Bankruptcy Ordinance [New Version], 5740-1980

Where additional receiving orders are made against a bankrupt, or where a bankrupt dies and an order is made that the estate be administered in bankruptcy, the trustee in the bankruptcy immediately preceding such order shall, for the purposes of any proceedings consequent upon any such order, be deemed to be a creditor in respect of any provable debt in the subsequent bankruptcy that has not been paid in full.

A trustee in bankruptcy who has received notice of a subsequent bankruptcy petition filed against the bankrupt, or of a petition that the estate of the bankrupt be administered in bankruptcy, shall withhold, until the subsequent petition is determined, any property held by him at that time which the bankrupt acquired since being adjudicated bankrupt; if, pursuant to the subsequent petition, a bankruptcy order or an order for the administration of the estate in bankruptcy is made, the trustee shall transfer any such property or the proceeds of its sale to the trustee in the subsequent bankruptcy or to the trustee administering the estate in bankruptcy, after deducting his expenses.

A debtor who has been adjudicated bankrupt on his own petition and has received a discharge shall not be entitled to file a further bankruptcy petition within five years from the date of the discharge order.

Where property of a debtor has been seized in execution and, before it is sold or before the full amount claimed in the execution has been received or recovered, notice is given to the enforcement officer that a receiving order has been made against the debtor, the enforcement officer shall, on demand by the Official Receiver, deliver to the Official Receiver the property and any money seized or received in partial execution; provided that the costs of execution shall be a first charge on the property or money so delivered, and the Official Receiver or the trustee may sell the property or any part thereof in order to satisfy that charge.

Where property of a debtor has been sold in execution under a judgment, or where a sum of money has been paid to prevent a sale, the enforcement officer shall deduct the costs of execution from the proceeds of sale or from the money paid and shall retain the balance for fourteen days; if within that period notice is given to him that a bankruptcy petition has been filed and a receiving order is made against the debtor pursuant to that petition or pursuant to another petition known to the enforcement officer, the enforcement officer shall pay the balance to the Official Receiver or to the trustee, as the case may be, and they shall be entitled to retain it as against the execution creditor.

Where money is paid directly to a creditor or to his agent, it shall be treated, for the purposes of sections 92 and 93, as if it had been paid to the enforcement officer.

Where money or property of a bankrupt is held by another person and, on or after the date on which the receiving order is made but before notice thereof has been published in Reshumot (Official Gazette) in the prescribed manner, the holder pays the money or transfers the property to another, and such payment or transfer is void under this Ordinance as against the trustee — then, if the payer or transferor proves that at the time he did not know that the receiving order had been made, any right of the trustee to recover from him shall not be enforceable in legal proceedings except to the extent that the court is satisfied that there is no reasonable possibility of the trustee recovering from the person who received the money or property.

Nothing in this Ordinance — other than the provisions of sections 91 to 98 — shall, in a case of bankruptcy, invalidate any of the following transactions entered into in good faith before the making of the receiving order, if the other party to the transaction did not know that the debtor had, before the transaction, committed an act referred to in section 72(2); and the following are those transactions:

A person who has paid money or delivered property to a person subsequently adjudicated bankrupt, or to a person claiming by assignment from him, shall be discharged from his liability, notwithstanding anything in this Ordinance, if he did so before the date on which the receiving order was actually made, without knowing that a bankruptcy petition had been filed, and in all respects in the ordinary course of business or in good faith.

Where a banker becomes aware that an account holder with him is an undischarged bankrupt, he is required — unless satisfied that the account is maintained on behalf of another person — to notify the trustee or the Official Receiver immediately of the existence of the account, and thereafter shall not pay any money from that account except pursuant to a court order or pursuant to the instructions of the trustee.

The trustee shall take into his possession, as soon as possible, the books and documents of the bankrupt and all other property of the bankrupt that is capable of manual delivery, and no person shall have the right to prevent the Official Receiver or the trustee from taking possession of accounting books belonging to the bankrupt, or to claim a lien thereon as against the Official Receiver or the trustee.

Subject to the provisions of this Ordinance relating to property acquired by a bankrupt after adjudication, an agent of the bankrupt, including his treasurer, employee, banker and advocate, is required to pay and deliver to the trustee all money and securities in his possession or control by virtue of his position as agent which he is not entitled by law to retain as against the bankrupt or the trustee; if he fails to do so, he shall be guilty of an offence under this Ordinance.

