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BANKRUPTCY ORDINANCE
BANKRUPTCY ORDINANCE
(CHAPTER 6)
CONTENTS
Section
PART I SHORT TITLE AND INTERPRETATION
1. Short title
2. Interpretation
PART II PROCEEDINGS FROM ACT OF BANKRUPTCY TO DISCHARGE TO DISCHARGE
Acts of bankruptcy
3. Acts of bankruptcy
4. Bankruptcy notices
Receiving order and Official Receiver
5. Jurisdiction to make receiving order
6. Conditions on which creditor may petition
7. Liability of firm to have receiving order made against it
8. Powers of Official Receiver and duties of debtor on petition being
filed
9. Creditor's petition and order thereon
10. Debtor's petition and order thereon
11. Appearance of Official Receiver on petition
12. Effect of receiving order
13. Power to appoint interim receiver
14. Power to stay pending proceedings
15. Power to appoint special manager
16. Advertisement of receiving order
Proceedings consequent on order
17. First and other meetings of creditors
18. Debtor's statement of affairs
Public examination of debtor
19. Public examination of debtor
19A. Power of court to dispense with public examination of debtor on
application of Official Receiver
Compositions and schemes of arrangement
20. Compositions and schemes of arrangement
21. Effect of composition or scheme
Adjudication of bankruptcy
22. Adjudication of bankruptcy where composition not accepted or not
approved
23. Appointment of trustee
24. Committee of inspection
25. Power to accept composition or scheme after adjudication
Control over person and property of debtor
26. Duties of debtor as to discovery and realization of property
27. Arrest of debtor under certain circumstances
28. Re-direction of debtor's telegrams and letters
29. Inquiry as to debtor's conduct, dealings and property
30. Discharge of bankrupt
31. Fraudulent settlements
32. Effect of order of discharge
33. Power for court to annul adjudication in certain cases
PART III ADMINISTRATION OF PROPERTY
Proof of debts
34. Description of debts provable in bankruptcy
35. Mutual credit and set-off
36. Rules as to proof of debts
37. Priority of costs and charges
38. Priority of debts
39. Preferential claims in case of apprenticeship
40. Landlord's power of distress
41. Postponement of husband's and wife's claims
Property available for payment of debts
42. Relation back of trustee's title
43. Description of bankrupt's property divisible amongst creditors
44. Provisions as to second bankruptcy
Effect of bankruptcy on antecedent and other transactions
45. Restriction of rights of creditor under execution or attachment
46. Duties of bailiff as to goods taken in execution
47. Avoidance of certain settlements
48. Avoidance of general assignments of book debts unless registered
49. Avoidance of preference in certain cases
49A. Liabilities and rights of certain fraudulently preferred persons
50. Effects of lack of notice
51. Validity of certain payments to bankrupt and assignee
52. Dealings with undischarged bankrupt
Realization of property
53. Possession of property by trustee
54. Seizure of property of bankrupt
55. Sale of property out of Hong Kong
56. Appropriation of portion of pay, etc. to creditors
57. (Repealed)
58. Vesting and transfer of property
59. Disclaimer of onerous property
60. Powers of trustee to deal with property
61. Powers exercisable by trustee with permission of committee of
inspection
62. Power to allow bankrupt to manage property
63. Allowance to bankrupt for maintenance or service
64. Right of trustee to inspect goods pawned, etc.
65. Limitation of trustee's powers in relation to copyright
66. Protection of Official Receiver and trustee from personal liability in
certain cases
Distribution of property
67. Declaration and distribution of dividends
68. Joint and separate dividends
69. Provision for creditors residing at a distance, etc.
70. Right of creditor who has not proved debt before declaration of a
dividend
71. Interest on debts
72. Final dividend
73. No action for dividend
74. Right of bankrupt to surplus
PART IIIA CRIMINAL BANKRUPTCY
Interpretation
74A. Interpretation
Official Petitioner
74B. Office and functions of Official Petitioner
General
74C. Effect of criminal bankruptcy order
PART IV OFFICIAL RECEIVER
75. Appointment of Official Receiver and other officers
76. Status of Official Receiver
76A. Transitional provision
77. Duties of Official Receiver as regards the debtor's conduct
78. Duties of Official Receiver as to debtor's estate
PART V TRUSTEES IN BANKRUPTCY
Official name
79. Official name of trustee
Appointment
79A. Disqualification for appointment as trustee
79B. Corrupt inducement affecting appointment as trustee
80. Power to appoint joint or successive trustees
81. Proceedings in case of vacancy in office of trustee
Control over trustee
82. Discretionary powers of trustee and control thereof
83. Appeal to court against trustee
84. Control of court over trustee
Remuneration and costs
85. Remuneration of trustee
86. Allowance and taxation of costs
Receipts, payments, accounts, audit
87. Trustee to furnish list of creditors
88. Trustee to furnish statement of accounts
89. Annual statement of proceedings
90. Trustee not to pay into private account
91. Payment of moneys into bank
92. Record and account to be kept by trustee
93. Audit of trustee's accounts
Vacation of office by trustee
94. Release of trustee
95. Office of trustee vacated by insolvency
96. Removal of trustee
PART VI CONSTITUTION, PROCEDURE AND POWERS OF COURT
Jurisdiction
97. General power of court
Review and appeals
98. Review and appeals in bankruptcy
Procedure
99. General rules of procedure
99A. Jurisdiction of Registrar
100. Discretionary powers of court
100A. Court may make a regulating order
100B. First meeting and composition
100C. Adjudication
100D. Trustee
100E. Committee of inspection
100F. Informing creditors and ascertaining their wishes
100G. Creditors to give notice of intention to take part in public
examination
100H. Proof of debts in the case of banks
101. Consolidation of petitions
102. Power to change carriage of proceedings
103. Continuance of proceedings on death of debtor
104. Power to stay proceedings
105. Power to present petition against one partner
106. Power to dismiss petition against some respondents only
107. Actions by trustee and bankrupt's partners
108. Actions on joint contracts
109. Proceedings in partnership name
PART VII SUPPLEMENTAL PROVISIONS
Disobedience to order of court
110. Disobedience to order of court
Application of Ordinance
111. Exclusion of corporations, companies and limited partnerships
112. Administration in bankruptcy of estate of person dying insolvent
112A. Application of Ordinance to small bankruptcies
General rules
113. Power to make general rules
Fees and remuneration
114. Fees and remuneration
115. Disposal of Official Receiver's fees
Evidence
116. Evidence of proceedings at meetings of creditors
117. Evidence of proceedings in bankruptcy
118. Swearing of affidavits
119. Death of debtor or witness
120. Statements made to Official Receiver or trustee through an
interpreter
121. Certificate of appointment of trustee
Miscellaneous
122. Computation of time
123. Service of notices
124. Formal defect not to invalidate proceedings
125. Exemption of documents from stamp duty
126. Acting of corporations, partners, etc.
127. Certain provisions to bind Crown
Unclaimed funds or dividends
128. Unclaimed and undistributed dividends or funds
128A. Deposit of surplus cash balances
PART VIII BANKRUPTCY OFFENCES
129. Fraudulent debtors
130. Certain offences by persons other than the debtor
131. Undischarged bankrupt obtaining credit
132. Frauds by bankrupts, etc.
133. Bankrupt guilty of gambling, etc.
134. Bankrupt failing to keep proper accounts
135. Bankrupt absconding with property
136. Debtor concealing himself to avoid service, etc.
137. (Repealed)
138. Order by court for prosecution on report of trustee
139. Criminal liability after discharge or composition
140. Trial and punishment of offences
141. Evidence as to frauds by agents
142. Summary prosecution
PART IX MISCELLANEOUS
143. Transitional
Schedule 1 Criminal Bankruptcy Orders
Schedule 2
To amend the law relating to bankruptcy.
[1 January 1932]
Note: The references to "Form 2", etc. are to the forms specified in the
Bankruptcy (Forms) Rules (Cap. 6 sub. leg.).
