The Insolvency Act-1997

The Insolvency Act-1997

 

Procedure of adjudication

 

What is the order of adjudication?

The order of court by which a person is declared to be insolvent is called the Order of adjudication.

Before the court can pass an order of adjudication there must be a petition presented to it either by a creditor or by the debtor. The petitioning creditor or debtor must fulfill certain conditions.

 

Conditions of a creditor’s petition:

The following conditions must be fulfilled before a creditor can present a petition for the adjudication of a person as insolvent:

1)The amount owned must be Tk 500,000 or more.

2)The debtor must have committed an act of insolvency within one year before the presentation of the petition. 

 

3) A secured creditor is one who holds some movable or immovable property of the debtor out of which he can realize his claims.

A secured creditor can present an insolvency petition if the following conditions are satisfied:

a)He abandoned his security in favor of all the creditors, or

b)The security is insufficient to meet his claim of minimum Tk 500,000. 

 

Conditions of a debtor’s petition:

1)His debt amount of Tk 500,000 or

2)He has been arrested and imprisoned in execution of the decree of any court for the payment of money, or

3)An order of attachment in execution of a money decree has been made and is subsisting against his property. 

 

Who can not be declared insolvent?

Any person, man or women, who has attained majority can be declared insolvent if the conditions laid down in the insolvency act.

The following persons can be considered:

a)(a) Minor: A minor is not personally responsible for his debts and is not capable of entering into contracts. Therefore a minor can not be adjudicated an insolvent.

b)(b) Lunatic: A lunatic can not be adjudged insolvent for debts. But he can be adjudged insolvent only for debts incurred by him while he was sane. 

a)(c) Deceased person: A dead man can not be declared insolvent. If a debtor died after the presentation of the insolvency petition, his estate will be administered by the official assignee.

b)(d) Convict: A prisoner in the jail can be declared insolvent. 

a)(e) Companies: A company can not be declared insolvent. Because companies are directed by the Company Act-1994 approved by the govt.

b)(f) Govt. Body: Any govt. body can not be declared insolvent. If any creditor claim any due from the govt. organization, it is considered as the liability to the government. And government is bound to pay the amount at any time. 

(g) Partner: Since every partner is responsible for his debts of the firm, the creditor of a firm can file an insolvency petition against any partner or all of the partners for any debt due and owned by the firm.