Point in Time
Act No: No. 18 of 2015
Act Title: INSOLVENCY
[ Date of commencement: Parts I, III, V, First Schedule and Second Schedule: 30th November, 2015 Parts II, VI, VII, VIII, IX, X, XI, XII, Third Schedule and Fourth Schedule: 18th January, 2016, Part XIII: 4th March, 2016, Section 720: 27th June, 2016. ]
[ Date of Assent: 11th September, 2015. ]
Arrangement of Sections
PART I — PRELIMINARY PROVISIONS
1.
Short title and commencement
(1)

This Act may be cited as the Insolvency Act, 2015.

(2)

The provisions of this Act shall come into operation on such date as the Cabinet Secretary may, by notice in the Gazette, appoint and different dates may be appointed for different provisions.

(3)

Notwithstanding sub section (2), any provision that has not been brought into force within nine months after the publication of this Act shall come into force on the expiry of that period.

[ L. N. 244 /2015, L. N. 1/2016, L. N. 38/2016, L. N. 119/2016.]

3.
Objects and application of this Act
(1)

The objects of this Act are—

(a)

to establish and provide for the operation of a framework for the efficient and equitable administration of the estates of insolvent natural persons and unincorporated entities comprising natural persons, and the assets of insolvent companies and other bodies corporate, that maintains a fair balance between the interests of those persons, entities, companies and bodies and those of their creditors;

(b)

in the case of insolvent natural persons and unincorporated entities comprising natural persons, and insolvent companies and other bodies corporate whose financial position is redeemable—

(i) to enable those persons and entities to continue to operate as going concerns so that ultimately they may be able to meet their financial obligations to their creditors in full or at least to the satisfaction of those creditors; and
(ii) to achieve a better outcome for the creditors as a whole than would likely to be the case if those persons and entities were adjudged bankrupt;
(c)

in the case of insolvent companies and other bodies corporate whose financial position is redeemable—

(i) to enable those companies and bodies to continue to operate as going concerns so that ultimately they may be able to meet their financial obligations to their creditors in full or at least to the satisfaction of those creditors; and
(ii) to achieve a better outcome for the creditors as a whole than would likely to be the case if those companies and bodies were liquidated; and
(d)

in the case of insolvent natural persons and unincorporated entities comprising natural persons, and insolvent companies and other bodies corporate whose financial position is irredeemable—to provide an orderly system for adjudging those persons bankrupt and for the efficient and optimal administration and distribution of their estates for the benefit of their creditors;

(e)

in the case of insolvent companies and other bodies corporate whose financial position is irredeemable—to provide an orderly system for liquidating the affairs of those companies and bodies and for the efficient and optimal administration and distribution of their assets for the benefit of their creditors.

(2)

This Act applies to natural persons, partnerships, limited liability partnership, companies and other corporate bodies established by any written law.

PART II — INSOLVENCY PRACTITIONERS
4.
Circumstances in which person acts as insolvency practitioner
(1)

A person acts as an insolvency practitioner in relation to a natural person if the person acts—

(a)

as the bankruptcy trustee or interim trustee in respect of the person’s property or as permanent or interim trustee in the sequestration of the person’s estate;

(b)

as a trustee under a deed that is—

(i) a deed of composition made for the benefit of the person’s creditors; or
(ii) a trust deed for the creditors of the person; or
(c)

as supervisor of a voluntary arrangement approved under Division 1 of Part IV.

(2)

A person acts as an insolvency practitioner in relation to a company if the person acts as—

(a)

the liquidator, provisional liquidator, administrator of the company;

(b)

a supervisor of a voluntary arrangement approved under Part VIII; or

(c)

a supervisor of a voluntary arrangement approved under Part IX.

(3)

A reference in this section to a natural person includes, except in so far as the context otherwise requires, a reference to a partnership other than a limited liability partnership.

5.
Consequences of acting without authorisation
(1)

A person who, not being the holder of an authorisation, purports to act as an insolvency practitioner in relation to a company or a natural person commits an offence and is on conviction liable to a fine not exceeding five million shillings.

(2)

This section does not apply to the Official Receiver.

6.
Qualifications for person to act as insolvency practitioners
(1)

Subject to subsection (2) and (3), a person is qualified to act as an insolvency practitioner only if the person—

(a)

satisfies the requirements of the insolvency regulations with respect to education, practical training and experience;

(b)

is a member of a professional body recognised under section 7; and

(c)

satisfies the requirements (if any) of the rules governing the body.

(2)

A natural person is disqualified from being or acting as an insolvency practitioner if the person—

(a)

has been adjudged bankrupt, or the person’s estate has been sequestrated and, in either case, the person has not been discharged;

(b)

is subject to a disqualification order made under the law relating to companies; or

(c)

is unable to perform the functions of an insolvency practitioner because of physical or mental infirmity.

(3)

A body corporate is not eligible to be an insolvency practitioner, but this subsection does not extend to an employee of a body corporate.

(4)

A natural person who, during the two years immediately preceding the commencement of this Part, was carrying on any of the activities referred to in section 4(1) or (2) is, unless disqualified under subsection (2), taken to be qualified to be and to act as an insolvency practitioner on and after that commencement, but ceases to be so qualified unless the person has, within the twelve months after that commencement, complied with the requirements of subsection (1).

7.
Duty of Cabinet Secretary to declare certain bodies to be recognised as professional bodies for the purposes of this Act
(1)

The Cabinet Secretary shall, by notice published in the Gazette, declare one or more professional bodies to be recognised professional bodies for the purposes of this Act

(2)

The Cabinet Secretary may declare a professional body to be a recognised professional body only if it—

(a)

regulates the practice of a profession; and

(b)

maintains and enforces rules authorising its members to act as insolvency practitioners to ensure that members—

(i) are fit and proper persons to act as insolvency practitioners; and
(ii) meet acceptable requirements relating to education practical training and experience.
(3)

A reference to the members of a recognised professional body includes a reference to persons who are, whether members of that body or not, governed by its rules in the practice of the relevant profession.

(4)

The Cabinet Secretary may revoke a notice made under subsection (1) if it appears to the Cabinet Secretary that the professional body no longer meets the requirements of subsection (2).

(5)

A notice made by the Cabinet Secretary under this section takes effect from the date of the notice or such other date as is specified in it.

(6)

The Cabinet Secretary may, in revoking a notice made under subsection (1), exempt a specified member, or a specified class of members, of the professional body concerned from the effect of the revocation and to authorise the member, or the members of that class, to continue acting as an insolvency practitioner or as insolvency practitioner for such period as the Cabinet Secretary determines and notifies in writing to the member or members concerned.

(7)

In this section, “profession” means a profession involving carrying on any of the activities referred to in section 4(1) or (2).

8.
Application to act as insolvency practitioner
(1)

A person who wishes to act as an insolvency practitioner may apply to the Official Receiver for an authorisation to act as an insolvency practitioner for the purposes of this Act.

(2)

The Official Receiver shall refuse an application under subsection (1) that—

(a)

is not made in the manner prescribed by the insolvency regulations;

(b)

does not contain or be accompanied by such information as the Official Receiver may reasonably require for purposes of determining the application; or

(c)

does not comply with subsection (3); or.

(d)

is not accompanied by the fee so prescribed.