PART I SHORT TITLE AND INTERPRETATION
1. Short title
This Ordinance may be cited as the Bankruptcy Ordinance.
2. Interpretation
In this Ordinance, unless the context otherwise requires-
"affidavit" includes statutory declaration, affirmation and attestation on
honour;
"available act of bankruptcy" means any act of bankruptcy available for a
bankruptcy petition at the date of the presentation of the petition on
which the receiving order is made;
"bailiff" includes any officer charged with the execution of a writ or
other process;
"court" means the High Court sitting in its bankruptcy jurisdiction;
(Amended 92 of 1975 s. 59)
"debt provable in bankruptcy" or "provable debt" includes any debt or
liability by this Ordinance made provable in bankruptcy;
"goods" includes all chattels personal;
"oath" includes affirmation, declaration and attestation on honour;
"Official Receiver" means the Official Receiver appointed under section
75; (Added 47 of 1984 s. 2)
"ordinary resolution" means a resolution decided by a majority in value of
the creditors present, personally or by proxy, at a meeting of creditors
and voting on the resolution;
"prescribed" means prescribed by general rules within the meaning of this
Ordinance;
"property" includes money, goods, things in action, land and every
description of property, whether real or personal and whether situate in
Hong Kong or elsewhere, also obligations, easements and every description
of estate, interest and profit, present or future, vested or contingent,
arising out of or incident to property as above defined;
(Amended 47 of 1984 s. 16)
"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 majority in number
and three-fourths in value of the creditors present, personally or by
proxy, at a meeting of creditors and voting on the resolution;
"Registrar" means the Registrar of the Supreme Court, and any Deputy or
Assistant Registrar of the Supreme Court; (Replaced 47 of 1984 s. 2)
"trustee" means the trustee in bankruptcy of a debtor's estate.
[cf. 1914 c. 59 s. 167 U. K.]
PART II PROCEEDINGS FROM ACT OF BANKRUPTCY TO DISCHARGE
Acts of bankruptcy
3. Acts of bankruptcy
(1) A debtor commits an act of bankruptcy in each of the following cases-
(a) if in Hong Kong or elsewhere he makes a conveyance or assignment of
his property to a trustee or trustees for the benefit of his creditors
generally;
(b) if in Hong Kong or elsewhere he makes a fraudulent conveyance, gift,
delivery or transfer of his property or of any part thereof;
(c) if in Hong Kong or elsewhere he makes any conveyance or transfer of
his property or any part thereof, or creates any charge thereon, which
would 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 Hong Kong, or being out of Hong
Kong remains out of Hong Kong, or departs from his dwelling-house or usual
place of business, or otherwise absents himself, or begins to keep house,
or removes his property or any part thereof beyond the jurisdiction of the
court;
(e) if execution against him has been levied by seizure of his goods under
process in an action, or proceeding in the court, and the goods have been
either sold or held by the bailiff for 21 days:
Provided that, where an interpleader summons has been taken out in regard
to the goods seized, the time elapsing between the date at which such
summons is taken out and the date at which the proceedings on such summons
are finally disposed of, settled or abandoned shall not be taken into
account in calculating such period of 21 days;
(f) if he files in the court a declaration of his inability to pay his
debts or presents a bankruptcy petition against himself; (See Form 2)
(g) if a creditor has obtained a final judgment or final order against him
for any amount, and execution thereon not having been stayed, has served
on him in Hong Kong or, by leave of the court, elsewhere, a bankruptcy
notice under this Ordinance, and he does not, within 7 days after service
of the notice, in case the service is effected in Hong Kong, and in case
the service is effected elsewhere, then within the time limited in that
behalf by the order giving leave to effect the service, either comply with
the requirements of the notice or satisfy the court that he has a counter-
claim set off or cross-demand which equals or exceeds the amount of the
judgment debt or sum ordered to be paid, and which he could not set up in
the action in which the judgment was obtained or the proceedings in which
the order was obtained:
For the purposes of this paragraph and of section 4, any person who is for
the time being entitled to enforce a final judgement or final order shall
be deemed to be a creditor who has obtained a final judgment or final
order;
(h) if the debtor gives notice to any of his creditors that he has
suspended or that he is about to suspend payment of his debts.
(2) In this Ordinance, "a debtor", unless the context otherwise requires,
includes any person, whether a British subject or not, who at the time
when any act of bankruptcy was done or suffered by him-
(a) was personally present in Hong Kong; or
(b) ordinarily resided or had a place of residence in Hong Kong; or
(c) was carrying on business in Hong Kong, personally or by means of an
agent or manager; or
(d) was a member of a firm or partnership which carried on business in
Hong Kong. (Amended 47 of 1984 s. 16)
[cf. 1914 c. 59 s. 1 U. K.]
4. Bankruptcy notices
A bankruptcy notice under this Ordinance shall be issued to a judgement
creditor, or creditor who has obtained a final order, by the Registrar on
the filing of a request for that purpose, and shall be in the prescribed
form, and shall require the debtor to pay the judgment debt or sum ordered
to be paid in accordance with the terms of the judgment or order, or to
secure or compound for it to the satisfaction of the creditor or the
court, and shall state the consequences of non-compliance with the notice,
and shall be served in the prescribed manner: (See Forms 4, 5)
Provided that a bankruptcy notice-
(a) may specify an agent to act on behalf of the creditor in respect of
any payment or other thing required by the notice 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 actually 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 such
misstatement; 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 constituted a compliance with
the notice had the actual amount due been correctly specified therein.
[cf. 1914 c. 59 s. 2 U. K.]
Receiving order and Official Receiver
5. Jurisdiction to make receiving order
Subject to the conditions hereinafter specified, if a debtor commits an
act of bankruptcy the court may, on a bankruptcy petition being presented
either by a creditor or by the debtor, make an order, in this Ordinance
called a receiving order, for the protection of the estate. (See Forms 25,
26)
[cf. 1914 c. 59 s. 3 U. K.]
6. Conditions on which creditor may petition
(1) Subject to the provisions of section 7, a creditor shall not be
entitled to present a bankruptcy petition against a debtor unless- (See
Form 10)
(a) the debt owing by the debtor to the petitioning creditor, or if 2 or
more creditors join in the petition, the aggregate amount of debts owing
to the several petitioning creditors, amounts to more than $5,000; and
(Amended 65 of 1976 s. 2)
(b) the debt is a liquidated sum, payable either immediately or at some
certain future time; and
(c) the act of bankruptcy on which the petition is grounded has occurred
within 3 months before the presentation of the petition; and
(d) the debtor is domiciled in Hong Kong, or within a year before the date
of the presentation of the petition has ordinarily resided, or had a
dwelling-house or place of business, in Hong Kong, or has carried on
business in Hong Kong, personally 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 Hong Kong by means of a partner
or partners or an agent or manager. (Amended 47 of 1984 s. 16)
(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 estimate of the value of his security. 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 unsecured creditor.
[cf. 1914 c. 59 s. 4 U. K.]
7. Liability of firm to have receiving order made against it
(1) The following provisions shall have effect in the case of a firm
carrying on business in Hong Kong-
(a) a creditor of the firm shall be entitled to present a bankruptcy
petition against the firm, and a receiving order may be made against the
firm in respect of an act of bankruptcy committed in reference to the
business of the firm by any partner of the firm or by any person having
the control or management of the business of the firm. An act of
bankruptcy shall be deemed to be committed in reference to the business of
the firm in all cases in which the act relates to the property or
creditors of the firm and would be an act of bankruptcy by such partner or
person as aforesaid if it related to his property or creditors;
(b) it shall be sufficient that a receiving order against the firm be made
in the firm name, without mentioning the names of the partners, and such
receiving order shall affect the joint and separate property of all the
partners;
(c) the right of a creditor to present a bankruptcy petition against the
firm, and the jurisdiction of the court to make a receiving order or an
adjudication of bankruptcy against the firm, shall not be affected by the
fact, if it is so, that all or any of the partners of the firm are not
British subjects or are not resident or domiciled in Hong Kong.