In relation to the property of a bankrupt, and for the purpose of taking possession of or detaining it, the trustee shall have the status of a receiver under Chapter V of the Execution Law, 5727-1967, and the court may, on the application of the trustee, enforce the possession or detention.

Where the property of a bankrupt includes stock, shares, a share in a vessel as defined in the Shipping (Vessels) Law, 5720-1960, or other property the transfer of which is effected by registration in the books of a company, office or person, the trustee is entitled to transfer the property to the same extent as the bankrupt would have been entitled to do so had he not become bankrupt.

Where the property of a bankrupt includes claims, they shall be deemed to have been duly assigned to the trustee.

Any person may, pursuant to an order of the Court, seize from the property of a bankrupt, or from the property of a debtor against whom a receiving order has been made, any property in the custody or possession of the bankrupt or the debtor or of any other person, and for the purpose of such seizure may break open any house, building or room of the bankrupt or the debtor in which they are said to be found, or any building or receptacle of theirs in which any of their property is said to be found; if the Court is satisfied that such property is concealed in a place not belonging to them, it may issue to any police officer or officer of the Court an order to search therefor.

Where the Official Receiver or the trustee has seized property that was in the possession or on the premises of a debtor against whom a receiving order has been made, or has done anything in relation to property in respect of which no other person has a claim, and it is subsequently proved that on the date of the receiving order the property did not belong to the debtor, the Official Receiver or the trustee shall not be personally liable for any harm caused to the claimant of the property by the seizure or the act done, or for the costs of proceedings taken to establish the claim to the property, unless the Court is of the opinion that there was negligence in the handling of the property on the part of the Official Receiver or the trustee.

An order of discharge shall automatically discharge any order made under section 111, unless an express order is made to continue the payments.

Until the appointment of a trustee, the Official Receiver shall be the trustee for the purposes of this Ordinance, and immediately upon the making of a declaration against a debtor the property of the bankrupt shall vest in the trustee, and upon the appointment of a trustee it shall pass and vest immediately in the trustee so appointed.

The property of a bankrupt shall pass and vest from trustee to the trustee for the time being, without any conveyance, and for the purposes of any enactment requiring the registration of transfers of property, the certificate of appointment of a trustee shall be deemed a transfer of property and may be registered accordingly; where the Official Receiver is the trustee, the receiving order shall be deemed the certificate of appointment and no registration or notation shall be required.

From the date of the disclaimer all rights and liabilities of the bankrupt and of his property in the disclaimed property shall cease, and the trustee shall be discharged from all personal liability in respect of the property from the date on which it vested in him; however, the disclaimer shall not affect the rights and liabilities of any other person except to the extent necessary to release the bankrupt and his property and the trustee from liability.

Where the trustee has been required in writing by an interested party in onerous property to decide whether he will disclaim the property or not, and within twenty-eight days from the date of receipt of the requirement, or such longer period as the Court has permitted, the trustee has not notified whether he will or will not disclaim — he shall no longer be able to disclaim, and if the property was a contract it shall be deemed to have been adopted by him.

The Court may, on the application of a person entitled to the benefit of, or subject to a liability under, a contract with the bankrupt, make an order rescinding the contract on such terms as it may fix with respect to payment of damages for non-performance of the contract and any other matter as it thinks fit, and damages awarded as aforesaid shall be a provable debt in the bankruptcy for the applicant.

A person injured by reason of a disclaimer under sections 115 to 121 shall be deemed a creditor of the bankrupt to the extent of the injury and shall accordingly have a provable debt in the bankruptcy.

Where the property of a bankrupt includes copyright or any interest therein and he is by reason thereof liable to pay royalties or a share of profits to the author —

Subject to the provisions of this Ordinance the trustee may —

With the permission of the committee of inspection, the trustee may appoint the bankrupt to be a supervisor over the management of his property or any part thereof, or as manager of his business for the benefit of the creditors, or to assist in any other manner in the management of the property, on such terms as the trustee may direct.

With the permission of the committee of inspection, the trustee may make allowances to the bankrupt out of his property for his maintenance and for the maintenance of his family, or as remuneration for his services in the realisation of his property; however, the Court may reduce the allowance.