is in debted to such an amount as would justify the petitioner in presenting a petition against him, the Court, on such secu rity (if any) being given as the Court may require for pay ment to the petitioner of any debt which may be established against him in due course of law, and of the costs of estab lishing the debt, may, instead of dismissing the petition, stay all proceedings on the petition for such time as may be re quired for trial of the question relating to the debt.

(6) Where proceedings are stayed, the Court may, if by rea son of the delay caused by the stay of proceedings or for any other cause it thinks just, make a receiving order on the petition of some other creditor, and shall thereupon dismiss, on such terms as it thinks just, the petition in which pro ceedings have been stayed as aforesaid.

(7) A creditor's petition shall not, after presentment, be with drawn without the leave of the Court.

Debtor's petition and order thereon

8 (1) A debtor's petition shall allege that the debtor is un able to pay his debts, and the presentation thereof shall be deemed an act of bankruptcy without the previous filing by the debtor of any declaration of in ability to pay his debts, and the Court shall thereupon make a receiving or der.

(2) A debtor's petition shall not, after presentment, be withdrawn without the leave of the Court.

Effect of receiving order

9 (1) On the making of a receiving order the Official Receiver shall be thereby constituted receiver of the property of the debtor, and there after, except as directed by this Act, no creditor to whom the debtor is in debted in respect of any debt provable in bankruptcy shall have any remedy against the property or person of the debtor in respect of the debt, or shall commence any action or other legal pro ceedings, unless with the leave of the Court and on such terms as the Court may impose.

(2) But this section does not affect the power of any se cured cred itor to realise or otherwise deal with his secu rity in the same manner as he would have been entitled to realise or deal with it if this section had not been passed.

Power to appoint interim receiver

10 The Court may, if it is shown to be necessary for the protection of the estate, at any time after the presen tation of a bankruptcy petition, and be fore a receiving or der is made, appoint the Official Receiver to be interim re ceiver of the property of the debtor, or of any part thereof, and direct him to take immediate possession thereof or of any part thereof.

Power to stay pending proceedings

11 (1) The Court may, at any time after the presentation of a bankruptcy petition, stay any action, execution, or other legal process against the property or person of the debtor, and any court in which proceed ings are pending against a debtor may, on proof that a bankruptcy petition has been presented by or against the debtor, either stay the proceed ings or allow them to continue on such terms as it may think just.

(2) Where the Court makes an order staying any action or proceed ing, or staying proceedings generally, the order may be served by sending a copy thereof, under the seal of the Court, by post to the address for service of the plaintiff or other party prosecuting the proceeding.

Power to appoint special manager

12 (1) The Official Receiver of a debtor's estate may, on the applica tion of any creditor or creditors, and if satis fied that the nature of the debtor's estate or business or the interest of the creditors generally require the appoint ment of a special manager of the estate or business other than the Official Receiver, appoint a manager thereof ac cordingly to act until a trustee is appointed, and with such powers (including any of the powers of a receiver) as may be entrusted to him by the Official Receiver.

(2) The special manager shall give security and account in such manner as the creditors at a general meeting may di rect.

(3) The special manager shall receive such remuneration as the creditors may, by resolution at an ordinary meeting, de termine, or, in default of any such resolution, as may be prescribed.

Publishing receiving order

13 Notice of every receiving order, stating the name, ad dress, and de scription of the debtor, the date of the or der, the Court by which the order is made, and the date of the petition, shall be published in the Gazette in the prescribed manner.

Proceedings consequent on Order

First and other meetings of creditors

14 (1) As soon as may be after the making of a receiving or der against a debtor a general meeting of his creditors (in this Act referred to as the first meeting of creditors) shall be held for the purpose of considering whether a pro posal for a composition or scheme of arrangement shall be ac cepted, or whether it is expedient that the debtor shall be adjudged bankrupt, and generally as to the mode of deal ing with the debtor's property.

(2) With respect to the summoning of and proceedings at the first and other meetings of creditors, the rules in the First Schedule to this Act shall be observed.

Debtor's statement of affairs

15 (1) Where a receiving order is made against a debtor, he shall make out and submit to the Official Receiver a statement of and in relation to his affairs in the prescribed form, verified by affidavit, and showing the particulars of the debtor's assets, debts and liabilities, the names, residences and oc cupations of his creditors, the securities held by them re spectively, the dates when the securities were respectively given, and such further or other information as may be pre scribed or as the Official Receiver may require.

(2) The statement shall be so submitted within the fol lowing times, namely:

(a) if the order is made on the petition of the debtor, within three days from the date of the order;

(b) if the order is made on the petition of a creditor, within seven days from the date of the order;

but the Court may, in either case for special reasons, ex tend the time.

(3) If the debtor fails without reasonable excuse to comply with the requirements of this section, the Court may, on the application of the Official Receiver, or of any creditor, ad judge him bankrupt.