(2) The provisions of this section shall, so far as the nature of the case
will permit, apply to any person carrying on business in Hong Kong in a
name or style other than his own name.
(Amended 47 of 1984 s. 16)
8. Powers of Official Receiver and duties of debtor on petition being
filed
(1) Immediately on the filing of any petition the Official Receiver
may, in cases where he has reason to believe that any offence under this
Ordinance or any fraud has been or is about to be perpetrated, by notice
sent by messenger or by ordinary post, summon the debtor to attend before
him to give such information as he requires, and may, either by himself or
his agent authorized by him in writing, enter on any premises occupied by
the debtor between the hours of 8 a. m. and 6 p. m. for the purpose of
inspecting his property, stock in trade and books of account.
(2) It shall be the duty of the debtor to furnish the Official Receiver
with all such information as it is in the debtor's power to give or to
obtain.
(3) If the debtor fails without reasonable cause to attend on the Official
Receiver as aforesaid or to furnish him with such information as
aforesaid, or if the debtor obstructs the search of the premises or the
production of any book or document required in connexion therewith, or
authorizes or permits any such obstruction, the debtor shall be liable on
summary conviction to imprisonment for any term not exceeding 6 months,
and every person who takes any part in any such obstruction, whether
authorized or permitted by the debtor or not, shall be liable to the like
penalty.
9. Creditor's petition and order thereon
(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 shall
be served in the prescribed manner. (See Forms 10, 10A, 11, 12) (Amended
39 of 1987 s. 2)
(2) At the hearing the court shall require proof of the debt of the
petitioning creditor, of the service of the petition 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 petition.
(3) If the court is not satisfied with the proof of the petitioning
creditor's debt or of the act of bankruptcy or of the service of the
petition, or is satisfied by the debtor that he is able to pay his debts,
or considers that for other sufficient cause no order ought to be made,
the court may dismiss the petition. (Amended 45 of 1986 s. 2)
(4) When the act of bankruptcy relied on is non-compliance with a
bankruptcy notice to pay, secure or compound for a judgment debt or sum
ordered to be paid, the court may, if it thinks fit, stay or dismiss the
petition 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 indebted to such an amount as
would justify the petitioner in presenting a petition against him, the
court, on such security (if any) being given as the court may require for
payment to the petitioner of any debt which may be established against him
in due course of law, and of the costs of establishing the debt, may,
instead of dismissing the petition, stay all proceedings on the petition
for such time as may be required for trial of the question relating to the
debt.
(6) Where proceedings are stayed the court may, if by reason 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
proceedings have been stayed as aforesaid.
(7) A creditor's petition shall not after presentment be withdrawn without
the leave of the court.
[cf. 1914 c. 59 s. 5 U. K.]
10. Debtor's petition and order thereon
(1) A debtor's petition shall allege that the debtor is unable 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 inability
to pay his debts, and the court shall thereupon make a receiving order:
(See Form 3)
Provided that the court in its discretion may refuse the order if it
considers that there is sufficient cause for no order to be made.
(Replaced 45 of 1986 s. 3) In this subsection "sufficient cause" shall be
deemed to include, inter alia, the non-attendance of the debtor, or in the
case of a firm, of at least one of the partners thereof, on the hearing of
the petition, the absence of any material book of account, or any fraud or
misconduct not amounting to fraud by the debtor in relation to his
affairs, or in the case of a firm or person carrying on business under a
Chinese firm name, the non-production of the partnership book or of the
receipt and money-payment chops used in connexion with the business.
(2) A debtor's petition shall not after presentment be withdrawn without
the leave of the court.
[cf. 1914 c. 59 s. 6 U. K.]
11. Appearance of Official Receiver on petition
On the hearing of any creditor's or debtor's petition it shall be lawful
for the Official Receiver to appear and to call, examine and cross-examine
any witness and, if he so thinks fit, to support or oppose the making of a
receiving order.
12. Effect of receiving order
(1) On the making of a receiving order the Official Receiver shall be
thereby constituted receiver of the property of the debtor, and
thereafter, except as directed by this Ordinance, no creditor to whom the
debtor is indebted 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 proceedings, unless
with the leave of the court and on such terms as the court may impose.
(2) This section shall not affect the power of any secured creditor to
realize or otherwise deal with his security.
[cf. 1914 c. 59 s. 7 U. K.]
13. Power to appoint interim receiver
The court may, if it is shown to be necessary for the protection of the
estate, at any time after the presentation of a bankruptcy petition and
before a receiving order is made, appoint the Official Receiver to be
interim receiver of the property of the debtor or of any part thereof, and
direct him to take immediate possession thereof or of any part thereof.
(See Form 13)
[cf. 1914 c. 59 s. 8 U. K.]
14. Power to stay pending proceedings
(1) The court may at any time after the presentation of a bankruptcy
petition either stay any action, execution or other legal process against
the property or person of the debtor or allow it to continue on such terms
as it may think just.
(2) Where the court makes an order staying any action or proceedings 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 such proceeding or to the
address of his solicitor.
(3) Without prejudice to the provisions of subsection (1), if the court
orders the release of any debtor who is under execution for a civil debt,
it may impose such conditions as it thinks fit, and in particular it may
require as a condition of such release that the debtor find security to
attend in the subsequent bankruptcy proceedings and to abide by all orders
of the court relating to the said proceedings. [cf. 1914 c. 59 s. 9 U.
K.]
15. Power to appoint special manager
(1) The court may, on the application of the Official Receiver or of any
creditor or creditors, and if satisfied that the nature of the debtor's
estate or business or the interests of the creditors generally require the
appointment of a special manager of the estate or business other than the
Official Receiver, appoint a manager thereof accordingly 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 court may direct.
(3) The special manager shall receive such remuneration as may be
prescribed. [cf. 1914 c. 59 s. 10 U. K.]
16. Advertisement of receiving order
Notice of every receiving order, stating the name, address and description
of the debtor, the date of the order, and the date of the petition, shall
be gazetted by the Official Receiver. (See Form 27)
[cf. 1914 c. 59 s. 11 U. K.]
Proceedings consequent on order
17. First and other meetings of creditors
(1) As soon as may be after the making of a receiving order against a
debtor a general meeting of his creditors (in this Ordinance referred to
as the first meeting of creditors) shall be held for the purpose of
considering whether a proposal for a composition or scheme of arrangement
shall be accepted, or whether it is expedient that the debtor shall be
adjudged bankrupt, and generally as to the mode of dealing with the
debtor's property. (See Forms 30, 31, 32, 39, 45)
(2) The Chief Justice may, with the approval of Legislative Council, make
rules providing for the summoning of and proceedings at the first and
other meetings of creditors. (Replaced 33 of 1939; G. N. 840 of 1940 Supp.
Schedule)
[cf. 1914 c. 59 s. 13 U. K.]
18. Debtor's statement of affairs
(1) Where a receiving order is made against a debtor, he shall, unless the
court otherwise orders, 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, wherever situate, the names, addresses and
occupations of his creditors, whether in Hong Kong or elsewhere, the
securities held by them respectively, the dates when the securities were
respectively given, and such further or other information as may be
prescribed or as the Official Receiver may require. Such statement shall
also give details of all property held by him in a t' ong name or under
any
alias, or by his wife or any concubine of his, or by any person in trust
for him or them, with full particulars as to the manner and date of its
being acquired. (See Form 28) (Amended 65 of 1976 s. 3; 47 of 1984 ss. 3 &
16)
(2) The statement shall be so submitted within the following times,
namely-
(a) if the order is made on the petition of the debtor, within 3 days from
the date of the order;
(b) if the order is made on the petition of a creditor, within 7 days from
the date of the order, but the court may, in either case for special
reasons, extend the time.
(3) If the debtor fails without reasonable excuse to comply with the
requirements of this section, he may be punished for a contempt of court
and the court may, on the application of the Official Receiver or of any
creditor, adjudge him bankrupt. (See Form 75)
(4) Any person stating himself to be a creditor of the bankrupt may, on
payment of the prescribed fee, personally or by agent inspect the
statement at all reasonable times and take any copy thereof or extract
therefrom, but any person untruthfully so stating himself to be a creditor
shall be guilty of a contempt of court and shall be punishable accordingly
on the application of the trustee or Official Receiver.
