Bankruptcy Law

Bankruptcy law is a special law adopted to declare a debtor as insolvent. A debtor will be declared as insolvent if the debtor cannot satisfy the claims of his creditors. Bankruptcy is declared when a petition is filed by a debtor or by the creditor. The petition of bankruptcy will be filed when the debtor can not satisfy the claim of the creditor within ten days after the petition has been submitted to the court.

The proceedings of bankruptcy are initiated when the petitioner files a petition of bankruptcy. The condition of declaring insolvency is different for different debtors, determined by their assets or properties owned. The declaration of bankruptcy is based on the amount that the debtor needs to pay to the creditor and the value of the assets that the debtor holds.

If the debt is nearly equal to the assets of the company, partnership, trader or corporation, insolvency will be declared by the court. The creditor must produce the documents to prove the insolvency of the debtor. The creditor must deposit an amount for a trustee bankruptcy if the debt is not sufficient to claim insolvency of the joint-stock company, partnership or trader. Bankruptcy proceedings will not commence if the debtor pays the debt before the proceedings begin.

A trustee will be elected for preservation of the assets and to perform other activities for the debtor during the proceedings. The trustee should be independent of both the debtor and creditor.

A general meeting will be held for the appointment of the trustee and to address other issues, immediately after the debtor has declared the insolvency. The declaration of insolvency will be published in a local newspaper. If the creditors or debtor are not pleased with the actions of the trustee, a new trustee will be elected and a new trustee must be approved within five days.

The trustee should posses the required qualifications imposed by the bankruptcy act. A creditor or creditors can appoint their own trustee for their interest and supervision. Creditors can apply for application for dismissal of the trustee if they are not satisfied with him. A trustee may be liable for any loss and damage to the assets of the debtor.

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