(4) Any person stating himself in writing to be a credi tor of the bankrupt may, personally or by agent, inspect the statement at all reasonable times, and take any copy thereof or extract therefrom, but any person untruth fully so stating himself to be a creditor is guilty of a contempt of court, and is punishable accordingly on the application of the trustee or Official Receiver.

Public Examination of Debtor

Public examination of debtor

16 (1) Where the Court makes a receiving order, it shall, save as in this Act provided, hold a public sitting, on a day to be appointed by the Court, for the examination of the debtor, and the debtor shall attend thereat, and shall be examined as to his conduct, dealings, and property.

(2) The examination shall be held as soon as con veniently may be after the expiration of the time for the submission of the debtor's statement of affairs.

(3) The Court may adjourn the examination from time to time.

(4) Any creditor who has tendered a proof, or his represen tative authorised in writing, may question the debtor con cerning his affairs and the causes of his failure.

(5) The Official Receiver shall take part in the examination of the debtor; and for the purpose thereof, may employ a barrister and attorney.

(6) If a trustee is appointed before the conclusion of the examina tion, he may take part therein.

(7) The Court may put such questions to the debtor as it may think expedient.

(8) The debtor shall be examined upon oath, and he shall an swer all such questions as the Court may put or allow to be put to him; such notes of the examination as the Court thinks proper shall be taken down in writing, and shall be read over either to or by the debtor and signed by him, and may thereafter, save as in this Act provided, be used in evi dence against him; they shall also be open to the inspec tion of any creditor at all reasonable times.

(9) When the Court is of opinion that the affairs of the debtor have been sufficiently investigated, it shall by or der declare that his exami nation is concluded, but the order shall not be made until after the day ap pointed for the first meeting of creditors.

(10) Where the debtor is a person of unsound mind or suf fers from any such mental or physical affliction or disabil ity as in the opinion
of the Court makes him unfit to attend his public examina tion, the Court may make an order dis pensing with the examination, or direct ing that the debtor be ex amined on such terms, in such manner, and at such places as to the Court seems expedient.

Power to dispense with public examination of debtor

17 (1) The Court may, if it thinks fit, make an order dis pensing with the public examination of a debtor under sec tion 16 and in determining whether to make an order the Court shall have regard to all circumstances of the case in cluding, in particular —

(a) whether the debtor has made a full disclosure of his af fairs;

(b) whether he has been adjudged bankrupt on a previous oc casion;

(c) the number and nature of his debts;

(d) whether his bankruptcy would for any reason be a matter of pub lic concern; and

(e) such other matters as may be prescribed for the pur poses of this subsection by rules made under this Act.

(2) No order shall be made under subsection (1) except on the ap plication of the Official Receiver but the power of the Court under section 101(1) to review or rescind any such or der may be exercised either on the application of the Official Receiver or on the application of the debtor, a creditor or the trustee.

(3) Subsections (1) and (2) are without prejudice to sec tion 16(10).

(4) Where an order is made under this section or section 16(10) dispensing with the public examination of the debtor, section 18(2) and (6), 20(1) and 30(1) shall have effect as if his public examination were concluded on the date on which the order is made.

Composition or Scheme of Arrangement

Compositions or schemes of arrangement

18 (1) Where a debtor intends to make a proposal for a com position in satisfaction of his debts, or a proposal for a scheme of arrangement of his affairs, he shall, within four days of submitting his statement of affairs, or within such time thereafter as the Official Receiver may fix, lodge with the Official Receiver a proposal in writing, signed by him, embodying the terms of the composition or scheme which he is desirous of submitting for the consideration of his creditors, and set ting out particulars of any sureties or securities proposed.

(2) In such case the Official Receiver shall hold a meeting of credi tors, before the public examination of the debtor is con cluded, and send to each creditor, before the meeting, a copy of the debtor's proposal with a report thereon; and if at that meeting a majority in number and three fourths in value of all the creditors who have proved, resolve to ac cept the proposal, it shall be deemed to be duly accepted by the creditors, and when approved by the Court shall be bind ing on all the creditors.

(3) The debtor may at the meeting amend the terms of his proposal, if the amendment is, in the opinion of the Official Receiver, calculated to benefit the general body of creditors.

(4) Any creditor who has proved his debt may assent to or dissent from the proposal by a letter, in the prescribed form, addressed to the Official Receiver so as to be received by him not later than the day preceding the meeting, and any such assent or dissent has the effect as if the creditor had been pre sent and had voted at the meeting.

(5) The debtor or the Official Receiver may, after the pro posal is accepted by the creditors, apply to the Court to approve it, and notice of the time ap pointed for hearing the application shall be given to each creditor who has proved.

(6) The application shall not be heard until after the con clusion of the public examination of the debtor; however, any creditor who has proved may be heard by the Court in op position to the application, notwithstanding that he may at a meeting of creditors have voted for the acceptance of the proposal.

(7) For the purpose of approving a composition or scheme by joint debtors, the Court may, if it thinks fit, and on the report of the Official Receiver that it is expedient to do so, dis pense with the public examination of one of the joint debtors if he is unavoidably prevented from attending the examina tion by illness or absence from Bermuda.