[cf. 1914 c. 59 s. 14 U. K.]
Public examination of debtor
19. Public examination of debtor
(1) Where the court makes a receiving order, it shall, save as in this
Ordinance 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.
(See Forms 52 to 63)
(2) The examination shall be held as soon as conveniently 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 representative
authorized in writing, may question the debtor concerning 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, if specially authorized by the court,
may employ a solicitor with or without counsel. No solicitor or counsel
shall be allowed to take part in the examination on behalf of the debtor.
(6) If a trustee is appointed before the conclusion of the examination, 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 it shall be his duty to
answer 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 either in shorthand or longhand and they or a transcript thereof
shall be read over either to or by the debtor and signed by him and may
thereafter, save as in this Ordinance provided, be used in evidence
against him; they shall also be open to the inspection of any creditor at
all reasonable times upon payment of the prescribed fee.
(9) When the court is of opinion that the affairs of the debtor have been
sufficiently investigated, it shall by order declare that his examination
is concluded, but such order shall not be made until after the day
appointed for the first meeting of creditors.
(10) Where the debtor is a lunatic or suffers from any such mental or
physical affliction or disability as in the opinion of the court makes him
unfit to attend his public examination, or is absent from Hong Kong, the
court may make an order dispensing with such examination or directing that
the debtor be examined on such terms, in such manner and at such place as
to the court seems expedient. (Amended 47 of 1984 s. 16) [cf. 1914 c. 59
s. 15 U. K.]
19A. Power of court to dispense with public examination of debtor on
application of Official Receiver
(1) Notwithstanding section 19 the court may, on the application of the
Official Receiver, make an order dispensing with the public examination of
the debtor.
(2) Before making an application under subsection (1) the Official
Receiver shall-
(a) publish notice of his intention to make the application in the
Gazette; and
(b) give notice of his intention to make the application to every creditor
who has tendered a proof.
(3) Any creditor who has tendered a proof and wishes to oppose the making
of an order under subsection (1) shall, within 21 days after the date of
publication of a notice pursuant to subsection (2), give notice in writing
to the Official Receiver of his intention to oppose the making of an order
and may thereafter appear and oppose the making of an order.
(4) Before making an order under subsection (1) the court shall consider a
report of the Official Receiver made in the manner prescribed.
(Added 1 of 1976 s. 2)
Compositions and schemes of arrangement
20. Compositions and schemes of arrangement
(1) Where a debtor intends to make a proposal for a composition in
satisfaction of his debts or a proposal for a scheme of arrangement of his
affairs, he shall, within 4 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 setting out particulars of any
sureties or securities proposed.
(2) In such case the Official Receiver shall hold a meeting of creditors
before the public examination of the debtor is concluded, 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 accept the proposal,
it shall be deemed to be duly accepted by the creditors, and when approved
by the court shall be binding on all the creditors. (See Forms 64, 65, 66)
(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 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 shall have effect as if the creditor had been present
and had voted at the meeting.
(5) The debtor or the Official Receiver may, after the proposal is
accepted by the creditors, apply to the court to approve it, and notice of
the time appointed for hearing the application shall be given to each
creditor who has proved. (See Form 68)
(6) The application shall not be heard until after the public examination
of the debtor has been concluded, or dispensed with under section 19A. Any
creditor who has proved may be heard by the court in opposition to the
application, notwithstanding that he may at a meeting of creditors have
voted for the acceptance of the proposal. (Amended 1 of 1976 s. 3)
(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 so to do, dispense with the public examination of any
of the joint debtors if they are or any one of them is prevented from
attending the examination by illness or absence from Hong Kong but one at
least of such joint debtors shall be publicly examined. (Amended 47 of
1984 s. 16)
(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 proposal are not
reasonable or are not calculated to benefit the general body of creditors,
the court shall refuse to approve the proposal.
(10) If any facts are proved on proof of which the court would be required
either to refuse, suspend or attach conditions to the debtor's discharge
were he adjudged bankrupt, the court shall refuse to approve the proposal
unless it provides reasonable security for the payment of not less than 25
per cent on all the 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 proposal, the approval may be testified by
the seal of the court being attached to the instrument containing the
terms of the proposed composition or scheme, or by the terms being
embodied in an order of the court. (See Form 70)
(13) A composition or scheme accepted and approved in pursuance of this
section shall be binding on all the creditors so far as relates to any
debts due to them from the debtor and provable in bankruptcy.
(14) A certificate of the Official Receiver that a composition or scheme
has been duly accepted and approved shall, in the absence of fraud, be
conclusive as to its validity.
(15) The provisions of a composition or scheme under this section may be
enforced by the court on application by any person interested, and any
disobedience of an order of the court made on the application shall be
deemed a contempt of court. (See Forms 72, 73, 98, 101)
(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 injustice or
undue delay to the creditors or to the debtor, or that the approval of the
court was obtained by fraud, the court may, if it thinks fit, on
application 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 validity of any sale, disposition or payment duly
made or thing duly done under or in pursuance of the composition or
scheme. Where a debtor is adjudged bankrupt under this subsection, any
debt provable in other respects, which has been contracted before the
adjudication, shall be provable in the bankruptcy.
(17) If under or in pursuance of a composition or scheme a trustee is
appointed to administer the debtor's property or manage his business or to
distribute the composition, section 29 and Part V shall apply as if the
trustee were a trustee in a bankruptcy and as if the terms "bankruptcy",
"bankrupt" and "order of adjudication" included respectively a composition
or scheme of arrangement, a compounding or arranging debtor and an order
approving the composition or scheme.
(18) Part III shall, so far as the nature of the case and the terms of the
composition or scheme admit, apply thereto, the same interpretation being
given to the words "trustee", "bankruptcy", "bankrupt" and "order of
adjudication", as in subsection (17).
(19) No composition or scheme shall be approved by the court which does
not provide 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.
(20) The acceptance by a creditor of a composition or scheme shall not
release any person who under this Ordinance would not be released by an
order of discharge if the debtor had been adjudged bankrupt.
[cf. 1914 c. 59 s. 16 U. K.]
21. Effect of composition or scheme
Notwithstanding the acceptance and approval of a composition or scheme,
the composition or scheme shall not be binding on any creditor so far as
regards a debt or liability from which under the provisions of this
Ordinance the debtor would not be released by an order of discharge in
bankruptcy, unless the creditor assents to the composition or scheme.
[cf. 1914 c. 59 s. 17 U. K.]
Adjudication of bankruptcy
22. Adjudication of bankruptcy where composition not accepted or not
approved
(1) Where a receiving order is made against a debtor, then if the
creditors at the first meeting or any adjournment thereof by ordinary
resolution resolve that the debtor be adjudged bankrupt, or pass no
resolution, or if the creditors do not meet, or if a composition or scheme
is not approved in pursuance of this Ordinance within 14 days after the
conclusion of the examination of the debtor or such further time as the
court may allow, the court shall adjudge the debtor bankrupt; and
thereupon the property of the bankrupt shall become divisible among his
creditors and shall vest in a trustee.
(2) Notice of every order adjudging a debtor bankrupt, stating the name,
address and description of the bankrupt, the date of the adjudication and
the name of the trustee, shall be gazetted and shall be advertised in at
least 2 local newspapers, one of which shall be Chinese, or as may be
prescribed, and the date of the order shall for the purposes of this
Ordinance be the date of the adjudication. (See Form 27)
(3) It shall be sufficient that an adjudication order against a firm be
made in the firm name without mentioning the names of the partners, and
such adjudication order shall affect the joint and separate property of
all the partners.
(See Form 78)
[cf. 1914 c. 59 s. 18 U. K.]
