Personal insolvency imposes obligations on the debtor personally. Section 90 of the Insolvency Act (Chapter 253) states the central one.
Section 90(1) — the core duty
It is the duty of an insolvent to aid, to the best of his ability, in the realization of his property and the distribution of the proceeds among his creditors.
Section 90(2) — what that involves
(a) give such inventory of his property, and such lists of his creditors and debtors and of the debts due to and from them;
(b) submit to such examination, on oath or otherwise, by the trustee in respect of his property or his creditors;
(c) attend such meetings of his creditors;
(d) wait at such times on the trustee;
(e) execute such powers of attorney, transfers, deeds and instruments;
(f) generally do all such acts and things in relation to his property and the distribution of the proceeds,
as are (g) reasonably required by the trustee, (h) prescribed, or (i) directed by the Court by special order in a particular insolvency or on a special application by the trustee or a creditor.
(3) For the purposes of paragraph (b), the trustee may administer oaths.
An insolvent who wilfully fails (a) to perform these duties, or (b) to deliver up possession to the trustee of any part of the divisible property in his possession or under his control, is — in addition to any other punishment — guilty of a contempt of court.
The section 49(b) statement is the starting point: a full and accurate statement, verified on oath, of the debts and other liabilities, the names and residences of the creditors so far as known, and the causes of the insolvent’s inability to meet his engagements.
Note that the trustee may administer oaths without going to Court, and that the duty extends to executing transfers — important for assets that require registration, and for property outside the country under section 81, where the Court may order the insolvent to execute whatever is needed.
These duties are the personal counterpart of sections 311 and 322 of the Companies Act, which oblige directors and others to give a liquidator records, information and property. The difference is that here the obligations fall on the person whose estate it is, and continue throughout the insolvency.
Section 108 — allowances to the insolvent
With the consent of (a) the creditors by resolution in general meeting or (b) the committee of inspection, the trustee may from time to time make out of the estate such allowance to the insolvent as is approved —
(c) for the support of the insolvent and his family; or
(d) where he is engaged in winding-up his estate, in consideration of his services.
The insolvent must devote considerable time to the estate under section 90, and the divisible property under section 4(3) leaves him only tools, clothing and bedding to K40 and his life policies. Section 108 allows creditors to fund his support, and to pay him for his work.
It sits with section 99(2)(b), under which the trustee may — with the committee’s sanction — appoint the insolvent to superintend the management of the property or carry on his trade for the benefit of the creditors. Where the business has value only as a going concern, that is often the sensible course.
Note that the insolvent’s income is not automatically caught; it reaches the estate only by an order under section 74, fixed at what is just and reasonable.
Section 109 — apprentices and articled clerks
Where a person was apprenticed or an articled clerk to the insolvent when the petition was presented, and either the insolvent or the apprentice gives written notice to the trustee, the order of adjudication is a complete discharge of the indenture or articles.
Where a fee was paid to the insolvent, the trustee may, on application, pay out of the property such sum as he thinks reasonable to or for the apprentice — taking into account (a) the amount paid, (b) the time served before the commencement of the insolvency, and (c) the other circumstances.
Alternatively, on the apprentice’s application, the trustee may transfer the indenture or articles to some other person if it appears expedient. A decision under subsection (2) is subject to appeal to the Court.
The provision protects a young person who paid to be trained by someone who has since failed: the indenture ends, part of the fee may be returned, or the training may be transferred elsewhere.
Section 129 — the last examination
(1) On the application of the trustee — or, if the trustee omits to apply, the insolvent — the Court shall appoint a day, not earlier than one month from the date of the order of adjudication, for the insolvent to attend in court to pass his last examination, and shall cause the prescribed notice to be given.
(2) The Court may extend the time appointed.
(3) The Court may adjourn the last examination for such period as it thinks proper if (a) the examination and accounts are not satisfactory and the failure to give further or better information or accounts is attributable to neglect or default on the insolvent’s part; (b) the insolvent has wilfully disobeyed any order of the Court in his insolvency; or (c) the Court thinks it should be adjourned.
(4) and (5) Outside the National Capital District and the Central Province, the examination may be held before a magistrate, who then has all the Court’s powers under subsections (1) to (3).
It is the public accounting for the failure. The insolvent is examined in court about his property, his dealings and the causes of his insolvency — and the Court’s power to adjourn under subsection (3) is the sanction for an unsatisfactory account.
That matters because discharge follows this process. The insolvent who wants to be released from his debts must first satisfy the Court, and an examination adjourned for neglect, default or disobedience delays everything that follows.
The insolvent has a right of his own here: if the trustee omits to apply, the insolvent may. He cannot be left indefinitely without the examination that opens the road to discharge.
Sources
- Insolvency Act (Chapter 253) — ss 4, 49, 74, 81, 90, 99, 108, 109, 129
- Companies Act 1997 — ss 311, 322
Before relying on anything here, read the current text of the Companies Act 1997 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.