(8) The Court shall, before approving the proposal, hear a report of the Official Receiver as to the terms thereof, and as to the conduct of the debtor, and any objections which may be made by or on behalf of any creditor.

(9) If the Court is of opinion that the terms of the pro posal are not reasonable, or are not calculated to benefit the general body of credi tors, or in any case in which the Court is required, where the debtor is ad judged bankrupt, to refuse his discharge, the Court shall refuse to approve the proposal.

(10) If any facts are proved on proof of which the Court would be required ei ther to refuse, suspend or attach condi tions to the debtor's discharge were he adjudged bankrupt, the Court shall refuse to approve the proposal, unless he pro vides reasonable security for the payment of not less than ten cents in the dollar on all unsecured debts provable against the debtor's estate.

(11) In any other case the Court may either approve or refuse to approve the proposal.

(12) If the Court approves the pro posal, the approval may be testified by the seal of the Court being attached to the in strument containing the terms of the proposed composition or scheme, or by the terms being embodied in an order of the Court.

(13) A composition or scheme accepted and approved in pur suance of this section is binding on all the credi tors so far as relates to any debts due to them from the debtor and provable in bankruptcy, but does not release the debtor from any liability under a judg ment against him in an action for an affiliation order or un der a judgment against him in a matrimo nial cause, except to such an extent and under such condi tions as the Court expressly orders in respect of such lia bility.

(14) A certificate of the Official Receiver that a composition or scheme has been duly accepted and approved shall, in the ab sence of fraud, be conclusive as to its validity.

(15) The provisions of a composition or scheme under this section may be en forced by the Court on application by any person interested, and any disobedience of an order of the Court made on the ap plication shall be deemed a contempt of court.

(16) If default is made in payment of any instalment due in pursuance of the composition or scheme, or if it appears to the Court, on satisfactory evidence, that the composition or scheme cannot, in consequence of legal difficulties, or for any sufficient cause, proceed without in justice or undue de lay to the creditors or to the debtor, or that the ap proval of the Court was obtained by fraud, the Court may, if it thinks fit, on applica tion by the Official Receiver or the trustee or by any creditor, adjudge the debtor bankrupt, and annul the composition or scheme, but without prejudice to the va lidity of any sale, disposition or pay ment duly made, or thing duly done, under or in pursuance of the composition or scheme.

(17) Where a debtor is adjudged bankrupt under subsection (16), any debt provable in other respects, which has been contracted before the adjudication, is provable in the bankruptcy.

(18) If under or in pursuance of a composition or scheme a trustee is ap pointed to administer the debtor's prop erty or manage his business, or to dis tribute the composition, sec tion 29 and Part V of this Act apply as if the trustee were a trustee in a bankruptcy, and as if the terms "bankruptcy," "bankrupt," and "order of adjudication" in cluded respec tively a composition or scheme of arrangement, a compounding or arranging debtor, and an order approving the composition or scheme.

(19) Part II of this Act, so far as the nature of the case and the terms of the composition or scheme admit, ap plies thereto, the same interpretation being given to the words "trustee," "bankruptcy," "bankrupt," and "order of adjudica tion," as in subsection (18).

(20) No composition or scheme shall be approved by the Court which does not pro vide for the payment in priority to other debts of all debts directed to be so paid in the distribution of the property of a bankrupt.

(21) The acceptance by a creditor of a composition or scheme does not release any person who under this Act would not be released by an order of discharge if the debtor had been ad judged bankrupt.

Effect of composition or scheme

19 Notwithstanding the acceptance and approval of a compo sition or scheme, the composition or scheme shall not be binding on any creditor so far as re gards a debt or liabil ity from which, under the provisions of this Act, the debtor would not be released by an order of discharge in bankruptcy, unless the creditor assents to the composition or scheme.

Adjudication of Bankruptcy

Adjudication of bankruptcy where composition not accepted or approved

20 (1) Where a receiving order is made against a debtor, then, if the creditors at the first meeting or any adjourn ment thereof by ordinary resolu tion resolve that the debtor be adjudged bankrupt, or pass no resolution, or if the cred itors do not meet, or if a composition or scheme is not ap proved in pursuance of this Act within fourteen days after the conclusion of the exami nation of the debtor or such fur ther time as the Court may allow, the Court shall adjudge the debtor bankrupt; and thereupon the property of the bankrupt becomes divisible among his creditors and vests in a trustee.

(2) Notice of every order adjudging a debtor bankrupt, stat ing the name, address, and description of the bankrupt, the date of the adjudication, and the court by which the adjudi cation is made, shall be published in the Gazette in the prescribed manner, and the date of the
order shall, for the pur poses of this Act, be the date of the adjudication.