23. Appointment of trustee
(1) Where a debtor is adjudged bankrupt or the creditors have resolved
that he be adjudged bankrupt, the creditors may by ordinary resolution
appoint the Official Receiver or some other fit person, whether a creditor
or not, to fill the office of trustee of the property of the bankrupt or
they may resolve to leave his appointment to the committee of inspection
hereinafter mentioned. A person shall be deemed not fit to act as trustee
of the property of a bankrupt where he has been previously removed from
the office of trustee of a bankrupt's property for misconduct or neglect
of duty.
(2) The person appointed shall, unless he is the Official Receiver, give
such security as the court may direct or as may be prescribed, and the
court, if satisfied with the security, shall certify under the hand of the
Registrar that his appointment has been duly made, unless the appointment
is disapproved by the court on the ground that it has not been made in
good faith by a majority in value of the creditors voting, or that the
person appointed is not fit to act as trustee, or that his connexion with
or relation to the bankrupt or his estate or any particular creditor makes
it difficult for him to act with impartiality in the interests of the
creditors generally.
(3) The appointment of a trustee shall take effect as from the date of the
certificate.
(4) When a debtor is adjudged bankrupt after the first meeting of
creditors has been held and a trustee has not been appointed prior to the
adjudication, the Official Receiver shall forthwith summon a meeting of
creditors for the purpose of appointing a trustee. If no trustee is then
appointed by the creditors the court shall on the application of the
Official Receiver appoint the Official Receiver or some other fit person
to be trustee.
[cf. 1914 c. 59 s. 19 U. K.]
24. Committee of inspection
(1) The creditors qualified to vote may at their first or any subsequent
meeting, by resolution, appoint a committee of inspection for the purpose
of superintending the administration of the bankrupt's property by the
trustee.
(2) The committee of inspection shall consist of 2 or more persons,
possessing one or other of the following qualifications- (Amended 1 of
1976 s. 4)
(a) that of being a creditor or the holder of a general proxy or general
power of attorney from a creditor:
Provided that no creditor and no holder of a general proxy or general
power of attorney from a creditor shall be qualified to act as a member of
the committee of inspection until the creditor has proved his debt and the
proof has been admitted; or
(b) that of being a person to whom a creditor intends to give a general
proxy or general power of attorney:
Provided that no such person shall be 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
admitted.
(3) The committee of inspection shall meet at such times as they shall
from time to time appoint, and failing such appointment, at least once a
month, and the trustee or any member of the committee may also call a
meeting of the committee as and when he thinks necessary.
(4) 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.
(5) Any member of the committee may resign his office by notice in writing
signed by him and delivered to the trustee.
(6) If a member of the committee becomes bankrupt, or compounds or
arranges with his creditors, or is absent from 5 consecutive meetings of
the committee, his office shall thereupon become vacant.
(7) Any member of the committee may be removed by an ordinary resolution
at any meeting of creditors of which 7 days' notice has been given stating
the object of the meeting.
(8) 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 as above to fill the vacancy:
(Amended 47 of 1984 s. 4)
Provided that if the trustee is of the opinion that it is unnecessary for
the vacancy to be filled he may apply to the court and the court may make
an order that the vacancy shall not be filled, or shall not be filled
except in such circumstances as may be specified in the order. (Added 47
of 1984 s. 4)
(9) The continuing members of the committee, provided there be not less
than 2 such continuing members, may act notwithstanding any vacancy in
their body. (Replaced 1 of 1976 s. 4)
(10) If there be no committee of inspection any act or thing or any
direction or permission by this Ordinance authorized or required to be
done or given by the committee may be done or given by the court on the
application of the trustee. [cf. 1914 c. 59 s. 20 U. K.]
25. Power to accept composition or scheme after adjudication
(1) Where a debtor is adjudged bankrupt the creditors may, if they think
fit, at any time after the 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 adjudication. (See Forms 31, 64, 65, 66)
(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 pursuance 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 annual the composition or scheme, but without prejudice to
the validity of any sale, disposition or payment duly made or thing duly
done under or in pursuance of the composition or scheme. Where a debtor is
adjudged bankrupt under this subsection, all debts, provable in other
respects, which have been contracted before the date of such adjudication
shall be provable in the bankruptcy.
[cf. 1914 c. 59 s. 21 U. K.]
Control over person and property of debtor
26. Duties of debtor as to discovery and realization of property
(1) Every debtor against whom a receiving order is made shall, unless
prevented by sickness or other sufficient cause, attend the first meeting
of his creditors, and shall submit to such examination and give such
information 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 provided by this
Ordinance, or be prescribed or be directed by the court by any special
order or orders made in reference to any particular case or made on the
occasion 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
realization of his property and the distribution of the proceeds among his
creditors.
(4) If a debtor wilfully fails to perform the duties imposed on him by
this section or to deliver up possession of any part of his property,
which is divisible amongst his creditors under this Ordinance 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 authorized by the court to
take possession of it, he shall, in addition to any other punishment to
which he may be subject, be guilty of a contempt of court and may be
punished accordingly. (See Forms 99, 102, 104)
[cf. 1914 c. 59 s. 22 U. K.]
27. Arrest of debtor under certain circumstances
(1) The court may, by warrant addressed to any person or persons named
therein, cause a debtor to be arrested, and any books, papers, money and
goods in his possession or under his control or relating to his affairs 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-(See Forms
109, 110)
(a) if, after a bankruptcy notice has been issued under this Ordinance or
after presentation of a bankruptcy petition by or against him, it appears
to the court that there is probable cause 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 issued, or of avoiding
service of a bankruptcy petition, or of avoiding appearance to any such
petition, or of avoiding examination 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 dispose of or remove his goods with a view to preventing or
delaying possession being taken of them by the Official Receiver or
trustee, or that there is probable ground for believing 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 $50 without the leave of the Official Receiver or trustee;
(Amended 37 of 1950 Schedule)
(d) if without good cause shown he fails to attend any examination ordered
by the court;
(e) if there is probable cause for believing that he has committed an
offence punishable under this Ordinance:
Provided that no arrest upon a bankruptcy notice shall be valid and
protected unless the debtor before or at the time of his arrest is served
with such bankruptcy notice.
(2) No payment or composition made or security given after arrest made
under this section shall be exempt from the provisions of this Ordinance
relating to fraudulent preferences.
[cf. 1914 c. 59 s. 23 U. K.]
28. Re-direction of debtor's telegrams and letters
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 exceeding 3 months, as the court thinks fit
telegrams and post letters and other postal packets, addressed to the
debtor at any place or places mentioned in the order for re-direction,
shall be re-directed, sent or delivered by the agent of the telegraph
organization or the Post-master General, or the officers acting under
them, to the Official Receiver or the trustee or otherwise as the court
directs, and the same shall be done accordingly. (See Form 111)
[cf. 1914 c. 59 s. 24 U. K.]
29. Inquiry as to debtor's conduct, dealings and property
(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 wife, 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 require any such person to produce any
documents in his custody or power relating to the debtor, his dealings or
property. (See Form 112)
(2) If any person so summoned, after having been tendered a reasonable
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 examination. (See
Forms 115, 116)
(3) The court may, by itself or by a commissioner appointed for the
purpose, 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 application 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. (See Forms 113, 114)
(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.
(6) The court may, if it thinks fit, order that any person who if in Hong
Kong would be liable to be brought before it under this section shall be
examined in any place out of Hong Kong by a commissioner appointed for the
purpose. (Amended 47 of 1984 s. 16)
(7) In the case of the death of the debtor or his wife or of any other
witness whose evidence has been duly taken under this Ordinance, the
deposition of the person so deceased purporting to be sealed with the seal
of the court, or a copy thereof purporting to be so sealed, shall in all
legal proceedings be admitted as evidence of the matters therein deposed
to, saving all just exceptions.
[cf. 1914 c. 59 s. 25 U. K.]
30. Discharge of bankrupt
(1) A bankrupt may, at any time after being adjudged bankrupt, apply 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 examination of the bankrupt is concluded, or dispensed with under
section 19A. The application shall, except when the court in accordance
with rules under this Ordinance otherwise directs, be heard in open court.
