CHAPTER 82
BANKRUPTCY ACT

Arrangement of Sections

   Section

PART I
PRELIMINARY

   1.   Short title

   2.   Interpretation

PART II
PROCEEDINGS FROM ACT OF BANKRUPTCY TO DISCHARGE

ACTS OF BANKRUPTCY

   3.   Acts of bankruptcy

   4.   Bankruptcy notices

RECEIVING ORDER

   5.   Jurisdiction to make receiving order

   6.   Conditions on which creditor may petition

   7.   Proceedings and order on creditor’s petition

   8.   Debtor’s petition and order thereon

   9.   Effect of receiving order

   10.   Power to appoint interim receiver

   11.   Power to stay pending proceedings

   12.   Power to appoint special manager

   13.   Advertisement of receiving order

   14.   Power to rescind receiving order in certain cases

PROCEEDINGS CONSEQUENT ON ORDER

   15.   First and other meetings of creditors

   16.   Debtor’s statement of affairs

PUBLIC EXAMINATION OF DEBTOR

   17.   Public examination of debtor

COMPOSITION OR SCHEME OF ARRANGEMENT

   18.   Compositions and schemes of arrangement

   19.   Effect of composition or scheme

ADJUDICATION OF BANKRUPTCY

   20.   Adjudication of bankruptcy

   21.   Appointment of trustee

   22.   Committee of inspection

CONTROL OVER PERSON AND PROPERTY OF DEBTOR

   23.   Duties of debtor as to discovery and realisation of property

   24.   Address and certain particulars to be furnished

   25.   Arrest of debtor under certain circumstances

   26.   Re-direction of debtor’s letters

   27.   Inquiry as to debtor’s conduct, dealings and property

   28.   Discharge of bankrupt

   29.   Fraudulent settlements

   30.   Effect of order of discharge

   31.   Power for Court to annul adjudication in certain cases

   32.   Bankrupt not to act as director or manager of company or to manage business with relative

PART III
ADMINISTRATION OF PROPERTY

PROOF OF DEBTS

   33.   Description of debts provable in bankruptcy

   34.   Mutual credit and set-off

   35.   Rules as to proof of debts

   36.   Priority of debts

   37.   Preferential claim in case of apprenticeship

   38.   Landlord’s power of distress in case of bankruptcy

   39.   Postponement of claims

PROPERTY AVAILABLE FOR PAYMENT OF DEBTS

   40.   Relation back of trustee’s title

   41.   Description of bankrupt’s property divisible amongst creditors

   42.   Provisions as to second bankruptcy

EFFECT OF BANKRUPTCY ON ANTECEDENT AND OTHER TRANSACTIONS

   43.   Restriction of rights of creditor under execution or attachment

   44.   Duties of sheriff as to goods taken in execution

   45.   Avoidance of certain settlements

   46.   Avoidance of general assignments of book debts unless registered

   47.   Avoidance of preference in certain cases

   48.   Protection of bona fide transactions without notice

   49.   Validity of certain payments to bankrupt and assignee

   50.   Recovery of property transferred without knowledge of receiving order

   51.   Dealings with undischarged bankrupt

REALISATION OF PROPERTY

   52.   Possession of property by trustee

   53.   Seizure of property of bankrupt

   54.   Appropriation of portion of salary or wages to creditors

   55.   Vesting and transfer of property

   56.   Disclaimer of onerous property

   57.   Powers of trustee to deal with property

   58.   Powers exercisable by trustee with permission of committee of inspection

   59.   Power to allow bankrupt to manage property

   60.   Allowance to bankrupt for maintenance or service

   61.   Right of trustee to inspect goods pawned, etc.

   62.   Limitation of trustee’s powers in relation to copyright

   63.   Protection of official receiver and trustees from personal liability in certain cases

DISTRIBUTION OF PROPERTY

   64.   Declaration and distribution of dividends

   65.   Joint and separate dividends

   66.   Provision for creditors residing at a distance, etc.

   67.   Right of creditor who has not proved debt before declaration of a dividend

   68.   Interest on debts

   69.   No action for dividend

   70.   Right of bankrupt to surplus

PART IV
OFFICIAL RECEIVER AND STAFF

   71.   Appointment of official receiver and assistant official receivers

   72.   Appointment of acting and deputy official receiver

   73.   Status of official receiver

   74.   Duties of official receiver as regards debtor’s conduct

   75.   Duties of official receiver as regards debtor’s estate

PART V
TRUSTEES IN BANKRUPTCY

OFFICIAL NAME

   76.   Official name of trustee

APPOINTMENT

   77.   Power to appoint joint or successive trustees

   78.   Proceedings in case of vacancy in office of trustee

CONTROL OVER TRUSTEE

   79.   Discretionary powers of trustee and control thereof

   80.   Appeal to Court against trustee or official receiver

   81.   Control of official receiver over trustees

REMUNERATION AND COSTS