Vesting in trustee of certain items of excess value

21 (1) Subject to section 22, where—

(a) property is excluded by virtue of section 42(b) and (c) from the property of the bankrupt, and

(b) it appears to the trustee that the realisable value of the whole or any part of that property exceeds the cost of a reasonable replacement for that property or that part of it,

the trustee may by notice in writing claim that property or, as the case may be, that part of it for the property of the bankrupt.

(2) Upon the service on the bankrupt of a notice under this section, the property to which the notice relates vests in the trustee as part of the property of the bankrupt; and, except against a purchaser in good faith, for value and without notice of the bankruptcy, the trustee's title to that property has relation back to the commencement of the bankruptcy.

(3) The trustee shall apply funds comprised in the property of the bankrupt to the purchase by or on behalf of the bankrupt of a reasonable replacement for any property vested in the trustee under this section; and the duty imposed by this subsection has priority over the obligation of the trustee to distribute the property.

(4) For the purposes of this section property is a reasonable replacement for other property if it is reasonably adequate for meeting the needs met by other property.

Time limit for notice under s. 21

22 (1) Except with the leave of the Court, a notice shall not be served under section 21, after the end of the period of forty-two days beginning with the day on which the property in question first came to the knowledge of the trustee.

(2) For the purposes of this section —

(a) anything which comes to the knowledge of the trustee is deemed in relation to any successor of his as trustee to have come to the knowledge of the successor at the same time; and

(b) anything which comes (otherwise than under paragraph (a)) to the knowledge of a person before he is the trustee is deemed to come to his knowledge on his appointment taking effect or, in the case of the official receiver, on his becoming trustee.

Appointment of trustee

23 (1) Where a debtor is adjudged bankrupt, or the credi tors have re solved that he be adjudged bankrupt, the credi tors may by ordinary resolution appoint some fit person, whether a creditor or not, to fill the office of trustee of the property of the bankrupt and declare what security is to be given and to whom by the person so appointed before he en ters on the office of trustee; or they may resolve to leave his appointment to the committee of in spection men tioned in section 24.

(2) A person shall be deemed not fit to act as trustee of the prop erty of a bankrupt where he has been previously re moved from the office of trustee of a bankrupt's property for misconduct or neglect of duty.

(3) The appointment of a trustee shall be reported to the Court and the Court upon being satisfied that the requi site security has been entered into by him may, unless it feels that the person is not fit, by order give a certifi cate declaring him to be trustee of the bankruptcy named in the certificate and the certificate is conclusive evidence of the appointment of the trustee.

(4) The appointment of a trustee shall take effect as from the date of the order.

(5) The Official Receiver shall not, save as in this Act provided, be the trustee of the bankrupt's property.

(6) If a trustee is not appointed by the creditors within four weeks from the date of the adjudication, or, in the event of there being nego tiations for a composition or scheme pending at the expiration of those four weeks, then within seven days from the close of those negotiations by the re fusal of the creditors to accept, or of the Court to approve, the composition or scheme, the Official Receiver shall re port the matter to the Court, and thereupon the Court shall appoint some fit person to be trustee of the bankrupt's prop erty, and shall certify the appointment.

(7) The creditors or the committee of inspection (if so authorised by resolution of the creditors) may, at any sub sequent time, if they think fit, appoint a trustee, and, on the appointment being made and certified, the person ap pointed becomes trustee in the place of the person appointed by the Court.

(8) When a debtor is adjudged bankrupt after the first meeting of creditors has been held, and a trustee has not been appointed before
the adju dication, the Official Receiver shall forthwith summon a meeting of creditors for the purpose of appointing a trustee.

Committee of inspection

24 (1) The creditors qualified to vote may, at their first or any sub sequent meeting by resolution, appoint a committee of inspection for the pur pose of superintending the adminis tration of the bankrupt's property by the trustee.

(2) The committee of inspection shall consist of not more than five nor less than three persons, possessing one or other of the following qualifi cations:

(a) that of being a creditor or the holder of a general proxy or general power of attorney from a creditor, except that no creditor and no holder of a general proxy or general power of attorney from a creditor is qualified to act as a member of the committee of inspection until the credi tor has proved his debt and the proof has been duly lodged before the time appointed for the meeting; or

(b) that of being a person to whom a creditor intends to give a general proxy or general power of attorney but no such person is qualified to act as a member of the committee of inspection until he holds such a proxy or power of attorney, and until the creditor has proved his debt and the proof has been duly lodged before the time appointed for the meeting.

(3) A body corporate may be a member of the committee of inspection but it cannot act as such otherwise than by a representative appointed under this rule.

(4) A member of the committee of inspection may, in relation to the business of the committee, be represented by another person duly authorised by him for that purpose.

(5) A person acting as a committee-member's representative shall hold a letter of authority entitling him so to act, either generally or specially, and the letter shall be signed by or on behalf of the committee-member.

(6) The chairman at any meeting of the committee of inspection may call on a person claiming to act as a committee-member's representative to produce his letter of authority and may exclude him if it appears that his authority is deficient.

