Bankruptcy Ordinance [New Version]

Creditor and Purchaser

92. Where goods of a debtor have been seized in execution, and before their sale or before the full amount claimed in the execution has been received or levied, notice has been given to the enforcement officer that a Receiving Order has been made against the debtor, the enforcement officer shall deliver to the Official Receiver, on his demand, the goods and any money seized or received in partial execution; however, the costs of the execution shall be a first charge on the goods or money so delivered, and the Official Receiver or trustee may sell the goods or part thereof in satisfaction of that charge.

Duty of Enforcement Officer to Deliver Goods

:40(1]]

Where goods of a debtor have been sold in execution under a judgment for the payment of a sum exceeding two shekels, 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 on that petition or on another petition known to the enforcement officer, the enforcement officer shall pay the balance to the Official Receiver or 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 his agent, it shall be treated, for the purposes of Sections 92 and 93, as if it had been paid to the enforcement officer.

Directly

40(3)]]

Where money or property of a bankrupt is held by another person, and on or after the date of the making of the Receiving Order but before notice thereof has been published in the Official Gazette in the prescribed manner, the holder pays the money or transfers the property to another person, and such payment or transfer is void under this Ordinance as against the trustee — then, if the payer or transferor proves that he was not aware at that time that the Receiving Order had been made, any right of recovery against him vested in the trustee shall not be enforceable by legal proceedings except to the extent that the Court considers there is no reasonable possibility of the trustee recovering from the person who received the money or property.

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658 Book of Laws 34 28 Elul 5740 09.09.1980

General Unregistered

Preservation of Transactions in Good Faith

99. Nothing in this Ordinance — other than the provisions of Sections 91 to 98 — shall, in the case of Bankruptcy, avoid any of the following transactions made in good faith before the making of the receiving Order, if the other party to the transaction did not know that the debtor had, prior to the transaction, committed an act as referred to in Section 72(2); and these are the transactions:

A person who has paid money or delivered property to a person subsequently declared Bankrupt, or to a person claiming under an assignment from him, shall be discharged from his obligation, notwithstanding anything in this Ordinance, if he did so before the date on which the receiving Order was actually made, without knowledge that a Bankruptcy petition had been filed, and in all cases in the ordinary course of business or in good faith in every other respect.

Undischarged Bankrupt

Where it becomes known to a banker that an account holder with him is an undischarged Bankrupt, he shall — unless satisfied that the account is held on behalf of another person — immediately notify the Trustee or the Official Receiver of the existence of the account, and thereafter shall not pay any money from that account except pursuant to an Order of the Court or pursuant to the instructions of the Trustee, unless one month has elapsed from the date of the notification and no instructions have been received from the Trustee.

The Trustee shall take into his possession, as soon as practicable, the books and documents of the Bankrupt and all other assets of the Bankrupt capable of manual delivery, and no person shall have the right to prevent the Official Receiver or the Trustee from holding the account books belonging to the Bankrupt, or to claim a lien over them as against the Official Receiver or the Trustee.

Delivered

Subject to the provisions of this Ordinance with respect to property acquired by a Bankrupt after the declaration, the agent of the Bankrupt, including his treasurer, employee, banker, and attorney, shall pay and deliver to the Trustee all money and securities in his possession or control by virtue of his status as agent that he is not entitled by law to retain as against the Bankrupt or the Trustee; failure to do so shall render him guilty of an offence under this Ordinance.

The Bankrupt

For the purposes of the assets of the Bankrupt, and for the purpose of taking possession of or retaining them, the Trustee shall have the status of a receiver under Chapter E of the Execution Law, 5727-1967, and the Court may, on the application of the Trustee, enforce the taking of possession or the retention.

Assets in Execution

Where among the assets of the Bankrupt there is stock, shares, a share in a vessel within the meaning of the Shipping (Vessels) Law, 5720-1960, or other assets the transfer of which is effected by registration in the books of a Company, office, or person, the Trustee shall be entitled to transfer the asset to the same extent as the Bankrupt would have been entitled to do so had he not become Bankrupt.

By Registration

Where among the assets of the Bankrupt there are claims, they shall be deemed to have been duly assigned to the Trustee.

Any person may, by Order of the Court, seize from the assets of a Bankrupt, or from the assets of a debtor against whom a receiving Order has been made, any asset in the custody or possession of the Bankrupt or 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 debtor where they are alleged to be found, or any building or receptacle of theirs in which an asset of theirs is alleged to be found; where the Court is satisfied that such an asset 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 therein.

Bankrupt

Where the Official Receiver or the Trustee has seized an asset that was in the possession or on the premises of a debtor against whom a receiving Order was made, or has done anything in respect of an asset without knowing that another person has a claim to it, and it is subsequently proved that on the date of the receiving Order the asset did not belong to the debtor, the Official Receiver or the Trustee shall not be personally liable for any damage caused to the claimant of the asset as a result of the seizure or the act, or for the costs of proceedings taken to establish the claim to the asset, unless the Court is of the opinion that there was negligence in the handling of the asset on the part of the Official Receiver or the Trustee.