   82.   Remuneration of trustee

   83.   Allowance and taxation of costs

RECEIPTS, PAYMENTS, ACCOUNTS, AUDIT

   84.   Trustee to furnish list of creditors

   85.   Trustee to furnish statement of accounts

   86.   Books to be kept by trustee

   87.   Annual statement of proceedings

   88.   Trustee not to pay into private account

   89.   Bankruptcy Estates Account

   90.   Investment of surplus funds

   91.   Audit of trustee’s accounts Vacation of Office by Trustee Section

   92.   Release of trustee

   93.   Office of trustee vacated by insolvency

   94.   Removal of trustee

PART VI
CONSTITUTION, PROCEDURE AND POWERS OF COURT JURISDICTION

   95.   Jurisdiction in bankruptcy

   96.   Judge may exercise his powers in chambers

   97.   Jurisdiction in bankruptcy of registrar

   98.   General powers of bankruptcy Courts

   99.   Power to make receiving order in lieu of committal order

APPEALS

   100.   Appeals in bankruptcy

PROCEDURE

   101.   Discretionary powers of Court

   102.   Consolidation of petitions

   103.   Power to change carriage of proceedings

   104.   Continuance of proceedings on death of debtor

   105.   Power to stay proceedings

   106.   Power to present petition against one partner

   107.   Power to dismiss petition against some respondents only

   108.   Property of partners to vest in same trustee

   109.   Actions by trustee and bankrupt’s partners

   110.   Actions on joint contracts

   111.   Proceedings in partnership name

ORDERS AND WARRANTS OF COURT

   112.   Courts to be auxiliary to other Commonwealth Courts

   113.   Commitment to prison

PART VII
SUPPLEMENT PROVISIONS

APPLICATION OF ACT

   114.   Exclusions of companies

   115.   Limited partnerships

   116.   Privilege of Parliament

   117.   Small estates

   118.   Administration in bankruptcy of estate of person dying insolvent

GENERAL RULES

   119.   Power to make general rules Gazette

FEES, REMUNERATION AND AUDIT

   120.   Fees and percentages

   121.   Remuneration

   122.   Audit of accounts of official receiver

EVIDENCE

   123.   Gazette to be evidence

   124.   Evidence of proceedings at meetings of creditors

   125.   Evidence of proceedings in bankruptcy

   126.   Swearing of affidavits

   127.   Death of debtor or witness

   128.   Certificate of appointment of trustee

   129.   Certificate of acts of official receiver

MISCELLANEOUS

   130.   Computation of time

   131.   Service of notices

   132.   Formal defects not to invalidate proceedings

   133.   Repealed by Act 17 of 1994

   134.   Acting of corporations, partners, etc.

   135.   Certain provisions to bind the State

UNCLAIMED DIVIDENDS AND INDIVISIBLE BALANCES

   136.   Unclaimed and undistributed dividends or funds

   137.   Indivisible balances

PART VIII
BANKRUPTCY OFFENCES

   138.   Fraudulent debtors

   139.   Undischarged bankrupt obtaining credit

   140.   Frauds by bankrupts, etc.

   141.   Bankrupt guilty of gambling, etc.

   142.   Bankrupt failing to keep proper accounts

   143.   Bankrupt absconding with property

   144.   False claim, etc.

   145.   Criminal liability after discharge or composition

   146.   General penalty

   147.   Form of charge

   148.   Evidence as to frauds by directors and officers of corporations or companies

PART IX
PROVISIONS FOR RECIPROCITY WITH OTHER COUNTRIES

   149.   Declaration of reciprocating countries and Courts

   150.   Effect of receiving order, etc., made by reciprocating Court against debtor with property in Zambia

   151.   Vesting of bankruptcy’s property in trustee appointed in reciprocating country

   152.   Powers of official receiver, etc., appointed in reciprocating country

   153.   Official receiver to act as agent of official receiver, etc., of reciprocating country

   154.   Mode of requesting official receiver to act as agent

   155.   Duties of official receiver acting as agent

   156.   Transmission of proofs of debt

   157.   Power of Court to make orders under sections 11 and 25

   158.   Enforcement of warrants of reciprocating Court

   159.   Limitation on powers of Court to entertain proceedings

   160.   Concurrent bankruptcies

   161.   Power of official receiver, etc., to require official receiver in reciprocating country to act as his agent

   162.   Power to make rules under Part IX

PART X
REPEALS

   163.   Repeals and savings

      FIRST SCHEDULE

      SECOND SCHEDULE

      THIRD SCHEDULE

AN ACT

to make provision for the administration in bankruptcy of the estates of debtors; to make provision for punishment of offences committed by debtors; to provide for reciprocity in bankruptcy proceedings between Zambia and other countries; and to provide for matters incidental to and consequential upon the foregoing.