(3)

The applicant shall include in, or attach to, the application evidence—

(a)

that the applicant is qualified to act as an insolvency practitioner; and

(b)

that the applicant—

(i) has a professional indemnity insurance policy or has provided security for the proper performance of the functions of an insolvency practitioner; and
(ii) that policy or security meets the requirements prescribed by the insolvency regulations with respect to acting as a practitioner; and
(c)

that the applicant is a fit and proper person to act as an insolvency practitioner.

(4)

The Official Receiver may direct that notice of the application be published in the Gazette or in such other publication as the Official Receiver specifies.

(5)

Information to be provided to the Official Receiver under this section is, if the Official Receiver so requires, to be in such form or verified in such manner as the Official Receiver may specify.

(6)

An application made under subsection (1) may be withdrawn at any time before it is granted or refused.

9.
Grant or refusal of authorisation
(1)

As soon as practicable after receiving an application made under section 8, the Official shall either grant or refuse the application.

(2)

The Official Receiver shall grant an application made under section 8 if satisfied that—

(a)

the application complies with the requirements of that section; and

(b)

that the applicant is qualified to act as an insolvency practitioner and is a fit and proper person to act as such.

(3)

The Official Receiver may not refuse an application for an authorisation without having given the applicant an opportunity to be heard.

(4)

On granting an authorisation under this section, the Official Receiver shall notify the applicant in writing of the authorisation and specify the date on which the authorisation is to take effect.

(5)

An authorisation granted under this section continues in force for such period, and subject to such reasonable conditions, as are specified in the authorisation.

10.
Power of Official Receiver to revoke authorisation
(1)

The Official Receiver may revoke an authorisation granted under subsection (l) if satisfied that the holder of the authorisation —

(a)

is no longer qualified to act as an insolvency practitioner;

(b)

is no longer a fit and proper person to act as an insolvency practitioner;

(c)

has been found guilty of an offence under this Act, or of an offence under any other Act involving fraud, dishonesty or breach of trust;

(d)

has contravened or failed to comply with, or is contravening or failing to comply with, a condition of the authorisation; or

(e)

in making the application for an authorisation, has provided the Official Receiver with false or misleading information.

(2)

An authorisation granted under this section may be revoked by the Official Receiver at the request, or with the consent, of the holder of the authorisation.

(3)

The Official Receiver may not revoke an authorisation (otherwise than at the request or with the consent of its holder) without having given its holder an opportunity to be heard.

(4)

A revocation of an authorisation does not take effect until the period within which an appeal within which the holder of the authorisation can appeal against the revocation has expired or, if within that period, the holder lodges such an appeal, until the appeal is finally determined or is withdrawn, whichever first occurs.

11.
Right to appeal against decisions of Official Receiver
(1)

A person whose application for an authorisation to act as an insolvency practitioner is refused may appeal to the Court against the refusal.

(2)

A person whose authorisation to act as insolvency practitioner is revoked otherwise than at the person’s request or with the person’s consent may appeal to the Court against the refusal.

(3)

Such an appeal may be entertained only if—

(a)

it is lodged with the Court within thirty days after the decision of the Official Receiver refusing the application or revoking the authorisation is notified to the applicant or holder of the authorisation, or within such extended period as the Court may allow; and

(b)

is in the form, and complies with any other requirements, prescribed by the insolvency regulations for the purposes of this section.

(4)

The Official Receiver is entitled to be served with a copy of the appeal and to appear at the hearing of the appeal as respondent.

(5)

On the hearing of an appeal lodged in accordance with this section, the Court shall, if it considers that the refusal of the appellant’s application, or the revocation of the appellant’s authorisation, was not warranted, make an order quashing the decision of the Official Receiver refusing the application, or revoking the authorisation, but otherwise, it shall make an order confirming the Official Receiver’s decision.

(6)

The Court may make such ancillary or consequential orders as it considers appropriate, including an order as to payment of costs of the appeal proceedings.

PART III — BANKRUPTCY OF NATURAL PERSONS
12.
Interpretation: Part III

In this Part—

“bankruptcy application” means an application for a debtor to be adjudged bankrupt;

“bankruptcy order,” in relation to a debtor, means an order of the Court adjudging the debtor bankrupt;

“creditor’s application” means a bankruptcy application made in accordance with section 17 by one or more creditors of a debtor;

“debtor” means a natural person who owes money to one or more creditors; and, if a trust, partnership or other unincorporated body owes money to a creditor, includes all of the trustees of the trust, all of the partners of the partnership and all of the members of the body;

“debtor’s application” means a bankruptcy application made in accordance with section 32 by a debtor;

“statutory demand” means a demand for payment of a debt made as referred to in section 17(3)(a) or (4)(a).

13.
Nature of bankruptcy
(1)

Bankruptcy occurs when the Court makes an order in respect of a debtor adjudging the debtor bankrupt—

(a)

on the application of one or more creditors of the debtor made in accordance with section 17; or

(b)

on the application of the debtor made in accordance with section 32.

(2)

If a person is adjudged bankrupt—

(a)

the property of the person vests in the bankruptcy trustee or, if there is no bankruptcy trustee, the Official Receiver;

(b)

the person becomes restricted as to the business activities that the person can undertake; and

(c)

the Official Receiver is entitled to recover assets that the person has transferred within the two years immediately preceding the bankruptcy.

14.
Alternatives to bankruptcy

A debtor who is insolvent may as an alternative to bankruptcy—

(a)

enter into a voluntary arrangement in accordance with Division 1 of Part IV;

(b)

make a proposal to creditors in accordance with Division 2 of Part IV;

(c)

pay creditors in instalments under a summary instalment order under Division 3 of that Part; or

(d)

enter the no asset procedure in accordance with Division 4 of that Part.

15.
Who is entitled to make a bankruptcy application
(1)

A bankruptcy application may be made to the Court in accordance with the provisions of this Part—

(a)

by one of the person's creditors or jointly by two or more one of them;

(b)

by the debtor; or

(c)

by the supervisor of any person who is for the time being bound by a voluntary arrangement proposed by the debtor and approved under Division 1 of Part IV.

(2)

On the hearing of such an application, the Court may, subject to and in accordance with the provisions of this Part, make a bankruptcy order.

(3)

An application may be made by a person referred to in subsection (1)(a) or (b) only if the debtor—

(a)

is domiciled in Kenya;

(b)

is personally present in Kenya on the date on which the application is made; or

(c)

at any time during the three years immediately preceding that date——

(i) has been ordinarily resident, or has had a place of residence; or
(ii) has carried on business in Kenya.
(4)

In subsection (3)(c), the reference to a debtor carrying on business includes—

(a)

the carrying on of a business by a firm or partnership of which the debtor is a member, and

(b)

the carrying on of a business by an agent or manager for the debtor for such a firm or partnership.

16.
Proceedings on a bankruptcy application
(1)

A bankruptcy application may not be withdrawn without the approval of the Court.

(2)

The Court has a general power to dismiss a bankruptcy application or to stay proceedings on such an application on the ground that the Court is of the opinion that a requirement of this Part or the insolvency regulations has not been complied with in a material respect.

(3)

If the Court stays proceedings on a bankruptcy application, it may do so on such terms as it considers appropriate.