(Amended 1 of 1976 s. 5)
(2) Where the bankrupt does not of his own accord, within such time as the
court may deem reasonable, apply for his discharge, the court may, of its
own motion or on the application of the Official Receiver or the trustee
or any creditor who has proved, make an order calling upon the bankrupt to
come up for his discharge on a day to be fixed by the court, and on due
service of the order, if the bankrupt does not appear on the day fixed
thereby, the court may make such order as it thinks fit, subject to the
provisions of this section, and the debtor shall, in addition to any other
punishment to which he may be subject, be guilty of a contempt of court
and may be punished accordingly.
(3) On the hearing of the application, or on the day on which the bankrupt
has been ordered to come up for his discharge or any subsequent day, the
court shall take into consideration a report of the Official Receiver as
to the bankrupt's conduct and affairs
(including a report as to the bankrupt's conduct during the proceedings
under his bankruptcy) and may either grant or refuse an absolute order 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:
Provided that where the bankrupt has committed any indictable offence
under this Ordinance or any other indictable offence connected with his
bankruptcy, or where in any case any of the facts hereinafter mentioned
are proved the court shall- (Amended 50 of 1991 s. 4) [cf. 1926 c. 7 s. 1
(1) (a) U. K.]
(a) refuse the discharge; or
(b) suspend the discharge for such period as the court thinks proper; or
[cf. 1926 c. 7 s. 1 (1) (b) U. K.]
(c) suspend the discharge until a dividend of not less than 50 per cent
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 satisfied at the date of the discharge, such
balance or part of any balance of the debts to be paid out of the future
earnings or after acquired property of the bankrupt in such manner 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 towards payment of his debts:
Provided that, if at any time after the expiration of 2 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 such 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.
(4) The facts hereinbefore referred to are-
(a) that the bankrupt's assets are not of a value equal to 50 per cent of
his unsecured liabilities, unless he satisfies the court that the fact
that the assets are not of a value of 50 per cent of his unsecured
liabilities has arisen from circumstances for which he cannot justly be
held responsible;
(b) that the bankrupt has omitted to keep such books of account as are
usual and proper in the business carried on by him and as sufficiently
disclose his business transactions and financial position within the 3
years immediately preceding his bankruptcy, or in the case of a firm
carrying on business under a Chinese firm name, that a partnership book
has not been kept, or that such books have not been available for the
trustee during the bankruptcy proceedings, unless they have been
accidentally lost or destroyed, the onus of proof of such accidental loss
or destruction being on the bankrupt;
(c) that the bankrupt has continued to trade after knowing himself to be
insolvent;
(d) that the bankrupt has contracted any debt provable in the
bankruptcy without having at the time of contracting it any reasonable or
probable ground of expectation (proof whereof shall lie on him) of being
able to pay it;
(e) that the bankrupt has failed to account satisfactorily 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 unjustifiable extravagance in
living, or by gambling, or by culpable neglect of his business affairs;
(g) that the bankrupt has put any of his creditors to unnecessary expense
by a frivolous or vexatious defence to any action properly brought against
him;
(h) that the bankrupt has brought on or contributed to his bankruptcy by
incurring unjustifiable expense by bringing a frivolous or vexatious
action; [cf. 1926 c. 7 s. 1 (2) U. K.]
(i) that the bankrupt has within 3 months preceding the date of the
receiving order, when unable to pay his debts as they become due, given
an undue preference to any of his creditors;
(j) that the bankrupt has within 3 months preceding the date of the
receiving order incurred liabilities with a view to making his assets
equal to 50 per cent of his unsecured liabilities;
(k) that the bankrupt has on any previous occasion, whether in Hong Kong
or elsewhere, been adjudged bankrupt or made a composition or arrangement
with his creditors; (Amended 47 of 1984 s. 16)
(l) that the bankrupt has been guilty of any fraud or fraudulent breach of
trust.
(5) The court may, on proof to its satisfaction of any of the facts
mentioned in subsection (4) (b), (c), (d), (f), (g), (h), (i) or
(l), summarily sentence the bankrupt to imprisonment for 1 year.
(6) For the purposes of this section, bankrupt's assets shall be deemed of
a value equal to 50 per cent of his unsecured liabilities when the court
is satisfied that the property of the bankrupt has realized or is likely
to realize, or with due care in realization might have realized, an amount
equal to 50 per cent of his unsecured liabilities, and a report by the
Official Receiver or the trustee shall be prima facie evidence of the
amount of such liabilities.
(7) For the purposes of this section, the report of the Official Receiver
shall be prima facie evidence of the statements therein contained.
(8) Notice of the appointment by the court of the day for hearing the
application for discharge shall be published as the court may direct or as
may be prescribed and shall be sent 14 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.
(9) The powers of suspending and of attaching conditions to a bankrupt's
discharge may be exercised concurrently.
(10) A discharged bankrupt shall, notwithstanding his discharge, give such
assistance as the trustee may require in the realization and distribution
of such of his property as is vested in the trustee, and if he fails to do
so he shall be 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 before its revocation.
(See Forms 81 to 90)
[cf. 1914 c. 59 s. 26 U. K.]
31. Fraudulent settlements
In either of the following cases, that is to say-
(a) in the case of a settlement made before and in consideration 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 consideration of
marriage for the future settlement on or for the settlor's wife or
children of any money or property wherein he had not at the date of his
marriage any estate or interest (not being money or property of or in
right of his wife), if the settlor is adjudged bankrupt or compounds or
arranges with his creditors and it appears to the court that such
settlement, covenant or contract was made in order to defeat 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 discharge 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.
(Amended 33 of 1939; G. N. 840 of 1940 Supp. Schedule; 20 of 1948 s. 4)
[cf. 1914 c. 59 s. 27 U. K.]
32. Effect of order of discharge
(1) An order of discharge shall not release the bankrupt-
(a) from any debt or 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 relating to any branch of the public
revenue, or at the suit of any public officer on a bail bond entered into
for the appearance of any person prosecuted for any such offence, and he
shall not be discharged from such excepted debts unless the Financial
Secretary certifies in writing his consent to his being discharged
therefrom; or (Amended 33 of 1939; G. N. 840 of 1940 Supp. Schedule)
(aa) from any liability to pay any amount under a confiscation order made
under the Drug Trafficking (Recovery of Proceeds) Ordinance (Cap. 405) or
under an external confiscation order registered under that Ordinance; or
(Added 35 of 1989 s. 32; Amended L. N. 19 of 1991)
(b) from any debt or liability incurred by means of any fraud or
fraudulent breach of trust to which he was a party, or from any debt or
liability whereof he has obtained forbearance by any fraud to which he was
a party.
(2) An order of discharge shall release the bankrupt from all other debts
provable in bankruptcy.
(3) An order of discharge shall be 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) An order of discharge shall not release any person who at the date of
the receiving order was a partner or co-trustee with the bankrupt or was
jointly bound or had made any joint contract with him, or any person who
was surety or in the nature of a surety for him.
[cf. 1914 c. 59 s. 28 U. K.]
33. Power for court to annul adjudication in certain cases
(1) Where in the opinion of the court a debtor ought not to have been
adjudged bankrupt, or where it is proved to the satisfaction of the court
that the debts of the bankrupt are paid in full, the court may, on the
application of any person interested, by order annul the adjudication.