The State that became Bankrupt

Of the Bankrupt

Where the Bankrupt receives a salary or income other than as referred to in Section 110, or is entitled to reduced pay, a pension, or compensation from the State, the Court shall, from time to time and on the application of the Trustee, make such Order as it deems just for payment to the Trustee of such payments or part thereof, for use in such manner as the Court shall direct.

By virtue of Discharge

A discharge Order shall automatically discharge any Order made under Sections 110 or 111, unless an express Order is made to continue the payments.

Until the appointment of a Trustee the Official Receiver shall be Trustee for the purposes of this Ordinance, and immediately upon the making of a declaration against a debtor the assets of the Bankrupt shall vest in the Trustee, and upon the appointment of a Trustee they shall pass and vest forthwith in the appointed Trustee.

Registration

The assets of the Bankrupt shall pass and vest from Trustee to the Trustee holding office at the relevant time, without the need for a conveyance, and for the purposes of any enactment requiring registration of transfers of assets, the certificate of appointment of a Trustee shall be deemed a transfer of assets and may accordingly be registered; where the Official Receiver is the Trustee, the receiving Order shall be deemed the certificate of appointment and no registration or recording shall be required.

Encumbered

From the date of the disclaimer, all rights, interests, and liabilities of the Bankrupt and of his assets in the disclaimed property shall cease, and the Trustee shall be discharged from all personal liability in respect of the property from the date 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 assets and the Trustee from liability.

Lease of Real Property

511(3)

Where a trustee is required in writing by an interested party in an onerous asset to decide whether to disclaim the asset or not, and within twenty-eight days from the date of receipt of the demand, or such longer period as the Court may have permitted, the trustee has not given notice whether he disclaims or does not disclaim — he shall no longer be entitled to disclaim, and if the asset was a Contract it shall be deemed to have been adopted by him.

Regarding Disclaimer

511(4)

The Court may, upon the application of a person entitled or liable under a Contract with the bankrupt as against the trustee, 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 for any other matter as it sees fit, and damages awarded as aforesaid shall constitute a provable debt in Bankruptcy for the applicant.

Disclaimer

The Official Receiver acting as trustee, by reason of the trustee having been released, transferred, resigned or deceased, may disclaim an asset that may be disclaimed under Sections 115 to 120, notwithstanding that the time prescribed therein for disclaimer has elapsed; however, he may exercise this power only within twelve months after becoming trustee as aforesaid, or after he became aware of the existence of the asset, whichever is the later.

A person aggrieved by a disclaimer under Sections 115 to 121 shall be deemed to be a creditor of the bankrupt to the extent of the damage suffered and shall accordingly have a provable debt in the Bankruptcy.

Regarding Disclaimer

662 Book of Laws 34 28 Elul 5740 — 09.09.1980

Restriction in Respect of Copyright

Where the assets of a bankrupt include a copyright or any interest therein, and the bankrupt is thereby liable to pay the author royalties or a share of profits —

To Administer Assets

Subject to the provisions of this Ordinance, the trustee may —

Requiring Consent

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

To the Bankrupt

To Administer Assets

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

Bankrupt

For Maintenance

551a

Inspection of Pledged Goods

Dividends

591

664 Book of Laws 34 28 Elul 5740 — 09.09.1980

Joint and Separate

601

Where joint and separate assets are being administered together —

Dividend

611

Rights of Creditor

Whose Debt Has Not Been Admitted

All moneys in the hands of the trustee shall be distributed as a dividend, but in computing and distributing it the trustee shall take into account —

Interest on Debts

631

A creditor whose debt has not been admitted until after one or more dividends have been declared shall be entitled to receive, out of the money for the time being in the hands of the trustee, all dividends he has not received, and this before such money is applied in payment of any future dividend; but the distribution of a dividend declared before his debt was admitted shall not be disturbed by reason only of his not having participated therein.

665 Book of Laws 34 28 Elul 5740 — 09.09.1980

Where the trustee refuses to pay a dividend, the Court may Order him to pay it, and also to pay out of his own pocket interest thereon for the period during which it was not paid and the costs of the application; however, no cause of action shall lie against the trustee in respect of a dividend otherwise than under this Ordinance.

After payment of all amounts due to the creditors, together with interest or linkage differentials or linkage differentials and interest, within the meaning of the Interest and Price Linkage Law, 5721-1961, up to the date of payment, and all costs of the proceedings arising from the Bankruptcy petition — the balance shall be paid to the bankrupt.

Bankrupt's Right to Balance

Official Receivers and Deputies

With respect to the debtor, the Official Receiver shall —

With respect to the assets of the debtor, the Official Receiver shall —

In performing the Official Receiver's functions as interim receiver or administrator —

Every Official Receiver shall submit reports to such person as the Minister may direct, and shall pay all moneys and deal with all security as the Minister may direct.