Division 2 – Bankruptcy applications by creditors

17.
Creditor may apply for bankruptcy order in respect of debtor
(1)

One or more creditors of a debtor may make an application to the Court for a bankruptcy order to be made in respect of the debtor in relation to a debt or debts owed by the debtor to the creditor or creditors.

(2)

Such an application may be made in relation to a debt or debts owed by the debtor only if, at the time the application is made—

(a)

the amount of the debt, or the aggregate amount of the debts, is equal to or exceeds the prescribed bankruptcy level;

(b)

the debt, or each of the debts, is for a liquidated amount payable to the applicant creditor, or one or more of the applicant creditors, either immediately or at some certain, future time, and is unsecured;

(c)

the debt, or each of the debts, is a debt that the debtor appears either to be unable to pay or to have no reasonable prospect of being able to pay; and

(d)

there is no outstanding application to set aside a statutory demand in respect of the debt or any of the debts.

(3)

For the purposes of subsection (2)(c), a debtor appears to be unable to pay a debt if, but only if, the debt is payable immediately and either—

(a)

the applicant creditor to whom the debt is owed has served on the debtor a demand requiring the debtor to pay the debt or to secure or compound for it to the satisfaction of the creditor, at least twenty-one days have elapsed since the demand was served, and the demand has been neither complied with nor set aside in accordance with the insolvency regulations; or

(b)

execution or other process issued in respect of the debt on a judgment or order of any court in favour of the applicant, or one or more of the applicants to whom the debt is owed, has been returned unsatisfied either wholly or in part.

(4)

For the purposes of subsection (2)(c), a debtor appears to have no reasonable prospect of being able to pay a debt if, but only if, the debt is not immediately payable and—

(a)

the applicant to whom it is owed has served on the debtor a demand requiring the debtor to establish to the satisfaction of the creditor that there is a reasonable prospect that the debtor will be able to pay the debt when it falls due;

(b)

at least twenty-one days have elapsed since the demand was served; and

(c)

the demand has been neither complied with nor set aside in accordance with the insolvency regulations.

(5)

This section is subject to sections 18 to 20.

(6)

An overstatement in a statutory demand of the amount owing by the debtor does not invalidate the demand unless—

(a)

the debtor notifies the creditor that the debtor disputes the validity of the demand because it overstates the amount owing; and

(b)

the debtor makes that notification within the period specified in the demand for the debtor to comply with it.

(7)

A debtor complies with a demand that overstates the amount owing by—

(a)

taking steps that would have complied with the demand had it stated the correct amount owing, such as by paying the creditor the correct amount owing plus costs; and

(b)

taking those steps within the period specified in the demand for the debtor to comply.

18.
When court can make bankruptcy order on application by secured creditor
(1)

A debt that is the debt, or one of the debts, in respect of which a creditor’s application is made need not be unsecured if either—

(a)

the application contains a statement by the person having the right to enforce the security that the creditor is willing, in the event of a bankruptcy order being made, to give up the security for the benefit of all the bankrupt’s creditors; or

(b)

the application is expressed not to be made in respect of the secured part of the debt and contains a statement by that person of the estimated value at the date of the application of the security for the secured part of the debt.

(2)

In a case to which subsection (1)(b) applies, the secured and unsecured parts of the debt are to be treated for the purposes of sections 17, 19 and 20 as separate debts.

19.
Expedited creditor’s application

If a creditor’s application is made wholly or partly in respect of a debt that is the subject of a statutory demand, the application may be made before the end of the twenty-one day period referred to in section 17 if—

(a)

there is a serious possibility that the debtor’s property, or the value of any of that property, will be significantly reduced during that period; and

(b)

the application contains a statement to that effect.

20.
Proceedings on creditor’s application
(1)

The Court may not make a bankruptcy order on a creditor’s application unless it is satisfied that the debt, or one of the debts, in respect of which the application was made is either—

(a)

a debt which, having been payable at the date of the application or having since become payable, has been neither paid nor secured or compounded for; or

(b)

a debt that the debtor has no reasonable prospect of being able to pay when it falls due.

(2)

If the application contains a statement of the kind referred to in section 19, the Court may not make a bankruptcy order until at least twenty-one days have elapsed since the service of the relevant statutory demand.

(3)

The Court may dismiss the application if it is satisfied that the debtor is able to pay all of the debtor’s debts or is satisfied—

(a)

that the debtor has made an offer to secure or compound for a debt in respect of which the application is made;

(b)

that the acceptance of that offer would have required the dismissal of the application; and

(c)

that the offer has been unreasonably refused.

(4)

In determining for the purposes of subsection (3) whether the debtor is able to pay all of the debtor’s debts, the Court shall take into account the debtor’s contingent and prospective liabilities.

(5)

In determining for the purposes of this section what constitutes a reasonable prospect that a debtor will be able to pay a debt when it falls due, the Court shall presume that the prospect given by the information known to the creditor when the creditor entered into the transaction resulting in the debt was a reasonable prospect.

(6)

Nothing in sections 17 to 19 prevents the Court from allowing a creditor’s application to be amended by the omission of any creditor or debt and to be proceeded with as if action taken for the purposes of those sections had been taken only by or in relation to the remaining creditors or debts.

21.
Creditor’s execution process not to be issued or continued
(1)

A creditor who makes an application for a bankruptcy order in respect of a debtor may not issue an execution process against the debtor in respect of the property of the debtor to recover a debt on which the application is based.

(2)

If the creditor has already issued the execution process, the creditor may not continue it.

(3)

The creditor may make an application to the relevant court for approval to issue or continue the execution process.

(4)

On the hearing of an application made under subsection (3), the relevant court may make an order permitting the applicant to begin or continue the execution process but only if it is satisfied after considering all representations made to it that the interests of the other creditors will not be detrimentally affected.

(5)

Any action taken in contravention of subsection (1) or (2) is void,

22.
Power of relevant court to stay execution processes by other creditors or allow them on terms
(1)

After a creditor’s application has been made, the debtor or any creditor may apply to the relevant court for an order stopping the issue or continuance by any other creditor of an execution process against the debtor in respect of the property of the debtor.

(2)

On the hearing of an application under subsection (1), the Court may make an order—

(a)

stay the execution process on such terms as the Court considers appropriate; or

(b)

allowing the execution process to continue on such terms as the Court considers appropriate.

23.
Execution process issued by other court
(1)

This section applies if an execution process has been issued by a court other than the High Court.

(2)

If it is proved to the issuing court that an application for a bankruptcy order in respect of the debtor has been made to the High Court, that court may either—

(a)

stay the execution process on such terms as it considers appropriate; or

(b)

permit the execution process to continue on such terms as it considers appropriate.

24.
No restriction on execution process if bankruptcy application withdrawn or dismissed

The restrictions in sections 21 to 23 on issuing or continuing an execution process do not apply if an application is withdrawn or dismissed.

25.
When court may adjudge debtor bankrupt
(1)

The Court may make a bankruptcy order in respect of the debtor if the creditor has complied with section 17.

(2)

The Court may refuse to adjudge a debtor bankrupt if—

(a)

the applicant creditor has not satisfied the requirements specified in section 17;

(b)

the debtor is able to pay the debtor’s debts; or

(c)

it is just and equitable that the Court should not make a bankruptcy order.