(7) No member may be represented by a body corporate or by a person who is an undischarged bankrupt or is subject to a composition or arrangement with his creditors.

(8) No person shall —

(a) on the same committee of inspection, act at one and the same time as representative of more than one committee-member; or

(b) act both as a member of the committee of inspection and as representative of another member.

(9) Where the representative of a committee-member signs any document on the latter's behalf, the fact that he so signs shall be stated below his signature.

(10) The committee of inspection shall meet at such times as they shall from time to time appoint; and the trustee or any member of the committee may also call a meeting of the committee as and when he thinks necessary.

(11) The committee may act by a majority of their members present at a meeting, but shall not act unless a majority of the committee are present at the meeting.

(12) Any member of the committee may resign by notice in writing signed by him, and delivered to the trustee.

(13) A person's membership of the committee of inspection automatically terminates if the person becomes bankrupt or compounds or arranges with his creditors, or the person ceases to be, or is found never to have been, a creditor, or the person is neither present nor represented at five consecutive meetings of the committee; however, if the cause of termination is the member's bankruptcy, his trustee in bankruptcy replaces him as a member of the committee.

(14) Any member of the committee may be removed by an ordinary resolution at any meeting of creditors of which seven days' notice has been given stating the object of the meeting.

(15) On a vacancy occurring in the office of a member of the committee, the trustee shall forthwith summon a meeting of creditors for the purpose of filling the vacancy, and the meeting may by resolution appoint another creditor or other person eligible under subsection (2) to fill the vacancy.

(16) The continuing members of the committee, provided there is not less than two such continuing members, may act notwithstanding any vacancy in their body; and, where the number of members of the committee of inspection is for the time being less than five, the creditors
may increase that number so that it does not exceed five.

(17) If there is no committee of inspection, any act or thing or any direction or permission by this Act authorised or required to be done or given by the committee may be done or given by the Court on the application of the trustee.

Power to accept composition or scheme after bankruptcy adjudication

25 (1) Where a debtor is adjudged bankrupt the creditors may, if they think fit, at any time after adjudication, by a majority in number and three fourths in value of all the creditors who have proved, resolve to accept a proposal for a composition in satisfaction of the debts due to them under the bankruptcy, or for a scheme of arrangement of the bankrupt's affairs; and thereupon the same proceedings shall be taken and the same consequences shall ensue as in the case of a composition or scheme accepted before adjudica tion.

(2) If the Court approves the composition or scheme, it may make an order annulling the bankruptcy and vesting the property of the bankrupt in him or in such other person as the Court may appoint, on such terms, and subject to such conditions, if any, as the Court may declare.

(3) If default is made in payment of any instalment due in pur suance of the composition or scheme, or if it appears to the Court that the composition or scheme cannot proceed without injustice or undue delay, or that the approval of the Court was obtained by fraud, the Court may, if it thinks fit, on application by any person interested, adjudge the debtor bankrupt, and annul the composition or scheme, but without prejudice to the validity of any sale, disposition or payment duly made, or things duly done, under or in pur suance of the composition or scheme.

(4) Where a debtor is adjudged bankrupt under subsection (3), all debts, provable in other respects, which have been contracted before the date of the adjudication are provable in bankruptcy.

Control over Person and Property of Debtor

Duties of debtor to discovery and realisation of property

26 (1) Every debtor against whom a receiving order is made shall, un less prevented by sickness or other sufficient cause, attend the first meeting of his creditors, and shall submit to such examination and give such informa tion as the meeting may require.

(2) He shall give such inventory of his property, such list of his creditors and debtors, and of the debts due to and from them respectively, submit to such examination in respect of his property or his creditors, attend such other meetings of his creditors, wait at such times on the Official Receiver, special manager, or trustee, execute such powers of attorney, conveyances, deeds, and instruments, and generally do all such acts and things in relation to his property and the distribution of the proceeds amongst his creditors, as may be reasonably required by the Official Receiver, special manager, or trustee, or may be prescribed by general rules, or be di rected by the Court by any special order or orders made in reference to any particular case, or made on the occa sion of any special application by the Official Receiver, special manager, trustee, or any creditor or person interested.

(3) He shall, if adjudged bankrupt, aid, to the utmost of his power, in the realisation of his property and the distribution of the proceeds among his creditors.

(4) If a debtor wilfully fails to perform the duties im posed on him by this section, or to deliver up possession of any part of his property, which is divisible amongst his creditors under this Act, and which is for the time being in his possession or under his control, to the Official Receiver or to the trustee, or to any person authorised by the Court to take possession of it, he is, in addition to any other pun ishment to which he may be subject, guilty of a contempt of court, and may be punished accordingly.

