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Ordinance

Bankruptcy Ordinance [New Version]

פקודת פשיטת הרגל [נוסח חדש]

Chapter E: Trustees in Bankruptcy

Division A: Tenure of the Trustee

Official Name of Trustee

144.

The official name of a trustee in Bankruptcy shall be "the trustee of the estate of [name], a bankrupt," and under that name the trustee may, in Israel or elsewhere, hold assets of any description, enter into Contracts, sue and be sued, incur obligations binding upon the trustee and upon successors in office, and do all acts that are necessary or expedient in the performance of the trustee's functions.

Vacancy in Office of Trustee

145.

(a)Where the office of trustee becomes vacant, the creditors at a general meeting may appoint another person in place of the former trustee, in accordance with the procedures prescribed for the appointment of a first trustee.

(b)Upon the application of a creditor, the Official Receiver shall convene a meeting for the purpose of appointing a trustee pursuant to subsection (a).

(c)If within three weeks from the date on which the office of trustee became vacant the creditors have not appointed a person in place of the former trustee, the Official Receiver shall notify the Court accordingly and the Court may appoint a trustee; however, the Court may be requested to appoint a person proposed by the creditors, as referred to in Section 46(b).

(d)For so long as the office of trustee is vacant, the Official Receiver shall act as trustee.

Chapter B: Supervision of the Trustee

146.

In administering the assets of the bankrupt and distributing them among the creditors, the trustee shall have regard to the directions given by the creditors by resolution at a general meeting and to the directions of the committee of inspection; in the event of a conflict between the directions of the general meeting and those of the committee of inspection, the directions of the general meeting shall prevail, all subject to the provisions of this Ordinance.

Directions of the General Meeting and the Committee of Inspection

147.

(a)The trustee may convene general meetings of creditors in order to ascertain their wishes, and shall convene meetings at such times as the creditors may direct by resolution.

(b)Any creditor may, with the consent of creditors holding one-sixth in value of the claims, including the creditor's own claim, at any time request the trustee or the Official Receiver to convene a meeting of creditors, and the trustee or the Official Receiver shall thereupon convene such a meeting within fourteen days; provided that the initiator of the meeting shall deposit with the convenor a sum sufficient to cover the expenses of convening the meeting, which sum shall be refunded from the assets if the creditors or the Court so direct.

Convening of General Meetings

148.

The trustee may apply to the Court, in the prescribed manner, for directions in relation to any matter arising in connection with the Bankruptcy.

Application for Directions

149.

In administering and distributing the assets among the creditors, the trustee shall exercise discretion subject to the provisions of this Ordinance.

Discretion of the Trustee

150.

Where the bankrupt, a creditor, or any other person is aggrieved by any act or decision of the trustee, that person may apply to the Court, and the Court may confirm, annul, or vary the act or decision and may make such Order in the matter as it considers just.

Application to the Court

151.

(a)The Official Receiver shall keep under review the conduct of trustees; where a trustee has not faithfully discharged the trustee's duties or has not duly complied with all obligations imposed by this Ordinance, the Regulations, or otherwise, or where a creditor has filed a complaint with the Official Receiver in that regard, the Official Receiver shall investigate the matter and take such action as the Official Receiver considers expedient.

(b)The Official Receiver may require a trustee to answer any question relating to any Bankruptcy in which the trustee is engaged, and may apply to the Court to examine on oath the trustee or any other person in connection with the Bankruptcy.

(c)The Official Receiver may direct an examination of the books and vouchers of the trustee at the place where they are kept.

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Division C: Remuneration and Expenses

Trustee's Remuneration

152.

(a)Where the creditors have appointed a person to be trustee of a debtor's assets, the remuneration to be received by the trustee shall be fixed by the creditors by ordinary resolution, or by the committee of inspection if the creditors so resolve.

(b)The remuneration shall be paid in the form of a commission or percentage; part of the remuneration shall be calculated by reference to the amount realised by the trustee, after deducting amounts paid to secured creditors out of their security, and part by reference to the amount of the dividend distributed.

(c)The resolution fixing the remuneration shall specify the expenses included therein, and the creditors and the Estate of the bankrupt shall not be liable for the expenses so specified.

(d)If one quarter of the creditors, whether by number or by value of claims, object to the resolution, or if the bankrupt satisfies the Official Receiver that the remuneration is unnecessarily high, the Court shall, upon the application of the Official Receiver, fix the amount of the remuneration.

Trustee Acting Without Remuneration

153.

A trustee acting without remuneration shall be paid out of the Estate of the bankrupt such reasonable expenses as were incurred in connection with the Bankruptcy proceedings, as approved by the creditors with the consent of the committee of inspection or the Official Receiver.

Prohibition on Arrangements Regarding Remuneration

154.