26.
When the Court may stay application

The Court may, at any time, stay an application by a creditor for bankruptcy on such terms, and for such period, as the Court considers appropriate.

27.
Orders if more than one application
(1)

If there is more than one bankruptcy application in respect of a debtor, and one application has been stayed by an order of the Court, the Court may, if it believes there is a good reason to do so, make a bankruptcy order in respect of the application that has not been stayed.

(2)

On making a bankruptcy order under subsection (1), the Court shall dismiss the application that has been stayed on such terms as it considers appropriate.

28.
Orders if there is more than one order

If an application made by a creditor for a bankruptcy order relates to more than one debtor, the Court may refuse to make such an order in respect of one or some of the debtors without affecting the application made in relation to the remaining debtor or debtors.

29.
Power of the Court to make order staying bankruptcy application, etc
(1)

This section applies if a debtor—

(a)

has made a disposition of all, or substantially all, of the property of the debtor to a trustee for the benefit of the creditors of the debtor;

(b)

has made a proposal under Division 1 of Part IV; or

(c)

has applied for a summary instalment order under that Division.

(2)

The debtor, the bankruptcy trustee or any creditor may apply for an order under this section.

(3)

On the hearing of an application under this section, the Court may make any of the following orders—

(a)

an order staying the bankruptcy application;

(b)

an order staying any other bankruptcy application;

(c)

an order as to costs;

(d)

if it orders costs to be paid to the creditor who applied for the bankruptcy application—an order that the costs be paid out of the assets of the debtor.

(4)

This section does not limit the powers of the Court under section 39.

30.
Court may stay application while underlying debt is determined
(1)

This section applies if a debtor appears in opposition to a creditor's application and the debtor claims that the debtor—

(a)

does not owe a specified debt to the creditor; or

(b)

owes a specified debt to the creditor, but the debt is less than the prescribed bankruptcy level.

(2)

The Court may, instead of refusing the application, stay the application so that the issue of—

(a)

whether the debt is owed; or

(b)

how much of the debt is owed, can be resolved at trial.

(3)

As a condition of staying the application, the Court may require the debtor to give security to the creditor for any debt that may be established as owing by the debtor to the creditor, and for the cost of establishing the debt.

31.
Court may allow one creditor to be substituted for another
(1)

In the case of a creditor's application, the Court may substitute another creditor for the creditor making the application if—

(a)

the applicant creditor has not proceeded with due diligence, or at the hearing of the application offers no evidence; and

(b)

the debtor owes the other creditor two hundred and fifty thousand shillings or more.

Division 3 — Bankruptcy applications by debtors

32.
When debtor may make application for bankruptcy order
(1)

A debtor may make an application to the Court for an order adjudging the debtor bankrupt only on the grounds that the debtor is unable to pay the debtor’s debts.

(2)

The Court may decline to deal with such an application if it is not accompanied by a statement of the debtor’s financial position containing—

(a)

such particulars of the debtor’s creditors and of the debtor’s debts and other liabilities and assets as may be prescribed by the insolvency regulations; and

(b)

such other information as may be so prescribed.

(3)

The Court may reject a statement of the debtor’s financial position if of the opinion that it is incorrect or incomplete.

(4)

A debtor who makes an application under this section shall publish a notice of the application in—

(a)

a newspaper circulating within the region in which the debtor ordinarily resides; and

(b)

in such other publications (if any) as may be prescribed by the insolvency regulations for the purposes of this section.

(5)

The Court may decline to hear the application if subsection (4) has not been complied with to its satisfaction.

33.
Appointment of insolvency practitioner by the Court
(1)

Subject to section 34, on the hearing of a debtor’s application, the Court may not make a bankruptcy order if it appears to the Court—

(a)

that if a bankruptcy order were made the total amount of the applicant’s debts, so far as unsecured, would be less than the small bankruptcies level;

(b)

that if a bankruptcy order were made, the value of the bankrupt’s estate would be equal to or more than the prescribed minimum value;

(c)

that, during the five years immediately preceding the debtor’s application, the debtor has—

(i) neither been adjudged bankrupt; nor
(ii) made a composition with the debtor’s creditors in satisfaction of the debtor’s debts or a scheme of arrangement of the debtor’s financial affairs; and
(d)

that it would be appropriate to appoint an authorised insolvency practitioner to prepare a report under section 34.

(2)

If, on the hearing of the application, it appears to the Court that it would be appropriate to make an appointment as referred to in subsection (1)(d), the Court shall appoint an authorised insolvency practitioner in relation to the debtor—

(a)

to prepare a report under section 34; or

(b)

subject to Division 1 of Part IV, to act in relation to any voluntary arrangement to which the report relates as supervisor for the purpose of supervising its implementation.

(3)

In this section—

(a)

“prescribed minimum value” means the amount for the time being specified in the insolvency regulations for the purposes of this section;

(b)

“small bankruptcies level” means the amount for the time being so specified for the purposes of this section.

34.
Action on report of insolvency practitioner
(1)

The insolvency practitioner appointed under section 33 shall—

(a)

inquire into the debtor’s financial affairs; and

(b)

within such period as the Court may specify—submit a report to the Court stating whether the debtor is willing to make a proposal for a voluntary arrangement in accordance with Division 1 of Part IV.

(2)

If the insolvency practitioner proposes to state that the debtor is willing to make such a proposal, that practitioner shall also state—

(a)

whether, in his or her opinion, a meeting of the debtor’s creditors should be convened to consider the proposal; and

(b)

if, in that practitioner’s opinion such a meeting should be convened—the date on which, and time and place at which, the meeting should be held.

(3)

On considering a report submitted under this subsection (1), the Court may—

(a)

without any application, make an interim order under section 306, if it considers it appropriate to do so for the purposes of facilitating the consideration and implementation of the debtor’s proposal; or

(b)

if it considers it would be inappropriate to make such an order—make a bankruptcy order in respect of the applicant.

(4)

An interim order made in accordance with subsection (3)(a) ceases to have effect at the end of such period as the Court may specify for the purpose of enabling the debtor’s proposal to be considered by the debtor’s creditors in accordance with the applicable provisions of Division 1 of Part IV

(5)

If the insolvency practitioner has proposed in the report that a meeting of the debtor’s creditors should be convened, the insolvency practitioner shall, unless the Court otherwise directs, convene such a meeting for the time, date and place proposed in the report.

(6)

In this section, "debtor's business" includes any business in which the debtor has a financial interest.

35.
Joint application can be made by two or more debtors

Two or more debtors, who are partners in a business partnership, may make a joint application under section 32.

Division 4 — Appointment of interim trustee in respect of debtor’s property

36.
Appointment of interim trustee of debtor’s property on application of creditor
(1)

After a creditor’s application has been made, the creditor or any other creditor of the debtor may apply to the Court for an order for the appointment of an authorised insolvency practitioner as interim trustee in respect of all or a specified part of the debtor’s property.

(2)

The Court may make such an order at any time before a bankruptcy order is made in respect of the debtor.

(3)

In making an order under subsection (1), the Court may authorise the interim trustee to do all or any of the following:

(a)

take control of any property of the debtor;

(b)

sell any perishable property or property of the debtor that is likely to fall rapidly in value;

(c)

control the affairs or property of the debtor as directed by the Court.