Arrest of debtor under certain circumstances

27 (1) The Court may, by warrant addressed to any police officer or prescribed officer of the Court, cause a debtor to be arrested, and any books, papers, money and goods in his possession to be seized; and him and them to be safely kept as prescribed until such time as the Court may order under the following circumstances:

(a) if, after a bankruptcy notice has been issued under this Act, or after presentation of a bankruptcy pe tition by or against him, it appears to the Court that there is prob able reason for believing that he has absconded, or is about to abscond, with a view of avoiding payment of the debt in respect of which the bankruptcy notice was is sued, or of avoiding service of a bankruptcy petition, or of avoiding ap pearance to any such petition, or of avoiding exami nation in respect of his affairs, or of otherwise avoiding, delaying or embarrassing proceedings in bankruptcy against him;

(b) if, after presentation of a bankruptcy petition by or against him, it appears to the Court that there is
probable cause for believing that he is about to remove his goods with a view of preventing or delay ing possession being taken of them by the Official Receiver or trustee, or that there is probable ground for be lieving that he has concealed or is about to conceal or destroy any of his goods, or any books, documents or writings which might be of use to his creditors in the course of his bankruptcy;

(c) if, after service of a bankruptcy petition on him, or after a receiving order is made against him, he removes any goods in his possession above the value of three hundred dollars without the leave of the Official Receiver or trustee;

(d) if, without good cause shown, he fails to attend any examina tion ordered by the Court;

except that no arrest upon a bankruptcy notice is valid and protected, unless the debtor before or at the time of his arrest is served with the bankruptcy notice.

(2) No payment or composition made or security given af ter arrest made under this section is exempt from the provi sions of this Act relating to fraudulent preferences.

Re-direction of debtor's letters

28 Where a receiving order is made against a debtor, the Court, on the application of the Official Receiver or trustee, may from time to time order that for such time, not exceed ing three months, as the Court thinks fit, post letters, telegrams, other postal packets and electronic communication or otherwise, addressed to the debtor at any place or places mentioned in the order for re-direc tion, shall be re-directed, sent or delivered by the Postmas ter-General, or the officers acting under him, to the Official Receiver, or the trustee, or otherwise as the Court directs, and the same shall be done accordingly.

Enquiry as to debtor's conduct, dealings, and property

29 (1) The Court may, on the application of the Official Receiver or trustee, at any time after a receiving order has been made against a debtor, summon before it the debtor or his spouse, or any person known or suspected to have in his possession any of the estate or effects belonging to the debtor, or supposed to be indebted to the debtor, or any person whom the Court may deem capable of giving information respecting the debtor, his dealings or property, and the Court may re quire any such person to produce any documents in his cus tody or power relating to the debtor, his dealings or prop erty.

(2) If any person so summoned, after having been ten dered a reason able sum, refuses to come before the Court at the time appointed, or refuses to produce any such document, having no lawful impediment made known to the Court at the time of its sitting and allowed by it, the Court may, by warrant, cause him to be apprehended and brought up for ex amination.

(3) The Court may examine on oath, either by word of mouth, or by written interrogatories, any person so brought before it concerning the debtor, his dealings, or property.

(4) If any person on examination before the Court admits that he is indebted to the debtor, the Court may, on the ap plication of the Official Receiver or trustee, order him to pay to the Official Receiver or trustee, at such time and in such manner as to the Court seems expedient, the amount admitted, or any part thereof, either in full discharge of the whole amount in question or not, as the Court thinks fit, with or without costs of the examination.

(5) If any person on examination before the Court admits that he has in his possession any property belonging to the debtor, the Court may, on the application of the Official Receiver or trustee, order him to deliver to the Official Receiver or trustee such property, or any part thereof, at such time, and in such manner, and on such terms, as to the Court may seem just.

Discharge of bankrupt

30 (1) A bankrupt may, at any time after being adjudged bankrupt, ap ply to the Court for an order of discharge, and the Court shall appoint a day for hearing the application, but the application shall not be heard until the public ex amination of the bankrupt is concluded.

(2) The application shall, except when the Court in ac cordance with rules under this Act otherwise directs, be heard in open Court.

(3) On the hearing of the application the Court shall take into consideration a report of the Official Receiver as to the bankrupt's conduct and af fairs (including a report as to the bankrupt's conduct during the proceedings under his bankruptcy), and may either grant or refuse an absolute or der of discharge, or suspend the operation of the order for a specified time, or grant an order of discharge subject to any conditions with respect to any earnings or income which may afterwards become due to the bankrupt, or with respect to his after-acquired property except that where the bankrupt has been convicted of any misdemeanour under this Act, or any enactment repealed by this Act, or any other misde meanour connected with his bankruptcy, or where in
any case any of the facts mentioned in subsection (5) are proved, the Court shall either—

(a) refuse the discharge; or

(b) suspend the discharge for such period as the Court thinks proper; or

(c) suspend the discharge until a dividend of not less than ten cents in the dollar has been paid to the creditors; or

(d) require the bankrupt as a condition of his discharge to consent to judgment being entered against him by the Official Receiver or trustee for any balance or part of any balance of the debts provable under the bankruptcy which is not satis fied at the date of the discharge, such balance or part of any balance of the debts to be paid out of the future earnings of after-acquired property of the bankrupt in such man ner and subject to such conditions as the Court may direct; but execution shall not be issued on the judgment without leave of the Court, which leave may be given on proof that the bankrupt has since his discharge acquired property or income available to wards payment of his debts.