[14th April, 1967]

Act 27 of 1967,

Act 13 of 1994,

Act 17 of 1994.

PART I
PRELIMINARY

1.   Short title

This Act may be cited as the Bankruptcy Act.

2.   Interpretation

In this Act, unless the context otherwise requires—

“affidavit” includes a statutory declaration, affirmation, and attestation on honour;

“available act of bankruptcy” means any act of bankruptcy available for a bankruptcy petition at the date of the presentation of the petition on which the receiving order is made;

“the Court” means the High Court;

“debt provable in bankruptcy” or “provable debt” includes any debt or liability by this Act made provable in bankruptcy;

“Gazetted” means published in the Gazette;

“general rules” and “rules” include forms;

“goods” include all chattels personal;

“local bank” means any bank in Zambia;

“oath” includes affirmation, declaration, and attestation on honour;

“ordinary resolution” means a resolution decided by a majority in value of the creditors present, personally or by proxy, at a meeting of creditors and voting on the resolution;

“prescribed” means prescribed by general rules within the meaning of this Act;

“property” includes money, goods, things in action, land, and every description of property whether real or personal and whether situate in Zambia or elsewhere; and also obligations, easements, and every description of estate, interest and profit, present or future, vested or contingent, arising out of or incident to property as herein defined;

“reciprocating country” means any country declared a reciprocating country under section 149;

“reciprocating Court” means a Court having jurisdiction in bankruptcy or insolvency in a reciprocating country;

“relative by consanguinity or affinity” means a husband, wife, parent, child, grandparent, grandchild, brother, sister, uncle, aunt, nephew, niece, cousin and shall include relationship by adoption and whether legitimate or illegitimate and on the half-blood as well as of the whole blood and any person who is married to any of the foregoing;

“resolution” means ordinary resolution;

“secured creditor” means a person holding a mortgage charge or lien on the property of the debtor, or any part thereof, as a security for a debt due to him from the debtor;

“sheriff” includes any officer charged with the execution of a writ or other process;

“special resolution” means a resolution decided by a majority in number and three-fourths in value of the creditors present, personally or by proxy, at a meeting of creditors and voting on the resolution;

“trustee” means the trustee in bankruptcy of a debtor’s estate.

PART II
PROCEEDINGS FROM ACT OF BANKRUPTCY TO DISCHARGE

ACTS OF BANKRUPTCY

3.   Acts of Bankruptcy

   (1) A debtor commits an act of bankruptcy in each of the following cases—

      (a)   if in Zambia or elsewhere he makes a conveyance or assignment of his property to a trustee or trustees for the benefit of his creditors generally;

      (b)   if in Zambia or elsewhere he makes a fraudulent conveyance, gift, delivery, or transfer of his property, or of any part thereof;

      (c)   if in Zambia or elsewhere he makes any conveyance or transfer of his property, or of any part thereof, or creates any charge thereon, which would under this or any other Act be void as a fraudulent preference if he were adjudged bankrupt;

      (d)   if with intent to defeat or delay his creditors he does any of the following things, namely, departs out of Zambia, or being out of Zambia remains out of Zambia, or departs from his dwelling-house, or otherwise absents himself, or begins to keep house;

      (e)   if execution against him has been levied by seizure of his goods under process in an action in any court, or in any civil proceedings in the court, and the goods have been either sold or held by the sheriff for twenty-one days:

Provided that, where an interpleader summons has been taken out in regard to the goods seized, the time elapsing between the date at which such summons is taken out and the date at which the proceedings on such summons are finally disposed of, settled, or abandoned, shall not be taken into account in calculating such period of twenty-one days;

      (f)   if he files in the Court a declaration of his inability to pay his debts or presents a bankruptcy petition against himself;