A trustee shall not, under any circumstances, receive from the bankrupt, or from a lawyer, auctioneer, or any other person employed in the Bankruptcy, any gift, remuneration, consideration, or pecuniary or other benefit, other than the remuneration fixed by the creditors and paid from the assets; nor shall the trustee waive any part of the trustee's remuneration, whether as trustee, administrator, or Official Receiver, in favour of the bankrupt, a lawyer, or any other person employed in the Bankruptcy; nor shall the trustee enter into any arrangement under which the trustee would receive or waive any such sum.

Limitation on Payment to Another Person

155.

A trustee or administrator who receives remuneration for those services shall not allow in the trustee's accounts any payment to another person for the performance of those routine functions which, under this Ordinance or the Regulations, the trustee is required to perform personally.

Trustee Who Is a Lawyer

156.

A trustee who is a lawyer may stipulate that the remuneration for services as trustee shall include all professional services rendered by the trustee.

Taxation of Costs

157.

(a)Every account and claim for payment by lawyers, administrators, accountants, auctioneers, brokers, and other persons who are not trustees shall be subject to taxation by the officer prescribed for that purpose (in this Section — the officer), and no payment shall be allowed in the trustee's accounts on the basis thereof unless the taxation has been proved.

(b)Before declaring a dividend, the trustee shall, in timely fashion, request every person referred to in subsection (a) to submit a list of expenses and claims to the officer for taxation; a person who fails to submit the list within seven days of receipt of the request, or within such further time as the Court may allow upon application, shall have the dividend declared and distributed by the trustee without regard to any claim by that person, and the claim shall be void both against the assets and against the trustee personally.

(c)The officer shall not approve accounts and claims before being satisfied that the employment of the persons submitting them, in respect of the matters from which the payments arise, was duly authorised as prescribed prior to their employment, except in urgent cases where it must be shown that there was no unreasonable delay in obtaining the authorisation.

(d)Subject to Appeal to the Court, the officer may in the officer's discretion reduce or disallow any payment or claim that in the officer's opinion is excessive or was incurred improperly or unnecessarily.

List of Creditors

158.

Upon the request of a creditor, the trustee or the Official Receiver shall provide and post to that creditor a list of creditors showing the debt owed to each of them, and shall be entitled to charge for the list 0.25 new agorot per 150 words, plus postage.

List of Creditors

159.

Any creditor may, with the consent of one-sixth of the creditors including himself, demand at any time from the trustee or from the Official Receiver to supply and send to the creditors a financial report as of the date of the demand, and the trustee shall do so, provided that the party making the demand deposits with the trustee or the Official Receiver, as the case may be, a sum sufficient to cover the expenses involved therein, and the sum shall be returned to him out of the assets if the creditors or the court so direct.

Financial Report

160.

The trustee shall keep and maintain, in the prescribed manner, appropriate books, and shall ensure that there are recorded therein entries or minutes of meetings and such other matters as are prescribed, and every creditor may, subject to the supervision of the court, inspect the books personally or through an agent.

Books

161. (a) The trustee shall transmit to the Official Receiver, at the prescribed times and not less than once a year so long as the Bankruptcy continues, a report in the prescribed form and with the prescribed particulars, of the proceedings in the Bankruptcy up to the date of the summary.

(b)The Official Receiver shall cause the reports transmitted to him to be examined, and shall require the trustee to explain any act of misconduct, negligence, or omission appearing to him in the reports or in his accounts or otherwise, and may require the trustee to make good any loss sustained by the bankrupt's assets by reason of such act, negligence, or omission.

The Proceedings

[[(86(2)]]

Annual Report on Particulars

162.

A trustee shall not pay into his private bank account any sum received by him as trustee.

Particulars

Separation from Account

163.

(a)All money received by the trustee shall be paid by him forthwith into a bank account designated by the Minister of Finance; however —

(1)if the committee of inspection considers that, for the purpose of carrying on the debtor's business, for the purpose of obtaining advances, or by reason of the probable amount of the cash balance, it is desirable that the trustee should have an account at a bank not so designated, or has satisfied the Official Receiver that for some other reason it will be for the benefit of the creditors that the trustee should have an account at a bank not so designated, the Official Receiver shall, on the application of the committee of inspection, authorize the trustee to deposit and draw his payments at such other bank as the committee may select;

(2)where the trustee acts without a committee of inspection, the Official Receiver may, if he considers it expedient to do so in special circumstances, authorize the trustee, on his application, to deposit and draw his payments at such other bank as the Official Receiver may direct.

(b)An account of a trustee at a bank not designated shall be opened and maintained in the name of the debtor's assets, and the interest paid on the account shall form part of the assets; deposits into and withdrawals from such account shall be made in the prescribed manner.

Designated Bank:

Deposit of Money

164.

A trustee who retains in his hands for more than ten days, without explanation satisfactory to the Official Receiver, any sum exceeding five shekels or such other amount as the Official Receiver may in a special case have authorized him to retain, shall be liable to pay interest on the excess sum to the bankrupt's assets at the rate fixed for this purpose under the Interest (Rate Variation) Law, 5733-1972; he shall have no right to claim remuneration, he shall be liable to pay any expense occasioned by his default, and the Official Receiver shall be entitled to remove him from office.