(4) If at any time after the expiration of two years from the date of any order made under this section the bankrupt satisfies the Court that there is no reasonable probability of his being in a position to comply with the terms of the order, the Court may modify the terms of the order, or of any substituted order, in such manner and upon such conditions as it may think fit.

(5) The facts referred to in subsection (3) are—

(a) that the bankrupt's assets are not of a value equal to ten cents in the dollar on the amount of his unsecured lia bilities, unless he satisfies the Court that the fact that the assets are not of a value equal to ten cents in the dollar on the amount of his unsecured liabilities has arisen from circum stances for which he cannot justly be held responsi ble;

(b) that the bankrupt has omitted to keep such books of account as are usual and proper in the business car ried on by him and as sufficiently disclose his business transactions and financial position within the three years immedi ately preceding his bankruptcy;

(c) that the bankrupt has continued to trade after know ing himself to be insolvent;

(d) that the bankrupt has contracted any debt provable in the bankruptcy without having at the time of con tracting it any reasonable or probable ground of ex pectation (proof whereof lies on him) of being able to pay it;

(e) that the bankrupt has failed to account satisfacto rily for any loss of assets or for any deficiency of assets to meet his liabilities;

(f) that the bankrupt has brought on, or contributed to, his bankruptcy by rash and hazardous speculations, or by un justifiable extravagance in living, or by gambling, or by culpable neglect of his business af fairs;

(g) that the bankrupt has put any of his creditors to unnecessary expense by a frivolous or vexatious de fence to any ac tion properly brought against him;

(h) that the bankrupt has brought on or contributed to his bankruptcy by incurring unjustifiable expense in bring ing any frivolous or vexatious action;

(i) that the bankrupt has, within three months preceding the date of the receiving order, when unable to pay his debts as they become due, given an undue prefer ence to any of his creditors;

(j) that the bankrupt has, within three months preceding the date of the receiving order, incurred liabili ties with a view of making his assets equal to ten cents in the dollar on the amount of his unsecured liabilities;

(k) that the bankrupt has, on any previous occasion, been adjudged bankrupt, or made a composition or ar rangement with his creditors;

(l) that the bankrupt has been guilty of any fraud or fraudulent breach of trust.

(6) With a view to removing any disqualifica tion by law on ac count of bankruptcy which is removed if the bankrupt obtains from the Court his discharge with a cer tificate to the effect that the bankruptcy was caused by misfortune without any misconduct on his part, the Court may, if it thinks fit, grant such a certificate, but a re fusal to grant such a certificate is subject to appeal.

(7) For the purposes of this section, a bankrupt's as sets shall
be deemed of a value equal to ten cents in the dollar on the amount of his un secured liabilities when the Court is satisfied that the property of the bankrupt has re alised, or is likely to realise, or with due care in reali sation might have realised, an amount equal to ten cents in the dollar on his unsecured liabilities, and a report by the Official Receiver or the trustee shall be prima facie evidence of the amount of the liabilities.

(8) For the purposes of this section, the report of the Official Receiver shall be prima facie evidence of the statements therein contained.

(9) Notice of the appointment by the Court of the day for hearing the application for discharge shall be published in the prescribed manner, and sent fourteen days at least before the day so appointed to each creditor who has proved, and the Court may hear the Official Receiver and the trustee, and may also hear any creditor; at the hearing the Court may put such questions to the debtor and receive such evidence as it may think fit.

(10) The powers of suspending and of attaching conditions to a bankrupt's discharge may be exercised concurrently.

(11) A discharged bankrupt shall, notwithstanding his discharge, give such assistance as the trustee may require in the realisation and distri bution of such of his property as is vested in the trustee, and, if he fails to do so, he is guilty of a contempt of court; and the Court may also, if it thinks fit, revoke his discharge, but without prejudice to the validity of any sale, disposition or payment duly made or thing duly done subsequent to the discharge, but be fore its revocation.

Automatic discharge of bankrupt

31 (1) Where the Court makes an order—

(a) declaring that a debtor's examination under section 16 has been concluded; or

(b) dispensing with his examination under section 17,

the Court may, if it thinks fit, make an order directing that subsection (2) has effect if he is or has been adjudged bankrupt in the proceedings; and in determining whether to make such an order the Court shall have regard to all the circumstances of the case, including, in particular, any such facts as are stated in section 30(5) and whether the debtor has been convicted of any offence under this Act or any other offence connected with his bankruptcy.

(2) Where the Court makes an order under subsection (1), then, if the debtor is or has been adjudged bankrupt in the proceedings, then the bankrupt is discharged in any case by the expiration of the period of fifteen years beginning with the commencement of bankruptcy.

(3) This section is without prejudice to any power of the Court under section 101(1) to review, rescind or vary an order.