      (g)   if a creditor has obtained a final judgment or final order against him for any amount, and, execution thereon not having been stayed, has served on him in Zambia, or, by leave of the Court, elsewhere, a bankruptcy notice under this Act, and he does not, within seven days after service of the notice, in case the service is effected in Zambia, and in case the service is effected elsewhere, then within the time limited in that behalf by the order giving leave to effect the service, either comply with the requirements of the notice or satisfy the Court that he has a counterclaim, set-off or cross demand which equals or exceeds the amount of the judgment debt or sum ordered to be paid, and which he could not set up in the action in which the judgment was obtained, or the proceedings in which the order was obtained. For the purposes of this paragraph and of section 4, any person who is, for the time being, entitled to enforce a final judgment or final order, shall be deemed to be a creditor who has obtained a final judgment or final order;

      (h)   if the debtor gives notice to any of his creditors that he has suspended, or that he is about to suspend, payment of his debts.

   (2) In this Act, “a debtor”, unless the context otherwise requires, includes any person, whether a Zambian citizen or not, who at the time when any act of bankruptcy was committed by him—

      (a)   was personally present in Zambia; or

      (b)   ordinarily resided or had a place of residence in Zambia; or

      (c)   was carrying on business in Zambia, personally, or by means of an agent or manager; or

      (d)   was a member of a firm or partnership which carried on business in Zambia;

and, for the purposes of Part IX, includes a person against whom bankruptcy proceedings have been instituted in a reciprocating country and who has property in Zambia.

4.   Bankruptcy notices

A bankruptcy notice under this Act shall be in the prescribed form, and shall require the debtor to pay the judgment debt or sum ordered to be paid in accordance with the terms of the judgment or order, or to secure or compound for it to the satisfaction of the creditor or the Court, and shall state the consequences of non-compliance with the notice, and shall be served in the prescribed manner:

Provided that a bankruptcy notice—

      (i)   may specify an agent to act on behalf of the creditor in respect of any payment or other thing required by the notice to be made to, or done to the satisfaction of, the creditor;

      (ii)   shall not be invalidated by reason only that the sum specified in the notice as the amount due exceeds the amount actually due, unless the debtor within the time allowed for payment gives notice to the creditor that he disputes the validity of the notice on the ground of such misstatement; but, if the debtor does not give such notice, he shall be deemed to have complied with the bankruptcy notice if within the time allowed he takes such steps as would have constituted a compliance with the notice had the actual amount due been correctly specified therein.

RECEIVING ORDER

5.   Jurisdiction to make receiving order

Subject to the conditions hereinafter specified, if a debtor commits an act of bankruptcy the Court may, on a bankruptcy petition being presented either by a creditor or by the debtor, make an order, in this Act called a receiving order, for the protection of the estate.

6.   Conditions on which creditor may petition

   (1) A creditor shall not be entitled to present a bankruptcy petition against a debtor unless—

      (a)   the debt owing by the debtor to the petitioning creditor, or, if two or more creditors join in the petition, the aggregate amount of debts owing to the several petitioning creditors, amounts to ten ngwee; and

      (b)   the debt is a liquidated sum, payable either immediately or at some certain future time; and

      (c)   the act of bankruptcy on which the petition is grounded has occurred within three months before the presentation of the petition; and

      (d)   the debtor is domiciled in Zambia, or within a year before the date of the presentation of the petition has ordinarily resided, or had a dwelling-house or place of business in Zambia, or has carried on business in Zambia personally or by an agent or manager, or within the said period has been a member of a firm or partnership of persons which has carried on business in Zambia by means of a partner or partners, or an agent or manager;

nor, where a deed of arrangement has been executed, shall a creditor be entitled to present a bankruptcy petition founded on the execution of the deed, or any other act committed by the debtor in the course or for the purpose of the proceedings preliminary to the execution of the deed, in cases where he is prohibited from so doing by the law for the time being in force relating to deeds of arrangement.

   (2) If the petitioning creditor is a secured creditor, he must in his petition either state that he is willing to give up his security for the benefit of the creditors in the event of the debtor being adjudged bankrupt, or give an estimate of the value of his security. In the latter case, he may be admitted as a petitioning creditor to the extent of the balance of the debt due to him, after deducting the value so estimated in the same manner as if he were an unsecured creditor.

7.   Proceedings and order on creditor’s petition

   (1) A creditor’s petition shall be verified by affidavit of the creditor, or of some person on his behalf having knowledge of the facts and served in the prescribed manner.

   (2) At the hearing the Court shall require proof of the debt of the petitioning creditor, of the service of the petition, and of the act of bankruptcy, or, if more than one act of bankruptcy is alleged in the petition, of one of the alleged acts of bankruptcy, and if satisfied with the proof, may make a receiving order in pursuance of the petition.