(4)

An order authorising the trustee to control a debtor’s business may not extend beyond what, in the Court’s opinion, is necessary to conserve the debtor’s property.

(5)

The Official Receiver and any authorised insolvency practitioner are suitably qualified persons for the purpose of subsection (1).

(6)

In this section, "debtor's business" includes any business in which the debtor has a financial interest.

37.
Additional orders after appointment of interim trustee
(1)

After the appointment of an interim trustee under section 36, the Court may, on an application made under subsection (2), make additional orders under that section.

(2)

An application for the purpose of subsection (1) made by a creditor or the interim trustee or, with the approval of the Court, by any other person.

38.
Notice of appointment of interim trustee to be published
(1)

As soon as practicable after the appointment of an interim trustee, the trustee shall publish a notice of the appointment—

(a)

in one or more newspapers circulating in Kenya; and

(b)

in such other publication as may be prescribed by the insolvency regulations for the purposes of this section.

(2)

The appointment of the interim trustee does not take effect until subsection (1) has been complied with.

39.
Execution process not to be issued after notice of appointment of trustee is published
(1)

A creditor of the debtor may not issue an execution process under section 23 after notice of the appointment of the interim trustee has been published.

(2)

A creditor may not continue an execution process already issued before notice of the appointment of the interim trustee has been published.

(3)

A creditor or any other interested person may apply to the Court for an order allowing the issue or continuation of an execution process, and the Court may make an order on such terms as it considers appropriate.

(4)

Any action taken in contravention of subsection (1) or (2) is void.

40.
Effect of staying execution

If execution is stayed under section 39, sections 109, 110, 111, 112, 113, 114 and 116 apply as if the order staying execution were a bankruptcy order.

Division 5 — Adjudication of bankruptcy applications

41.
Bankruptcy commences on making of bankruptcy order

A bankruptcy under this Act commences on the date and at the time when a bankruptcy order is made in respect of the debtor.

42.
Date and time of bankruptcy order to be recorded
(1)

On making a bankruptcy order, the Court shall record the date and time when the order was made.

(2)

If the debtor is adjudged bankrupt on the application of the debtor, the Official Receiver shall record on the application the date and time when the debtor made the application.

43.
Registrar of the Court to notify trustee of bankruptcy order

As soon as practicable after the Court has made a bankruptcy order in respect of a debtor, the Registrar of the Court shall forward a copy of the order to the Official Receiver.

44.
Official Receiver to nominate bankruptcy trustee
(1)

As soon as practicable after receiving a copy of a bankruptcy order, the Official Receiver shall nominate a qualified person to be bankruptcy trustee in respect of the debtor’s property.

(2)

In this subsection (1), “qualified person” means the Official Receiver or an authorised insolvency practitioner.

45.
Presumption that act was done, or transaction was entered into or made, after bankruptcy

If a doubt arises as to whether an act was done, or a transaction entered into or made, before or after the time when a bankruptcy commenced, it is to be presumed, until the contrary is proved, that the act was done, or the transaction was entered into or made, after that time.

46.
Bankruptcy order to be binding on all persons

A bankruptcy order becomes binding on the bankrupt and all other persons—

(a)

on the expiry of the time within which an appeal may be lodged against the order; or

(b)

if an appeal is lodged in respect of the order within that period and the Court later confirms the order or the appeal is later withdrawn—on the confirmation of the order or the withdrawal of the appeal,

and the order can no longer be questioned on the ground that it was invalid or that a prerequisite for making it did not exist.

47.
Official Receiver to maintain public register of undischarged and discharged bankrupts
(1)

The Official Receiver shall establish and maintain a public register of undischarged and discharged bankrupts.

(2)

The Official Receiver shall maintain the register in accordance with Division 2 of Part XII.

Division 6 — What happens on and after bankruptcy commences

48.
What happens or is to happen on and after bankruptcy commences
(1)

When a bankruptcy order commences—

(a)

all proceedings to recover the bankrupt’s debts are stayed; and

(b)

the property of the bankrupt (whether in or outside Kenya), and the powers that the bankrupt could have exercised in respect of that property for the bankrupt’s own benefit, vest in the Official Receiver.

(2)

Despite subsection (1), the Court may, on the application by a creditor or other person interested in the bankruptcy, allow proceedings that had already begun before the bankruptcy commenced to continue on such terms as the Court considers appropriate.

(3)

Within thirty days after the date of the bankruptcy order, the Official Receiver shall, subject to subsection (4)—

(a)

publish a notice advertising the order—

(i) once in the Gazette; and
(ii) once in a newspaper widely circulating in the area in which the bankrupt resides; or
(b)

if the Court directs that the order be advertised in some other publication—publish such a notice in that other publication.

(4)

If the bankrupt has appealed against the order or has applied for its annulment, the Court may order the Official Receiver not to advertise the bankruptcy order, but only if it is satisfied that there are compelling reasons for doing so.

(5)

Subsection (1) is subject to section 106.

49.
Official Receiver to serve notice on bankrupt requiring the bankrupt to lodge statement of the bankrupt’s financial position
(1)

Within thirty days after receiving notice of a bankruptcy order, the Official Receiver shall serve on the bankrupt a notice—

(a)

stating that a bankruptcy order has been made in respect of the bankrupt;

(b)

requiring the bankrupt to lodge with the Official Receiver a statement setting out the bankrupt’s financial position; and

(c)

specifying a deadline for lodging the statement with the Official Receiver.

(2)

The Official Receiver shall serve the notice at the address of the bankrupt given in the bankruptcy application or at the bankrupt’s address last known to the Official Receiver.

(3)

This section does not apply if the bankrupt has already lodged a statement under section 32.

50.
Bankrupt to lodge statement of financial position with bankruptcy trustee
(1)

Within fourteen days after being served with the notice in accordance with section 49 (or within such extended period not exceeding sixty days as the Official Receiver may allow), the bankrupt shall lodge with the Official Receiver a statement of the bankrupt’s financial position setting out—

(a)

particulars of the bankrupt’s assets;

(b)

the bankrupt’s debts and liabilities;

(c)

the names, residences and occupations of the bankrupt’s creditors;

(d)

the securities held by the bankrupt’s creditors;

(e)

the dates when the securities were given; and

(f)

such other information as may be prescribed by the insolvency regulations or as the bankruptcy trustee may reasonably require.

(2)

At any time after lodging with the bankruptcy trustee a statement of the bankrupt’s financial position, the bankrupt may lodge additional or amended statements or answers with the bankruptcy trustee.

(3)

A bankrupt who fails to comply with a requirement of subsection (1) commits an offence and on conviction is liable to a fine not exceeding one million shillings or to imprisonment for a term not exceeding two years, or to both.

(4)

If, after being convicted of an offence under subsection (2), a bankrupt, without reasonable excuse, continues to fail to comply with the relevant requirement, the bankrupt commits a further offence on each day during which the failure continues and on conviction is liable to a fine not exceeding one hundred thousand shillings for each such offence.

51.
Creditors entitled to inspect and take copies of statement of bankrupt’s financial position
(1)

A person who in writing claims to be a creditor of the bankrupt is entitled, at all reasonable times (either personally or through an agent)—

(a)

to inspect the statement of the bankrupt’s financial position; and

(b)

to take a copy it or of part of it.

