Debtor's Welcome to their Brother
Debtor's Welcome to their Brother
The emphasis of this chapter is to address the different insolvency procedures for corporate and individual debtors. The Committee’s task is to examine whether the different procedures could be harmonised.
The Chapter proposes, at 2.3, the abolition of the acts of bankruptcy related to bankruptcy proceedings, and instead introduce a new system based on prima facie proof of insolvency. It also addresses other issues such as the criteria that justify an application by the creditor for the administration of insolvency proceedings, the categories of debt that justify the initiation of insolvency proceedings(2.5-2.11), and finally,the grounds for and evidence of an application.
A number of regarding the hearing questions are before the Committee(listed at 3.6). The committee recommends that payments, whether fully or in installments, must dispose of the proceedings, so far as this is consistent with the interests of other creditors. An emphasis is added on avoiding the publicity of paying off.
At page 23 of the document, the first draft of Chapter 5 is found. This draft focuses on the philosophy(5.3) and aims(5.6) for insolvency law, while the one above it highlighted the shortcomings of the current system against such aims. It then goes on to highlighting the differences between consumer and commercial debtors(5.10-14).
The chapter outlines the common behaviours of parties that go into insolvency(5.16-19). The report recommends that all parties face insolvency as quickly as possible. It recommends a new system whereby debtors could put themselves in the hands of their creditors with no delays, and that the mode of administration should not be decided until enough information on each case is supplied to the court.
The report identified a considerable disparity between the rights and remedies of creditors. It points to the question of the extent to which a creditor is entitled to control a debtor’s property, without prejudicing both parties’ rights.
Creditors are disadvantaged by a restriction on their civil remedies, as well as delay in realising the insolvent’s estate. This could be mitigated by deciding what estate should be available for distribution among creditors. The final version of this section is to be found on pages 77-79 of the PDF.