   (3) If the Court is not satisfied with the proof of the petitioning creditor’s debt, or of the act of bankruptcy, or of the service of the petition, or is satisfied by the debtor that he is able to pay his debts or that for other sufficient cause no order ought to be made, the Court may dismiss the petition.

   (4) When the act of bankruptcy relied on is non-compliance with a bankruptcy notice to pay, secure, or compound for a judgment debt, or sum ordered to be paid, the Court may, if it thinks fit, stay or dismiss the petition on the ground that an appeal is pending from the judgment or order.

   (5) Where the debtor appears on the petition and denies that he is indebted to the petitioner, or that he is indebted to such an amount as would justify the petitioner in presenting a petition against him, the Court, on such security (if any) being given as the Court may require for payment to the petitioner of any debt which may be established against him in due course of law, and of the costs of establishing the debt, may, instead of dismissing the petition, stay all proceedings on the petition for such time as may be required for trial of the question relating to the debt.

   (6) Where the proceedings are stayed, the Court may, if by reason of the delay caused by the stay of proceedings or for any other cause it thinks just, make a receiving order on the petition of some other creditor, and shall thereupon dismiss, on such terms as it thinks just, the petition in which proceedings have been stayed as aforesaid.

   (7) A creditor’s petition shall not, after presentment, be withdrawn without the leave of the Court.

8.   Debtor’s petition and order thereon

   (1) A debtor’s petition shall allege that the debtor is unable to pay his debts, and the presentation thereof shall be deemed an act of bankruptcy without the previous filing by the debtor of any declaration of inability to pay his debts, and the Court shall thereupon make a receiving order:

Provided that such order shall be refused unless the debtor has filed with the official receiver his statement of affairs prepared in accordance with the provisions of section 16.

   (2) A debtor’s petition shall not, after presentment, be withdrawn without the leave of the Court.

9.   Effect of receiving order

   (1) On the making of a receiving order, the official receiver shall be thereby constituted receiver of the property of the debtor, and thereafter, except as directed by this Act, no creditor to whom the debtor is indebted in respect of any debt provable in bankruptcy shall have any remedy against the property or person of the debtor in respect of the debt, or shall commence any action or other legal proceedings, unless with the leave of the Court and on such terms as the Court may impose.

   (2) This section shall not affect the power of any secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been passed.

10.   Power to appoint interim receiver

The Court may, if it is shown to be necessary for the protection of the estate, at any time after the presentation of a bankruptcy petition, and before a receiving order is made, appoint the official receiver to be interim receiver of the property of the debtor, or of any part thereof, and direct him to take immediate possession thereof or of any part thereof.

11.   Power to stay pending proceedings

   (1) The Court may, at any time after the presentation of a bankruptcy petition, stay any action, execution or other legal process against the property or person of the debtor, and any Court in which proceedings are pending against a debtor may, on proof that a bankruptcy petition has been presented by or against the debtor, either stay the proceedings or allow them to continue on such terms as it may think just.

   (2) Where the Court makes an order staying any action or proceedings, or staying proceedings generally, the order may be served by sending a copy thereof, under the seal of the Court, by post to the address for service of the plaintiff or other party prosecuting such proceeding.

12.   Power to appoint special manager

   (1) The official receiver may, if satisfied that the nature of the debtor’s estate or business or the interests of the creditors generally require the appointment of a special manager of the estate or business, other than the official receiver, appoint a manager thereof accordingly to act until a trustee is appointed, or until the official receiver shall give notice to the manager so appointed terminating his appointment, and with such powers (including any of the powers of a receiver) as may be entrusted to him by the official receiver.

   (2) The special manager shall give such security and account in such manner as the official receiver may direct.

   (3) The special manager shall receive such remuneration, as the official receiver may determine.

13.   Advertisement of receiving order

Notice of every receiving order, stating the name address and description of the debtor, the trading name or names (if any) of the debtor, the date of the order and the date of the petition, shall be Gazetted and advertised in a local paper in the prescribed manner.

14.   Power to rescind receiving order in certain cases

   (1) If in any case where a receiving order has been made on a bankruptcy petition it appears to the Court, upon the application of the official receiver, that the whole indebtedness of the debtor amounts to a sum not exceeding eighty ngwee, the Court, after such inquiry as it may think fit, may rescind the receiving order and annul the adjudication order, if made, and may make a composition order having the same effect as a composition order made by a subordinate court under the Subordinate Courts Act.