(2)

A person who falsely claims to be a creditor is in contempt of the Court.

52.
Official Receiver to convene first meeting of creditors
(1)

The Official Receiver shall, subject to subsection (5), convene the first meeting of the bankrupt’s creditors within the prescribed period, unless the Official Receiver decides, in accordance with section 53, not to hold the meeting.

(2)

The Official Receiver shall convene the meeting by giving notice of the time, date and place of the meeting to—

(a)

the bankrupt;

(b)

each creditor named in the statement of the bankrupt’s financial position; and

(c)

any other creditors known to the bankruptcy trustee.

a notice advertising the time, date and place of the meeting.

(3)

The Official Receiver shall publish a notice advertising the time, date and place of the meeting—

(a)

in one or more newspapers circulating generally in Kenya; and

(b)

in such other publications as the Official Receiver considers appropriate.

(4)

For the purpose of subsection (1), the prescribed period is—

(a)

thirty days after the statement of the bankrupt’s financial position is lodged with the Official Receiver; or

(b)

if the bankrupt is late in lodging the statement or fails to lodge a statement at all—thirty days after the date on which the bankruptcy order was made.

(5)

The Official Receiver may delay convening the first meeting of creditors for a period not exceeding fourteen days if the Official Receiver considers that there are special circumstances justifying the delay.

53.
Circumstances in which Official Receiver may decide not to convene first meeting of creditors.
(1)

The Official Receiver may decide not to convene a first creditors’ meeting if the Official Receiver—

(a)

has sent to each creditor named in the statement of the bankrupt’s financial position, and to any other creditor known to the Official Receiver, a notice that complies with section 54; and

(b)

has not, within fourteen days after sending the notice, received from a creditor a request to convene such a meeting.

(2)

In deciding whether the meeting should or should not be convened, the Official Receiver shall have regard to—

(a)

the bankrupt’s assets and liabilities;

(b)

the likely result of the bankruptcy; and

(c)

any other relevant matters.

(3)

Within seven days after deciding not to convene a first meeting of creditors, the Official Receiver shall send to each creditor named in the statement of the bankrupt’s financial position, and to any other creditor known to the Official Receiver, a notice stating—

(a)

the Official Receiver’s view that a first creditors’ meeting need not be convened;

(b)

the reasons for not convening the meeting; and

(c)

that the Official Receiver will convene a meeting only if the Official Receiver receives from a creditor, within fourteen days after sending the notice, a request to convene such a meeting.

54.
Documents to be sent with notice of meeting
(1)

The Official Receiver shall send the following documents with the notice of the first meeting of creditors:

(a)

a summary of the bankrupt’s statement of assets and liabilities;

(b)

extracts from, or a summary of, the bankrupt’s explanation of the causes of the bankruptcy; and

(c)

any comments on the bankruptcy that the Official Receiver chooses to make.

(2)

Subsection (1) does not apply if the Official Receiver has not received the statement of the bankrupt’s financial position when the notice is sent.

(3)

A failure in sending or receiving the documents in subsection (1) does not affect the validity of the proceedings at the meeting.

55.
Power of creditors to requisition meeting
(1)

If, in the case of a bankruptcy, the Official Receiver has not yet convened a first meeting of creditors, or has decided not to convene such a meeting, any creditor of the bankrupt may request the Official Receiver to convene such a meeting.

(2)

As soon as practicable after receiving a request under subsection (1), the Official Receiver shall convene a first meeting of creditors if the request appears to the Official Receiver to be made with the concurrence of not less than one-quarter in value of the bankrupt’s creditors (including the creditor making the request).

56.
Execution process not to be begin or continue after bankruptcy order advertised
(1)

A creditor may not begin or continue an execution process in respect of the bankrupt’s property or person for the recovery of a debt provable in the bankruptcy, after the Official Receiver—

(a)

has published an advertisement notifying the bankruptcy; or

(b)

has given notice of the bankruptcy to the creditor.

(2)

After the notice of the bankruptcy notice has been advertised, or after being given notice of the bankruptcy by the Official Receiver, a creditor may not seize or sell any property by means of distress for rent owed by the bankrupt.

(3)

If the distress procedure has already begun, such a creditor may continue with the procedure only with the approval of the Court and subject to such conditions as the Court may specify.

57.
Effect of bankrupt’s death after bankruptcy order

If a bankrupt dies after being adjudged bankrupt, the bankruptcy continues in all respects as if the bankrupt were still alive.

58.
Creditors’ role at creditors’ meetings

The role of the creditors in the bankruptcy is primarily—

(a)

to attend meetings of the creditors;

(b)

to submit proofs of the debts of the bankrupt; and

(c)

to examine the bankrupt at those meetings.

Division 7— Appointment and functions of bankruptcy trustees

59.
Power to appoint bankruptcy trustee
(1)

The power to appoint a person as a bankruptcy trustee in respect of a bankrupt’s estate, or to fill a vacancy in such an appointment, is exercisable—

(a)

except as provided by paragraph (b) or (c)—by a creditors’ meeting;

(b)

under section 60 or 61— by the Official Receiver;

(c)

under section 62-by the Court.

(2)

A power to appoint a person as bankruptcy trustee includes power to appoint two or more persons as joint bankruptcy trustees, but such an appointment is not effective unless it makes provision for the circumstances in which the trustees are required to act together and the circumstances in which one or more of them may act on behalf of the others.

(3)

The appointment of a person as bankruptcy trustee takes effect only if the person accepts the appointment.

(4)

The appointment of a person as a bankruptcy trustee takes effect at the time specified in the document by which the person is appointed.

(5)

This section does not affect the provisions of this Part under which the Official Receiver is, in specified circumstances, to be, or required to act as, the bankruptcy trustee in respect of a bankrupt’s estate.

60.
Consequences of failure of creditors’ meeting to appoint bankruptcy trustee
(1)

If a meeting convened under section 52 or 55 is held but no one is appointed as bankruptcy trustee, the Official Receiver shall decide whether or not there is a need to make such an appointment.

(2)

If the Official Receiver decides there is a need to make such an appointment, the Official Receiver shall make an appointment accordingly.

(3)

If the Official Receiver decides that there is no need to make such an appointment, the Official Receiver shall notify the decision to the Court.

(4)

On giving notice of the decision to the Court in accordance with subsection (3), the Official Receiver becomes bankruptcy trustee in respect of the bankrupt’s estate.

61.
Power of Official Receiver acting as bankruptcy trustee to appoint another person to act instead
(1)

The Official Receiver may, at any time while acting as bankruptcy trustee in respect of a bankrupt’s estate under a provision of this Division (other than section 62), appoint another qualified person to act as the bankruptcy trustee instead.

(2)

Immediately after making such an appointment, the Official Receiver shall notify the appointment to the Court.

(3)

The person appointed shall, as soon as practicable (and not later than seven days) after being appointed—

(a)

give notice of the appointment to each of the bankrupt’s creditors; or

(b)

if, on application made to the Court, the Court so allows—advertise the appointment in accordance with the directions of the Court.

(4)

In the notice or advertisement, the person appointed shall state—

(a)

whether the person proposes to convene a general meeting of the bankrupt’s creditors for the purpose of establishing a creditor’s committee under section 100; and

(b)

if the person does not propose to convene such a meeting—that the creditors are entitled under this Division to require one to be convened.

