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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.

59 s. 33 U. K.] 39. Preferential claims in case of apprenticeship (1) Where at the time of the presentation of the bankruptcy petition any person is apprenticed or is a trainee solicitor to the bankrupt, the adjudication of bankruptcy shall, if either the bankrupt or the apprentice or trainee solicitor gives notice in writing to the trustee to that effect, be a complete discharge of the indenture of apprenticeship or trainee solicitor contract; and if any money has been paid by or on behalf of the apprentice or trainee solicitor to the bankrupt as a fee, the trustee may, on the application of the apprentice or trainee solicitor or of some person on his behalf, pay such sum as the trustee, subject to an appeal to the court, thinks reasonable, out of the bankrupt's property, to or for the use of the apprentice or trainee solicitor, regard being had to the amount paid by him or on his behalf and to the time during which he served with the bankrupt under the indenture or trainee solicitor contract before the commencement of the bankruptcy and to the other circumstances of the case.

(2) Where it appears expedient to a trustee, he may, on the application of any apprentice or trainee solicitor to the bankrupt or any person acting on behalf of such apprentice or trainee solicitor, instead of acting under the provisions of subsection (1), transfer the indenture of apprenticeship or trainee solicitor contract to some other person.

(Amended 70 of 1991 s. 14) [cf. 1914 c. 59 s. 34 U. K.] 40. Landlord's power of distress The Landlord or other person to whom any rent is due from the bankrupt may, subject to the provisions of Part III of the Landlord and Tenant (Consolidation) Ordinance (Cap. 7), at any time either before or after the commencement of the bankruptcy, distrain upon the goods or effects of the bankrupt for the rent due to him from the bankrupt, with this limitation, that if such distress for rent be levied after the commencement of the bankruptcy, it shall be available only for 6 months' rent accrued due prior to the date of the order of adjudication and shall not be available for rent payable in respect of any period subsequent to the date when the distress was levied, but the landlord or other person to whom the rent may be due from the bankrupt may prove under the bankruptcy for the surplus due for which the distress may not have been available.

[cf. 1914 c. 59 s. 35 U. K.] 41. Postponement of husband's and wife's claims (1) Where a married woman has been adjudged bankrupt, her husband shall not be entitled to claim any dividend as a creditor in respect of any money or other estate lent or entrusted by him to her until all claims of the other creditors of his wife for valuable consideration in money or money's worth have been satisfied.

(2) Where a debtor has been adjudged bankrupt, any money or other estate of his wife lent or entrusted by her to him shall be treated as assets of his estate, and the wife shall not be entitled to claim any dividend as a creditor in respect of any such money or other estate until all claims of the other creditors of the debtor for valuable consideration in money or money's worth have been satisfied.

(3) In this section "married woman" and "wife" include "concubine".

[cf. 1914 c. 59 s. 36 U. K.] Property available for payment of debts 42. Relation back of trustee's title The bankruptcy of a debtor, whether it takes place on the debtor's own petition or upon that of a creditor or creditors, shall be deemed to have relation back to, and to commence at, the time of the act of bankruptcy being committed on which a receiving order is made against him, or, if the bankrupt is proved to have committed more acts of bankruptcy than one, to have relation back to, and to commence at, the time of the first of the acts of bankruptcy proved to have been committed by the bankrupt within 3 months next preceding the date of the presentation of the bankruptcy petition, but no bankruptcy petition, receiving order or adjudication shall be rendered invalid by reason of any act of bankruptcy anterior to the debt of the petitioning creditor. [cf. 1914 c. 59 s. 37 U. K.] 43. Description of bankrupt's property divisible amongst creditors The property of the bankrupt divisible amongst his creditors, and in this Ordinance referred to as the property of the bankrupt, shall not comprise the following particulars- (a) property held by the bankrupt on trust for any other person; (b) the tools (if any) of his trade and the necessary wearing apparel and bedding of himself and his family dependent on and residing with him, to a value, inclusive of tools and apparel and bedding, not exceeding $3,000 in the whole: (Amended 37 of 1950 Schedule; 65 of 1976 s. 4) But it shall comprise the following particulars- (i) all such property as may belong to or be vested in the bankrupt at the commencement of the bankruptcy or may be acquired by or devolve on him before his discharge; (ii) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge; (iii) all goods being at the commencement of the bankruptcy in the possession, order or disposition of the bankrupt, in his trade or business, by the consent and permission of the true owner, under such circumstances that he is the reputed owner thereof: Provided that things in action other than debts due or growing due to the bankrupt in the course of his trade or business shall not be deemed goods within the meaning of this section. (Amended 33 of 1939; G.

N. 840 of 1940 Supp. Schedule; 20 of 1948 s. 4) [cf. 1914 c. 59 s. 38 (1) U. K.] 44. Provisions as to second bankruptcy (1) Where a second or subsequent receiving order is made against a bankrupt, or where an order is made for the administration in bankruptcy of the estate of a deceased bankrupt, then for the purposes of any proceedings consequent upon any such order the trustee in the last preceding bankruptcy shall be deemed to be a creditor in respect of any unsatisfied balance of the debts provable against the property of the bankrupt in that bankruptcy.

(2) In the event of a second or subsequent receiving order made against a bankrupt being followed by an order adjudging him bankrupt, or in the event of an order being made for the administration in bankruptcy of the estate of a deceased bankrupt, any property acquired by him since he was last adjudged bankrupt, which at the date when the subsequent petition was presented had not been distributed amongst the creditors in such last preceding bankruptcy, shall subject to any disposition thereof made by the Official Receiver or trustee in that bankruptcy, without knowledge of the presentation of the subsequent petition, and subject to the provisions of section 52, vest in the trustee in the subsequent bankruptcy or administration in bankruptcy as the case may be.

(3) Where the trustee in any bankruptcy receives notice of a subsequent petition in bankruptcy against the bankrupt or after his decease of a petition for the administration of his estate in bankruptcy, the trustee shall hold any property then in his possession which has been acquired by the bankrupt since he was adjudged bankrupt until the subsequent petition has been disposed of, and if on the subsequent petition an order of adjudication or an order for the administration of the estate in bankruptcy is made, he shall transfer all such property or the proceeds thereof (after deducting his costs and expenses) to the trustee in the subsequent bankruptcy or administration in bankruptcy, as the case may be.
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