   (2) If the debtor shall not comply with the terms of a composition order made under this section, the subordinate court administering his estate may, if it thinks fit, annul the composition order but without prejudice to the validity of any payment duly made, or thing done, under or in pursuance of the composition order, and the Court having jurisdiction in bankruptcy shall thereupon make a receiving order against the debtor and adjudge him bankrupt. Where a debtor has been adjudged bankrupt under this sub-section, any debt provable in other respects, which has been contracted before the adjudication, shall be provable in the bankruptcy.

PROCEEDINGS CONSEQUENT ON ORDER

15.   First and other meetings of creditors

   (1) As soon as may be after the making of a receiving order against a debtor, a general meeting of his creditors (in this Act referred to as the first meeting of creditors) shall be held for the purpose of considering whether a proposal for a composition or scheme of arrangement shall be accepted, and generally as to the mode of dealing with the debtor’s property.

   (2) With respect to the summoning of and proceedings at the first and other meetings of creditors, the rules in the First Schedule shall be observed.

16.   Debtor’s statement of affairs

   (1) The debtor shall make out and submit to the official receiver a statement of and in relation to his affairs in the prescribed form, verified by affidavit, and showing the particulars of the debtor’s assets, debts and liabilities, the names, residences and occupations of his creditors, the securities held by them respectively, the dates when the securities were respectively given, and such further or other information as may be prescribed or as the official receiver may require.

   (2) The statement shall be so submitted—

      (a)   before, but not more than fourteen days before, the date of the presentation of the debtor’s petition, and upon such submission, the official receiver shall certify to the Court under his hand that such statement has been duly submitted to him;

      (b)   within fourteen days of the date of the receiving order made on the petition of a creditor, but the official receiver may, for special reasons, extend the time.

   (3) In the case of a creditor’s petition, if the debtor fails without reasonable cause to comply with the requirements of this section, he shall be guilty of a misdemeanour and the debtor shall, in addition to any other punishment to which he may be liable, be guilty of contempt of Court and be punishable accordingly.

   (4) Any person stating himself in writing to be a creditor of the bankrupt may, personally or by agent, inspect the statement at all reasonable times, and take any copy thereof or extract therefrom, but any person untruthfully so stating himself to be a creditor shall be guilty of contempt of Court, and shall be punishable accordingly on the application of the trustee or official receiver.

PUBLIC EXAMINATION OF DEBTOR

17.   Public examination of debtor

   (1) Where the Court makes a receiving order, it shall, save as in this Act provided, hold a public sitting, on a day to be appointed by the Court, for the examination of the debtor, and the debtor shall attend thereat, and shall be examined as to his conduct, dealings and property.

   (2) The examination shall be held as soon as conveniently may be after the expiration of the time for the submission of the debtor’s statement of affairs.

   (3) The Court may adjourn the examination for such periods of time or generally, as the Court shall think most convenient.

   (4) The Court may adjourn the public examination sine die and may make such further order as it thinks fit, where—

      (a)   it is of opinion that the debtor is not making a full and true disclosure of his affairs;

      (b)   the debtor, without showing any sufficient reason, has failed to attend the public examination or any adjournment thereof, or to comply with any order of the Court in relation to his accounts, conduct, dealings or property.

   (5) Any creditor who has tendered a proof, or his representative authorised in writing, may question the debtor concerning his affairs and the causes of his failure.

   (6) The official receiver shall take part in the examination of the debtor, and for the purpose thereof may employ a legal practitioner if he so desires.

   (7) If a trustee is appointed before the conclusion of the examination, he may take part therein.

   (8) The Court may put such questions to the debtor as it may think expedient.

   (9) The legal practitioner of the debtor may attend the examination, but shall not question the debtor, or address the Court.

   (10) The debtor shall be examined upon oath, and it shall be his duty to answer all such questions as the Court may put or allow to be put to him. Such notes of the examination as the Court thinks proper shall be taken down in writing, and shall be read over either to or by the debtor and signed by him, and may thereafter, save as in this Act provided, be used in evidence against him; and they shall also be open to the inspection of any creditor at all reasonable times.

   (11) If a debtor, on being examined before the Court, refuses to answer or does not answer to the satisfaction of the Court any questions which it may allow to be put, such debtor shall be guilty of contempt of Court, and be punishable accordingly.

   (12) When the Court is of the opinion that the affairs of the debtor have been sufficiently investigated, it shall by order declare that his examination is concluded; but notwithstanding such order the Court, on the application of the official receiver, may order a further examination of the debtor and such further examination shall be deemed to be the resumption of an adjourned examination.