62.
Special case in which the Court may appoint bankruptcy trustee
(1)

If a bankruptcy order is made when there is a supervisor of a summary instalment order approved in relation to the bankrupt under Division 2 of Part IV, the Court may, if it considers it appropriate to do so on making the order, appoint the supervisor of the order as bankruptcy trustee in respect of the bankrupt’s estate.

(2)

If an appointment is made under subsection (1), the Official Receiver is not required to decide under section 60(1) whether or not to convene a creditors’ meeting.

(3)

Section 61(4) and (5) apply to a bankruptcy trustee appointed under this section.

63.
Powers of bankruptcy trustee
(1)

A bankruptcy trustee may—

(a)

with the approval of the creditor’s committee, exercise of any of the powers specified in Part 1 of the First Schedule; and

(b)

without that approval, exercise any of the general powers specified in Part 2 of that Schedule.

(2)

With the approval of the creditors’ committee or the Court, a bankruptcy trustee may appoint the bankrupt—

(a)

to superintend the management of the bankrupt’s estate or any part of it;

(b)

to carry on the bankrupt’s business (if any) for the benefit of the bankrupt’s creditors; or

(c)

in any other respect to assist in administering the estate in such manner and on such terms as the bankruptcy trustee may direct.

(3)

An approval given for the purposes of subsection (1)(a) or (2) is required to be a specific one and to relate to a particular exercise of the relevant power.

(4)

A person dealing with the bankruptcy trustee in good faith and for value is not required to ascertain whether an approval required by subsection (1)(a) or (2) has been given.

(5)

If a bankruptcy trustee has done anything without the approval required by subsection (1)(a) or (2), the Court or the creditor’s committee (if any) may, for the purpose of enabling the bankruptcy trustee to meet the bankruptcy trustee’s expenses out of the bankrupt’s estate, ratify what that trustee has done.

(6)

Part 3 of the First Schedule has effect with respect to the things that the bankruptcy trustee is able to do for the purposes of, or in connection with, the exercise of any of the bankruptcy trustee’s powers under this Act.

(7)

If, in exercising a power conferred by this Act, a bankruptcy trustee who is not the Official Receiver—

(a)

disposes of property comprised in the bankrupt’s estate to an associate of the bankrupt; or

(b)

employs an advocate, the bankruptcy trustee shall, if there is a creditor’s committee, give notice to the committee of that exercise of that power.

(8)

A bankruptcy trustee may use his or her discretion in administering a bankrupt’s property, but, in doing so, is required to have regard to the resolutions passed by the creditors at creditors’ meetings.

64.
Bankruptcy trustee not to sell bankrupt’s property before first creditors’ meeting
(1)

A bankruptcy trustee may sell property of the bankrupt before the first meeting of creditors only if—

(a)

it is perishable or is likely to rapidly diminish in value;

(b)

in that trustee’s opinion, its sale could be prejudiced by delay; or

(c)

expenses would, in that trustee’s opinion, be incurred by the delay and, before sale, the bankruptcy trustee has consulted the creditors.

(2)

The bankruptcy trustee shall ensure that the proceeds of the sale of a bankrupt’s property in accordance with subsection (1) are in every case invested in accordance with section 66.

65.
Title of purchaser from bankruptcy trustee

The title of a purchaser of the bankrupt’s property from a bankruptcy trustee under a document that is made in the exercise of the bankruptcy trustee’s power of sale in the First Schedule may not be questioned except on account of fraud.

66.
Bankruptcy trustee to bank money and power to invest surplus
(1)

A bankruptcy trustee shall establish and maintain a bank account in respect of each bankrupt estate administered by that trustee and shall pay into the relevant account all money that that trustee receives in that capacity.

(2)

If money held by a bankruptcy trustee in respect of a bankrupt’s estate is not immediately required to be paid in connection with the administration of the estate, the bankruptcy trustee may invest the money in an investment of a kind prescribed by the insolvency regulations for the purposes of this section.

(3)

A bankruptcy trustee who invests money in accordance with subsection (2) shall credit to the bankrupt’s estate the interest, dividends or other money that accrues in respect of the investment.

67.
Bankruptcy trustee may assign right to sue under this Act
(1)

A bankruptcy trustee may, if the Court has first approved it, assign a right to sue that is conferred on the bankruptcy trustee by this Act.

(2)

An application for such an approval may—

(a)

be made only by the bankruptcy trustee or the person to whom it is proposed to assign the right to sue; and

(b)

be opposed only by a person who is a defendant to the bankruptcy trustee’s action, if already begun, or a proposed defendant.

68.
Proceedings by bankruptcy trustee when bankrupt is partner in business partnership
(1)

If a member of a business partnership is adjudged bankrupt, the Court may authorise the bankruptcy trustee to bring proceedings in the names of the bankruptcy trustee and the bankrupt’s partner.

(2)

The bankruptcy trustee shall serve notice of the application on the partner for authority to bring the proceedings, and the partner may oppose the application.

(3)

The partner may apply to the Court for a direction that—

(a)

the partner is to be paid the partner’s proper share of the proceeds of the proceedings; or

(b)

the partner is to be indemnified by the bankruptcy trustee against any costs incurred in the proceedings on the condition that the partner does not claim any benefit from them.

(4)

Any purported release by the partner of the debt or demand to which the proceedings relate is void.

69.
Discharge or transfer of indenture of apprenticeship or articles of agreement on bankruptcy of employer
(1)

If a person is apprenticed or is an articled clerk to an employer who is adjudged bankrupt, either of them may give notice to the bankruptcy trustee or the Official Receiver requesting that the indenture of apprenticeship or articles of agreement be discharged.

(2)

On receiving a notice under subsection (1), the bankruptcy trustee or Official Receiver shall discharge the indenture of apprenticeship or articles of agreement, but only if satisfied that it would be in the interests of the apprentice or clerk to do so.

(3)

If money has been paid to the bankrupt by or on behalf of the apprentice or clerk as a fee, the bankruptcy trustee may, on the application of the apprentice or clerk, or of the agent of the apprentice or clerk, pay from the bankrupt’s estate such amount as the trustee considers reasonable to or for the use of the apprentice or clerk,

(4)

In deciding whether to make a payment under subsection (3), the bankruptcy trustee shall take into consideration—

(a)

the amount paid by or on behalf of the apprentice;

(b)

the time during which the apprentice or clerk served with the bankrupt under the indenture or articles before the commencement of the bankruptcy, and

(c)

any other relevant circumstance.

(5)

On the application of any apprentice or articled clerk to the bankrupt, or an agent of the apprentice or articled clerk, the bankruptcy trustee or Official Receiver may, instead of acting under subsection (2), transfer the indenture of apprenticeship or articles of agreement to some other person.

(6)

Subsection (5) is subject to section 12 of the Industrial Training Act.

(7)

Any person dissatisfied with a decision of the bankruptcy trustee under subsection (3) may apply to the Court for an order quashing or varying the decision.

(8)

On the hearing of an application made under subsection (7), the Court may make the order sought by the applicant or such other order as it considers appropriate.