(Amended 45 of 1986 s. 4)
(1A) The court may, on the application of the Official Receiver, by order-
-(a) rescind a receiving order made against a debtor; or
(b) annul an adjudication of bankruptcy made against a bankrupt, if the
court is satisfied that the assets for division among the unsecured
creditors after payment of all costs, charges and expenses and the debts
which are preferential under this Ordinance are not and will not be
sufficient to pay a dividend of 15 per cent, and that it is desirable in
all the circumstances of the case for such order to be made. (Added 45 of
1986 s. 4)
(2) Where an order is made under this section rescinding a receiving order
or annulling an adjudication, all sales and dispositions of property and
payments duly made, and all acts theretofore done, by the Official
Receiver, trustee or other person acting under their authority, or by the
court, shall be valid, but the property of the debtor, if he has been
adjudged bankrupt, shall vest in such person as the court may appoint, or
in default of any such appointment revert to the debtor for all his estate
or interest therein on such terms and subject to such conditions, if any,
as the court may declare by order. (Amended 45 of 1986 s. 4)
(3) Notice of the order rescinding a receiving order or annulling an
adjudication shall be forthwith gazetted and shall be advertised in at
least 2 local newspapers, one of which shall be Chinese, or as may be
prescribed. (Amended 45 of 1986 s. 4)
(4) For the purposes of this section, any debt disputed by a debtor shall
be considered as paid in full if the debtor enters into a bond, in such
sum and with such sureties as the court approves, to pay the amount to be
recovered in any proceeding for the recovery of or concerning the debt,
with costs, and any debt due to a creditor who cannot be found or cannot
be identified shall be considered as paid in full if paid into court.
[cf. 1914 c. 59 s. 29 U.
K.]
PART III ADMINISTRATION OF PROPERTY
Proof of debts
34. Description of debts provable in bankruptcy
(1) Demands in the nature of unliquidated damages arising otherwise than
by reason of a contract, promise or breach of trust shall not be provable
in bankruptcy.
(2) A person having notice of any act of bankruptcy available against the
debtor shall not prove in bankruptcy for any debt or liability contracted
by the debtor subsequently to the date of his so having notice. (Amended
13 of 1966 Schedule)
(3) Save as aforesaid, all debts and liabilities, present or future,
certain or contingent, to which the debtor is subject at the date of the
receiving order, or to which he may become subject before his discharge by
reason of any obligation incurred before the date of the receiving order,
including a liability to pay further damages as provided for in section
56A (2) (b) of the Supreme Court Ordinance (Cap. 4) (following an award of
provisional damages), shall be deemed to be debts provable in bankruptcy.
(Amended 40 of 1986 s. 5)
(4) An estimate shall be made by the trustee of the value of any debt or
liability provable as aforesaid which by reason of its being subject to
any contingency or contingencies, or for any other reason, does not bear a
certain value.
(5) Any person aggrieved by any estimate made by the trustee as aforesaid
may appeal to the court.
(6) If in the opinion of the court the value of the debt or liability is
incapable of being fairly estimated, the court may make an order to that
effect, and thereupon the debt or liability shall, for the purposes of
this Ordinance, be deemed to be a debt not provable in bankruptcy.
(7) If in the opinion of the court the value of the debt or liability is
capable of being fairly estimated, the court may direct the value to be
assessed before the court itself without the intervention of a jury and
may give all necessary directions for this purpose, and the amount of the
value when assessed shall be deemed to be a debt provable in bankruptcy.
(8) For the purposes of this Ordinance, "liability" includes-
(a) any compensation for work or labour done;
(b) any obligation or possibility of an obligation to pay money or money's
worth on the breach of any express or implied covenant, contract,
agreement or undertaking, whether the breach does or does not occur, or is
or is not likely to occur or capable of occurring, before the discharge of
the debtor;
(c) generally, any express or implied engagement, agreement or undertaking
to pay or capable of resulting in the payment of money or money's worth,
whether the payment is, as respects amount, fixed or unliquidated, as
respects time, present or future, certain or dependent on any one
contingency or on 2 or more contingencies, or, as to mode of valuation,
capable of being ascertained by fixed rules or as matter of opinion. [cf.
1914 c. 59 s. 30 U. K.]
35. Mutual credit and set-off
Where there have been mutual credits, mutual debts or other mutual
dealings between a debtor against whom a receiving order is made under
this Ordinance and any other person proving or claiming to prove a debt
under the receiving order, an account shall be taken of what is due from
the one party to the other in respect of such mutual dealings and the sum
due from the one party shall be set off against any sum due from the other
party and the balance of the account, and no more, shall be claimed or
paid on either side respectively; but a person shall not be entitled under
this section to claim the benefit of any set-off against the property of a
debtor in any case where he had, at the time of giving credit to the
debtor, notice of an act of bankruptcy committed by the debtor and
available against him.
(Amended 33 of 1939; G. N. 840 of 1940 Supp. Schedule)
[cf. 1914 c. 59 s. 31 U. K.]
36. Rules as to proof of debts
The Chief Justice may, with the approval of the Legislative Council, make
rules providing for the mode of proving debts, the right of proof by
secured and other creditors, the admission and rejection of proofs, and
other matters. (Replaced 33 of 1939; G. N. 840 of 1940 Supp. Schedule)
[cf. 1914 c. 59 s. 32 U. K.]
37. Priority of costs and charges
(1) The assets remaining after payment of the actual expenses incurred in
realizing any of the assets of the debtor shall, subject to any order of
the court, first be liable to the following payments, which shall be made
in the following order of priority, namely-
(a) the actual expenses incurred by the Official Receiver in protecting or
attempting to protect the property or assets of the debtor or any part
thereof and any expenses or outlay incurred by him or by his authority in
carrying on the business of the debtor;
(b) the fees, percentages and charges payable to, or costs, charges and
expenses incurred or authorized by, the Official Receiver, whether acting
as Official Receiver or trustee;
(c) the remuneration of the special manager, if any; and
(d) the taxed costs of the petitioner, so far as the same may not have
been disallowed by the court.
(2) Whenever the court is satisfied that property of a debtor in respect
of whose estate a receiving order has been made has been preserved for the
benefit of the creditors by means of legal proceedings brought by a
creditor against the debtor without notice of any available act of
bankruptcy committed by the debtor, the court may in its discretion order
the payment of the costs of such legal proceedings or any part of them
(taxed as between party and party) out of the estate, with the same
priority as to payment as is herein provided in respect of the taxed costs
of the petitioner.
38. Priority of debts
(1) In the distribution of the property of a bankrupt there shall be paid
in priority to all other debts-
(a) (Repealed 47 of 1984 s. 5)
(b) any-
(i) payment from the Protection of Wages on Insolvency Fund under section
18 of the Protection of Wages on Insolvency Ordinance (Cap. 380) to any
clerk or servant in respect of wages or salary or both in respect of
services rendered to the bankrupt if such payment was made during a period
of 4 months before the date of the filing of the petition; and
(ii) wages and salary (including commission provided that the amount
thereof is fixed or ascertainable at the relevant date) of any clerk or
servant in respect of services rendered to the bankrupt during a period-
(A) beginning 4 months next before the date of the filing of the petition
and ending on the making of the receiving order; or
(B) beginning 4 months next before the date of application for an ex
gratia payment, under section 16 of the Protection of Wages on Insolvency
Ordinance (Cap. 380), from the Protection of Wages on Insolvency Fund, and
ending on that date of application, whichever is the earlier, not
exceeding, together with any payment under sub-paragraph (i), $300;
(Replaced 12 of 1985 s. 29 (4). Amended 48 of 1987 s. 8)
(c) any-
(i) payment from the Protection of Wages on Insolvency Fund under section
18 of the Protection of Wages on Insolvency Ordinance (Cap. 380) to any
labourer or workman in respect of wages, whether payable for time or for
piece work, in respect of services rendered to the bankrupt if such
payment was made during a period of 4 months before the date of the filing
of the petition; and
(ii) wages of any labourer or workman, whether payable for time or for
piece work, in respect of services rendered to the bankrupt during the
period-
(A) beginning 4 months next before the date of the filing of the petition
and ending on the making of the receiving order; or
(B) beginning 4 months next before the date of application for an ex
gratia payment, under section 16 of the Protection of Wages on Insolvency
Ordinance (Cap. 380), from the Protection of Wages on Insolvency Fund, and
ending on that date of application, whichever is the earlier, not
exceeding, together with any payment under sub-paragraph (i), $100;
(Replaced 12 of 1985 s. 29 (4). Amended 48 of 1987 s. 8)
(ca) any severance payment payable to an employee under the Employment
Ordinance (Cap. 57), not exceeding in respect of each employee $6,000;
(Added 54 of 1974 s. 2)
(caa) any long service payment payable to an employee under the Employment
Ordinance (Cap. 57), not exceeding in respect of each employee $8,000;
(Added 78 of 1985 s. 2)
(cb) any amount due in respect of compensation or liability for
compensation under the Employees' Compensation Ordinance
(Cap. 282), accrued before the date of the receiving order and, where the
compensation is a periodical payment, the amount due in respect thereof
shall be taken to be the amount of the lump sum for which the periodical
payment could, if redeemable, be redeemed on an application being made for
that purpose under the Employees' Compensation Ordinance (Cap. 282), but
this paragraph shall not apply to any amount due in respect of
compensation or liability for compensation where the bankrupt has entered
into a contract with a person carrying on accident insurance business in
Hong Kong in respect of his liability under the Employees' Compensation
Ordinance (Cap. 282) for personal injury by accident to the employee to
whom the compensation or liability for compensation is due; (Added 5 of
1977 s. 2. Amended 47 of 1984 s. 16)
(cc) any wages in lieu of notice payable to an employee under the
Employment Ordinance (Cap. 57), not exceeding in respect of each employee
one month's wages or $2,000 whichever is the lesser; (Added 5 of 1977 s.