Moneys

670 Book of Laws 34 28 Elul 5740 09.09.1980

Closure of Debtor's Bank Account

Removal of Retention

165.

An account held by the debtor at a bank on the date of the making of the Receiving Order shall not be closed before the expiration of seven days from the day fixed for the first meeting of creditors, unless the Official Receiver has directed its closure for the safety of the account or for other sufficient reason, all subject to the Regulations relating to small Bankruptcies under Section 201.

Trustee

Audit of Accounts

166.

(a)Every trustee shall send to the Official Receiver, or to such person as the Official Receiver may direct, at the prescribed times but not less than twice a year during his tenure of office, a report of his receipts and payments as trustee.

(b)The report shall be in the prescribed form, shall be prepared in duplicate, and shall be verified by affidavit in the prescribed form.

(c)The Official Receiver shall cause the report to be audited; for the purposes of the audit the trustee shall supply to the Official Receiver or to such person as the Official Receiver may direct such vouchers and information as may be required, and the Official Receiver may at any time require the production of and inspect any book or account kept by the trustee.

(d)After the audit of the account, copies thereof shall be kept, one by the Official Receiver and one by the court, and each copy shall be open to inspection by any creditor and any interested person.

(e)The Official Receiver shall cause the audited report or a summary thereof to be printed or typewritten, and shall send by post a copy to every creditor.

(f)Where the Official Receiver is acting as trustee, the court shall take his place with respect to every act and appointment which would otherwise have been performed or made by the Official Receiver and with respect to every authorization which would have been required from him, and every document required to be submitted under this section to the Official Receiver shall be submitted by the Official Receiver to the court.

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Division E: Vacation of Office of a Trustee

Release of Trustee

167.

(a)Where a trustee has realized all the assets of the bankrupt, or so much thereof as can, in his opinion, be realized without needlessly protracting the trusteeship, and has declared a final dividend, or has ceased to act by reason of a composition having been approved, or has resigned or been removed from office, the Official Receiver shall, on the application of the trustee, cause a report on his accounts to be prepared, and if he is satisfied that the trustee has fulfilled all his requirements, he shall examine the report and any objection to the release of the trustee lodged by a creditor or other interested person, and shall thereupon grant or withhold the release accordingly.

(b)Where the release of a trustee is withheld, the court may, on the application of a creditor or other interested person, make an order requiring the trustee to make good the consequences of any act or omission on his part.

Effect of Release

168.

An order of the Official Receiver releasing a trustee shall discharge him from all liability in respect of any act done or default made by him in the administration of the bankrupt's affairs or otherwise in relation to his conduct as trustee; but the order may be revoked if it is proved to have been obtained by fraud or by suppression of a material fact.

Official Receiver as Trustee

[[(86(4), (5)]]

Release of Official Receiver

169.

(a)The provisions of Sections 167 and 168 shall apply to the Official Receiver when he is trustee or is acting as trustee; the court shall take his place with respect to every act which he would have been required to perform had he not been the trustee, and every document required to be submitted under those sections to the Official Receiver shall be submitted by the Official Receiver to the court.

(b)Where the Official Receiver has been released under this Chapter, he shall continue to act as trustee in respect of any matter arising thereafter in the administration of the debtor's assets, but his continued acting shall not render him personally liable in respect of any act, omission, or liability occurring before his release.

671 Book of Laws 34 28 Elul 5740 09.09.1980

170.

(a)The release of a trustee otherwise than by reason of resignation or removal from office shall have the effect of a transfer, and from that time the Official Receiver shall become trustee.

(b)Where a trustee has been released and the Official Receiver has become or is acting as trustee, he shall not be personally liable in respect of any act, omission, or liability of a previous trustee.

Released Trustee

171. (a) A trustee against whom a Receiving Order is made shall thereby vacate his office as trustee.

(b)The creditors who appointed a trustee may remove him from office by ordinary resolution at a meeting convened for that purpose of which seven days' notice has been given, and may, at that meeting or at any subsequent meeting, appoint another person to the vacancy so created.

(c)The Official Receiver may remove from office a trustee appointed by creditors if he considers that any one of the following circumstances has arisen, but if the creditors, by ordinary resolution, have expressed their disagreement with the removal, the trustee or the creditors may appeal against the removal to the court; and these are the circumstances:

(1)the trustee has misconducted himself, or is not fulfilling his duties under this Ordinance and the Regulations made thereunder;

(2)the trusteeship is being unnecessarily protracted without anticipated benefit to the creditors;

(3)the trustee is unfit to perform his duties by reason of mental illness, prolonged illness, or prolonged absence;

(4)his connections with the bankrupt or with his assets or with any particular creditor are likely to impede him from acting impartially for the benefit of the creditors generally;

(5)misconduct in any other matter.

Removal of Trustee

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