70.
Bankruptcy trustee may apply for directions by the Court
(1)

A bankruptcy trustee may apply to the Court for directions on any question concerning the operation of this Part.

(2)

A bankruptcy trustee who acts under a direction of the Court discharges the bankruptcy trustee’s duty in relation to the matter for which the direction was sought, and it does not matter that the direction is later invalidated, overruled, or set aside or otherwise becomes ineffective.

(3)

However, the bankruptcy trustee is not protected by subsection (2) if, in obtaining or following the Court’s direction, the bankruptcy trustee was guilty of—

(a)

fraud; or

(b)

deliberate concealment or misrepresentation.

71.
Application to the Court to reverse or modify bankruptcy
(1)

A person (including the bankrupt or a creditor) whose interests, monetary or otherwise, are detrimentally affected by an act or decision to which this section applies may apply to the Court to reverse or modify the act or decision.

(2)

This section applies to—

(a)

an act or decision of the bankruptcy trustee; or

(b)

a decision of the Court in carrying out an examination under section 170.

(3)

The application may be entertained only if is made—

(a)

within twenty-one days after the act or decision; or

(b)

within such extended period as the Court allows.

(4)

On the hearing on an application made under subsection (1), the Court shall—

(a)

confirm the bankruptcy trustee’s act or decision, with or without such modifications as it considers appropriate; or

(b)

if it is of the opinion that the act or decision was unfair or unreasonable, quash it.

72.
Bankruptcy trustee to keep proper accounting records
(1)

A bankruptcy trustee shall—

(a)

keep proper accounting records for each bankruptcy in the form and manner prescribed by the insolvency regulations; and

(b)

if required by the Court to do so—verify those records by statutory declaration.

(2)

A creditor or other person who has an interest in a particular bankruptcy is entitled to inspect the bankruptcy trustee’s accounting records relating to the particular bankruptcy.

(3)

After the end of three years from the discharge of a bankrupt, the bankruptcy trustee may dispose of the accounting records deposited with the bankruptcy trustee for the purposes of the bankruptcy by—

(a)

delivering them to the bankrupt or the bankrupt’s personal representative, if requested; or

(b)

destroying or otherwise disposing of them.

73.
Bankruptcy trustee’s final statement of receipts and payments
(1)

The bankruptcy trustee shall prepare a final statement of receipts and payments that complies with subsection (2)

(a)

as soon as practicable after the distribution of the final dividend has been determined; or

(b)

when the whole of the bankrupt’s property has been realised, if there are insufficient assets to pay all the proofs of debt.

(2)

A final statement of receipts and payments complies with this subsection if it—

(a)

shows in detail the receipts and payments in respect of the bankrupt’s estate; and

(b)

can be inspected without fee by any creditor or other person who has an interest in it.

(3)

The bankruptcy trustee shall publish the final statement of receipts and payments in the prescribed form, and advertise in the prescribed manner that it has been published.

74.
Audit of bankruptcy trustee’s accounts
(1)

If, in relation to a bankruptcy, the Official Receiver is not the bankruptcy trustee, the Official Receiver may from time to time audit—

(a)

the bankruptcy trustee’s accounting records for any particular bankruptcy;

(b)

any statement of accounts and statement of financial position prepared by the bankruptcy trustee under section 73; and

(c)

the account (if any) maintained by the bankruptcy trustee for the purposes of this Act.

(2)

If, in relation to a bankruptcy, the Official Receiver is the bankruptcy trustee, the Auditor-General may from time to time audit the records, statements and account referred to in subsection (1)(a) to (b).

75.
Removal of bankruptcy trustee and vacation of office
(1)

Except as otherwise provided by this section, a bankruptcy trustee appointed in respect of a bankrupt’s estate may be removed from office only by—

(a)

an order of the Court; or

(b)

a creditor's meeting convened specially for that purpose in accordance with the insolvency regulations.

(2)

If the Official Receiver is the bankruptcy trustee, or the bankruptcy trustee is appointed by the Official Receiver or by the Court (otherwise than under section 62), a creditors meeting may be convened for the purpose of replacing the bankruptcy trustee, but only if—

(a)

the Official Receiver or that trustee considers it appropriate to do so;

(b)

the Court so directs; or

(c)

the meeting is requested by one of the bankrupt’s creditors with the concurrence of not less than one-quarter, in value, of the creditors (including the creditor making the request).

(3)

A bankruptcy trustee who is not also the Official Receiver vacates office on ceasing to be authorised as an insolvency practitioner.

(4)

A bankruptcy trustee who is not also the Official Receiver may resign office by giving to the Court not less than thirty days’ notice of the resignation.

(5)

A bankruptcy trustee vacates office—

(a)

on giving notice to the Court that a final meeting has been held in accordance with section 253 and of the decision (if any) of that meeting; or

(b)

if the relevant bankruptcy order is annulled—on the annulment of the order.

76.
When Official Receiver is released from obligations as bankruptcy trustee
(1)

If a person has been appointed by the Court to replace the Official Receiver on his or her ceasing to hold office as bankruptcy trustee in respect of a bankrupt’s estate, the Official Receiver is released from such time as the Court orders.

(2)

If a person has been appointed by a general meeting of a bankrupt’s creditors to replace the Official Receiver on his or her ceasing to hold office as bankruptcy trustee in respect of the bankrupt’s estate, the Official Receiver is released from office from the time at which the Official Receiver gives notice to the Court that another person has been appointed as a replacement.

(3)

If the Official Receiver, while acting as bankruptcy trustee, gives notice to the Cabinet Secretary that the administration of the bankrupt’s estate is for practical purposes complete, the Official Receiver’s release takes effect from such time as the Cabinet Secretary determines in writing.

(4)

On being released under this section, the Official Receiver is, from the time specified in accordance with this section, discharged from all liability both in respect of acts or omissions occurring in the course of, or in relation to, administering the estate of the bankrupt concerned.

77.
When bankruptcy trustee ,not being the Official Receiver, is released from obligations
(1)

This section applies when a person other than the Official Receiver ceases hold office as a bankruptcy trustee.

(2)

If the person has been removed from office by a meeting of the bankrupt’s creditors that has not resolved against the person’s release or who has died, the person is released from the time at which a notice is given to the Court in accordance with the insolvency regulations that the person has ceased to hold office.

(3)

If the person has been removed from office—

(a)

by a general meeting of the bankrupt’s creditors that has resolved against the bankrupt’s release;

(b)

by the Court, the person is released from such time as the Official Receiver determines, on an application made by that person.

(4)

If the person has vacated office under section 75(3), the person is released from such time as the Official Receiver determines, on an application made by that person.

(5)

If the person has resigned office under section 75(4), the person is released from such time as may be determined in accordance with the insolvency regulations.

(6)

If the person has vacated office under section 75(5)(a), the person is released—

(a)

if the final meeting referred to in that subsection has resolved against that person’s release—such time as the Official Receiver determines, on an application made by that person; but

(b)

if that meeting has not so resolved—the time at which the person vacated office.

(7)

When a bankruptcy order is annulled, the person is released from such time as the Court determines.

(8)

On being released under this section, a bankruptcy trustee is, from the time specified in accordance with this section, discharged from all liability both in respect of acts or omissions occurring in the course of, or in relation to, administering the estate of the bankrupt concerned.