   (13) Where the debtor is a mentally disordered person or suffers from any such mental or physical affliction or disability as in the opinion of the Court makes him unfit to attend his public examination, the Court may make an order dispensing with such examination, or directing that the debtor be examined on such terms, in such manner, and at such place as the Court thinks expedient.

COMPOSITION OR SCHEME OF ARRANGEMENT

18.   Compositions and schemes of arrangement

   (1) Where a debtor either before or after he has been adjudged bankrupt intends to make a proposal for a composition in satisfaction of his debts, or a proposal for a scheme of arrangement of his affairs, he shall lodge with the official receiver a proposal in writing, signed by him, embodying the terms of the composition or scheme which he is desirous of submitting for the consideration of his creditors, and setting out particulars of any sureties or securities proposed.

   (2) If, in the opinion of the official receiver, the debtor’s proposal is not calculated to benefit the general body of creditors or has been lodged with the object of preventing a full investigation of the debtor’s conduct or affairs or is otherwise prejudicial to the administration of the debtor’s estate in accordance with the provisions of this Act, the official receiver may reject the debtor’s proposal, but in every other case the official receiver shall hold a meeting of creditors, and send to each creditor, before the meeting, a copy of the debtor’s proposal with a report thereon; and if, at that meeting, a majority in number and three-fourths in value of all the creditors who have proved resolve to accept the proposal, it shall be deemed to be duly accepted by the creditors, and, when approved by the Court, shall be binding on all the creditors.

   (3) The debtor may at the meeting amend the terms of his proposal, if the amendment is, in the opinion of the official receiver, calculated to benefit the general body of creditors.

   (4) Any creditor who has proved his debt may assent to or dissent from the proposal by a letter, in the prescribed form, addressed to the official receiver so as to be received by him not later than the day preceding the meeting, and any such assent or dissent shall have effect as if the creditor had been present and had voted at the meeting.

   (5) The debtor or the official receiver may, after the proposal has been accepted by the creditors, apply to the Court to approve it, and notice of the time appointed for hearing the application shall be given to each creditor who has proved.

   (6) Every debtor whose proposal has been accepted by the creditors shall be examined as provided by section 17, and the application to the Court to approve the proposal shall not be heard until after the conclusion of such examination.

   (7) Any creditor who has proved may be heard by the Court in opposition to the application, notwithstanding that he may at the meeting of creditors have voted for the acceptance of the proposal.

   (8) For the purpose of approving a composition or scheme by joint debtors, the Court may, if it thinks fit, and on the report of the official receiver that it is expedient so to do, dispense with the public examination of one of the joint debtors if he is unavoidably prevented from attending the examination by illness or is absent from Zambia.

   (9) The Court shall, before approving the proposal, hear a report of the official receiver as to the terms thereof and as to the conduct of the debtor, and any objections which may be made by or on behalf of any creditor.

   (10) If the Court is of opinion that the terms of the proposal are not reasonable, or are not calculated to benefit the general body of creditors, the Court shall refuse to approve the proposal.

   (11) If any facts are proved on proof of which the Court would be required either to suspend or attach conditions to a debtor’s discharge from adjudication in bankruptcy, the Court shall refuse to approve the proposal, unless it provides reasonable security for the payment of not less than twenty-five ngwee in the kwacha on all the unsecured debts provable against the debtor’s estate.

   (12) In any other case the Court may either approve or refuse to approve the proposal.

   (13) If the Court approves the proposal, the approval may be testified by the seal of the Court being attached to the instrument containing the terms of the proposed composition or scheme, or by terms being embodied in an order of the Court.

   (14) A composition or scheme accepted and approved in pursuance of this section shall be binding on all the creditors so far as relates to any debts due to them from the debtor and provable in bankruptcy, but shall not release the debtor from any liability under a judgment against him in an action for seduction, or under an affiliation order, or under a judgment against him as a co-respondent in a matrimonial cause, except to such an extent and under such conditions as the Court expressly orders in respect of such liability.

   (15) If the Court approves the composition or scheme, and if the debtor has been adjudged bankrupt, it may make an order annulling the bankruptcy and vesting the property of the bankrupt in him or in such other person as the Court may appoint on such terms and subject to such conditions, if any, as the Court may declare.

   (16) A certificate of the official receiver that a composition or scheme has been duly accepted and approved shall, in the absence of fraud, be conclusive as to its validity.

   (17) The provisions of a composition on scheme under this section may be enforced by the Court on application by any person interested, and any disobedience of an order of the Court made on the application shall be deemed a contempt of Court.