2)
(cd) all accrued holiday remuneration becoming payable to any clerk,
servant, workman or labourer (or in the case of his death to any other
person in his right) on the termination of his employment before or as a
consequence of the receiving order; (Added 47 of 1984 s. 5)
(ce) any payment from the Employees Compensation Assistance Fund under
Part IV of the Employees Compensation Assistance Ordinance 1991 (54 of
1991) representing an amount due by the bankrupt in respect of
compensation or liability for compensation under the Employees'
Compensation Ordinance (Cap. 282) accrued before the date of the receiving
order; (Added 54 of 1991 s. 47)
(d) all statutory debts due from the bankrupt to the Crown at the date of
the receiving order and which became due and payable within 12 months next
before that date. (Replaced 47 of 1984 s. 5)
(2) Where the date of the receiving order is after 27 March 1953, but
before 1 June 1970, the sum of $3,000 shall be deemed to be substituted in
each case for the sums of $300 and $100 referred to respectively in
subsection (1) (b) and (c). (Added 8 of 1953 s. 2. Amended 42 of 1970 s.
2)
(2A) Where the date of the receiving order is on or after 1 June 1970, but
before 1 April 1977, the sum of $6,000 shall be deemed to be substituted
in each case for the sums of $300 and $100 referred to in subsection (1)
(b) and (c) respectively. (Added 42 of 1970 s. 2. Amended 5 of 1977 s. 2)
(2B) Where the date of the receiving order is on or after 1 April 1977,
the sum of $8,000 shall be deemed to be substituted in each case for the
sums of $300 and $100 referred to in paragraphs (b) and (c) respectively,
and for the sum of $6,000 referred to in paragraph (ca), of subsection
(1). (Added 5 of 1977 s. 2)
(3) The debts specified in subsection (1) (b), (c), (ca), (caa), (cb),
(cc), (cd) and (ce) - (Amended 47 of 1984 s. 5; 78 of 1985 s. 2; 54 of
1991 s. 47)
(a) shall have priority over the debts specified in subsection (1) (d);
(b) shall rank equally among themselves; and
(c) shall be paid in full unless the property of the bankrupt is
insufficient to meet them, in which case they shall abate in equal
proportions among themselves. (Replaced 42 of 1970 s. 2. Amended 54 of
1974 s. 2; 5 of 1977 s. 2)
(3A) (Repealed 47 of 1984 s. 5)
(4) Subject to the provisions contained in section 37 and to the retention
of such sums as may be necessary for the costs of administration or
otherwise, the foregoing debts shall be discharged forthwith so far as the
property of the debtor is sufficient to meet them.
(5) In the event of a landlord or other person distraining or having
distrained on any goods or effects of a bankrupt within 3 months next
before the date of the receiving order the debts to which priority is
given by this section shall be a first charge on the goods or effects so
distrained on or the proceeds of the sale thereof. (Amended 42 of 1970 s.
2)
(5A) Any money paid under a charge under subsection (5) shall be a debt
due from the estate of the bankrupt to the landlord or other person
distraining or having distrained, and such debt shall be discharged so far
as the property of the bankrupt is sufficient to meet it after payment of
the debts specified in subsection (1) but before payment of the other
debts proved in the bankruptcy. (Added 42 of 1970 s. 2)
(5B) Where any assets have been recovered under an indemnity for costs of
litigation given by certain creditors, or have been protected or preserved
by the payment of moneys or the giving of indemnity by creditors, or where
expenses in relation to which a creditor has indemnified a trustee have
been recovered, the court may, on the application of the Official Receiver
or the trustee or any such creditor, make such order as it deems just with
respect to the distribution of those assets and the amount of those
expenses so recovered with a view to giving those creditors an advantage
over others in consideration of the risk run by them in so doing. (Added
47 of 1984 s. 5)
(5C) Any remuneration in respect of a period of holiday or of absence from
work through sickness or other good cause shall be deemed to be wages in
respect of services rendered to the bankrupt during that period. (Added 47
of 1984 s. 5)
(6) This section shall apply in the case of a deceased person who dies
insolvent as if he were a bankrupt and as if the date of his death were
substituted for the date of the receiving order.
(7) In the case of partners the joint estate shall be applicable in the
first instance in payment of their joint debts and the separate estate of
each partner shall be applicable in the first instance in payment of his
separate debts. If there is a surplus of the separate estates, it shall be
dealt with as part of the joint estate. If there is a surplus of the joint
estate, it shall be dealt with as part of the respective separate estates
in proportion to the right and interest of each partner in the joint
estate. (See Rule 195)
(8) Subject to the provisions of this Ordinance, all debts proved in the
bankruptcy shall be paid pari passu.
(9) If there is any surplus after payment of the foregoing debts, it shall
be applied in payment of interest from the date of the receiving order at
the rate of 8 per cent per annum on all debts proved in the bankruptcy.
(10) In this section-
"accrued holiday remuneration" includes, in relation to any person, all
sums which, by virtue either of his contract of employment or of any
enactment (including any order made or direction given under any
Ordinance), are payable on account of the remuneration which would, in the
ordinary course, have become payable to him in respect of a period of
holiday had his employment with the bankrupt continued until he became
entitled to be allowed the holiday;
"Employees Compensation Assistance Fund" means the fund established by
section 7 of the Employees Compensation Assistance Ordinance 1991 (54 of
1991); (Added 54 of 1991 s. 47) "Protection of Wages on Insolvency Fund"
means the fund deemed to be established and continued in existence under
section 6 of the Protection of Wages on Insolvency Ordinance (Cap. 380);
(Added 12 of 1985 s. 29 (4))
"statutory debt" means a debt the liability for which and the amount of
which are determined by or under any provision in any Ordinance or
imperial enactment; "wages" includes, in relation to any person, any sum
which, by virtue of his contract of employment, is payable to him as a
Lunar New Year bonus, but does not include any accrued holiday
remuneration. (Replaced 47 of 1984 s. 5)
(11) The Bankruptcy (Amendment) Ordinance 1984 (47 of 1984) shall not
apply in the case of a bankruptcy where the date of the receiving order
occurred before the commencement of that Ordinance, and, in such a case,
the provisions relating to priority of debts which would have applied if
that Ordinance had not been enacted shall be deemed to remain in full
force. (Added 47 of 1984 s. 5)
(12) The Fifth Schedule to the Protection of Wages on Insolvency Ordinance
1985 (12 of 1985) shall not apply in the case of a bankruptcy where the
date of the filing of a petition occurred before the commencement of that
Ordinance, and, in such case, the provisions relating to priority of debts
which would have applied if that Ordinance had not been enacted shall be
deemed to remain in full force. (Added 12 of 1985 s. 29 (4)) [cf. 1914. c.
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