Discharge of bankrupt on application of Official Receiver

32 (1) This section applies to any adjudication of bankruptcy made af ter 30 January 1990, or made within five years before 31 January 1990 where—

(a) the bankrupt has not applied under section 30 for an order of discharge in respect of the adjudication; and

(b) the adjudication has not been annulled under section 25(2) or 35; and

(c) the Court has not made an order under section 31(1) in relation to the adjudication or any such order has been re scinded; and

(d) five years have elapsed since the date of the adju dication.

(2) Within twelve months after the fifth anniversary of the date of any adjudication to which this section applies, the Official Receiver shall make an application to the Court in re spect of the adjudication.

(3) The Court shall appoint a day for the hearing of the applica tion and notice of the appointment shall be published in the prescribed manner and sent fourteen days at least be fore the day so appointed to the bankrupt.

(4) On the hearing of the application the Court shall take into consideration a report of the Official Receiver as to the bankrupt's conduct and af fairs, including a report as to the bankrupt's conduct during the proceedings under his bankruptcy; and for the purposes of this section that report shall be prima facie evidence of the statements therein con tained.

(5) Except where the Court otherwise directs, the appli cation may be heard in the absence of the bankrupt; and the Court may hear the trustee and any creditor, receive such other evidence as it thinks fit and, if the bankrupt is pre sent, put questions to him or may hear the bankrupt on his own behalf.

(6) On any application under this section the Court may—

(a) grant or refuse an absolute order of discharge;

(b) suspend the discharge for such period as the Court thinks proper or until a dividend of not less than ten cents in the dollar has been paid to the cred itors; or

(c) require the bankrupt as a condition of his discharge to consent to judgment being entered against him by the Official Receiver or trustee for any balance or part of any balance of the debts provable under the bankruptcy which is not satis fied at the date of the discharge, such balance or part to be paid out of the future earnings or after-acquired property of the bankrupt in such manner and subject to such con ditions as the Court may direct.

(7) Execution shall not be issued without the leave of the Court on any judgment entered by virtue of subsection (6)(c); and leave may be given on proof that the bankrupt has since his discharge acquired property or income avail able towards payment of his debts.

(8) If at any time after the expiration of two years from the date of any order made under this section the bankrupt satisfies the Court that there is no reasonable probability of his being in a position to comply with the terms of the order, the Court may modify the terms of the order, or of any substituted order, in such manner and on such conditions as it thinks fit.

(9) References to discharge and an order of discharge in section 30(11) and section 34 include references to discharge and an order of discharge under this section.

Fraudulent settlements

33 In either of the following cases:

(a) in the case of a settlement made before and in con sideration of marriage where the settlor is not at the time of making the settlement able to pay all his debts without the aid of the property comprised in the settlement; or

(b) in the case of any covenant or contract made in con sideration of marriage for the future settlement on or for the set tlor's wife or children of any money or property wherein he had not at the date of his marriage any estate or in terest (not being money or property of or in right of his wife);

if the settlor is adjudged bankrupt or compounds or arranges with his credi tors, and it appears to the Court that the settlement, covenant, or contract was made in order to de feat or delay creditors, or was unjustifiable having regard to the state of the settlor's affairs at the time when it was made, the Court may refuse or suspend an order of dis charge, or grant an order subject to conditions, or refuse to approve a composition or arrangement, as the case may be, in like manner as in cases where the debtor has been guilty of fraud.

Effect of order on discharge

34 (1) An order of discharge does not release the bankrupt—

(a) from any debt on a recognizance nor from any debt with which the bankrupt may be chargeable at the suit of the Crown or of any person for any offence against a statute re lating to any branch of the pub lic revenue, or at the suit of the Provost Marshal General or other public of ficer on a bail bond en tered into for the appearance of any person prose cuted for any such offence; and he is not discharged from such excepted debts unless the Official Receiver after consultation with the Minister of Finance certi fies in writing his consent to the bankrupt being discharged therefrom; or

(b) from any debt or liability incurred by means of any fraud or fraudulent breach of trust to which he was a party, nor from any debt or liability whereof he has obtained for bearance by any fraud to which he was a party; or

(c) from any bankruptcy debt which —

(i) consists in a liability to pay damages for neg ligence, nuisance or breach of a statutory, contractual or other duty, being damages in re spect of personal in juries to any person; or

(ii) arises under any financial provi sion order made under the Matrimonial Causes Act 1974 [title 27 item 3] or any affiliation order or any order relat ing to maintenance made under the Matrimonial Proceed ings (Magistrates Courts) Act 1974 [title 27 item 5].

(2) An order of discharge shall release the bankrupt from all other debts provable in bankruptcy.

(3) An order of discharge is conclusive evidence of the bankruptcy, and of the validity of the proceedings therein, and in any
proceedings that may be instituted against a bankrupt who has obtained an order of discharge in respect of any debt from which he is released by the order, the bankrupt may plead that the cause of action occurred before his discharge.

(4)