   (18) If default is made in payment of any installment due in pursuance of the composition or scheme, or if it appears to the Court that the composition or scheme cannot proceed without injustice or undue delay to the creditors or to the debtor, or that the approval of the Court was obtained by fraud, the Court may, if it thinks fit, on the application of the official receiver or the trustee or by any creditor, adjudge the debtor bankrupt, and annul the composition or scheme, but without prejudice to the validity of any sale, disposition or payment duly made, or thing duly done, under or in pursuance of the composition or scheme. Where a debtor is adjudged bankrupt under this sub-section, any debt provable in other respects which has been contracted before the adjudication, shall be provable in the bankruptcy.

   (19) If under or in pursuance of a composition or scheme a trustee is appointed to administer the debtor’s property or manage his business, or to distribute the composition, section 27 and Part V shall apply as if the trustee were a trustee in a bankruptcy, and as if the terms “bankruptcy”, “bankrupt”, and “order of adjudication” included respectively a composition or scheme of arrangement, a compounding or arranging debtor, and an order approving the composition or scheme.

   (20) Part III shall, so far as the nature of the case and the terms of the composition or scheme admit, apply thereto, the same interpretation being given to the words “trustee”, “bankruptcy”, “bankrupt”, and “order of adjudication”, as in sub-section (19).

   (21) No composition or scheme shall be approved by the Court which does not provide for the payment in priority to other debts of all debts directed to be so paid in the distribution of the property of a bankrupt.

   (22) The acceptance by a creditor of a composition or scheme shall not release any person who under this Act would not be released by an order of discharge from adjudication in bankruptcy.

19.   Effect of composition or scheme

Notwithstanding the acceptance and approval of a composition or scheme, the composition or scheme shall not be binding on any creditor so far as regards a debt or liability from which, under the provisions of this Act, the debtor would not be released by an order of discharge in bankruptcy, unless the creditor assents to the composition or scheme.

20.   Adjudication of bankruptcy

   (1) At the time of making a receiving order, or at any time thereafter, the Court may, on the application of the debtor himself adjudge him a bankrupt.

   (2) When a receiving order has been made and the official receiver has satisfied the Court that the debtor has absconded or is about to abscond, the Court may forthwith adjudge the debtor bankrupt.

   (3) In every other case when a receiving order has been made, the Court shall make an order adjudging the debtor bankrupt at the expiration of the time prescribed for appealing against the receiving order, if the same has not been rescinded:

Provided that the debtor may, prior to the expiration of such time, apply to the Court, on the ground that he possesses assets sufficient to pay his debts in full, that an order adjudging him bankrupt be not made forthwith, and, if upon such application no order adjudging the debtor bankrupt is then made, the official receiver may apply at any time thereafter that the debtor be adjudged bankrupt, and the Court may thereupon, after hearing a report of the official receiver as to the assets and liabilities of the debtor and as to his conduct, adjudge the debtor bankrupt.

   (4) On the making of an order adjudging the debtor bankrupt, the property of the debtor shall become divisible among his creditors and shall vest in a trustee as by this Act provided.

   (5) Notice of every order adjudging a debtor bankrupt, stating the name, address and description of the bankrupt, the trading name or names (if any) of the bankrupt and the date of the adjudication, shall be Gazetted and advertised in a local paper in the prescribed manner, and the date of the order shall, for the purposes of this Act, be the date of the adjudication.

21.   Appointment of trustee

   (1) When a debtor has been adjudged bankrupt, creditors may by ordinary resolution appoint some fit person, whether a creditor or not, to fill the office of trustee of the property of the bankrupt; or they may resolve to leave his appointment to the committee of inspection hereinafter mentioned. A person shall be deemed not fit to act as trustee of the property of a bankrupt where he has been previously removed from the office of trustee of a bankrupt’s property for misconduct or neglect of duty.

   (2) The person so appointed shall give security in manner prescribed to the satisfaction of the official receiver, and the official receiver, if satisfied with the security, shall certify that his appointment has been duly made, unless he objects to the appointment on the ground that it has not been made in good faith by a majority in value of the creditors voting, or that the person appointed is not fit to act as trustee, or that his connection with or relation to the bankrupt or his estate or any particular creditor makes it difficult for him to act with impartiality in the interests of the creditors generally:

Provided that, where the official receiver makes any such objection he shall, if so requested by a majority in value of the creditors, notify the objection to the Court, and thereupon the Court may decide on its validity.

   (3) The appointment of a trustee shall take effect as from the date of the certificate.

   (4) The official receiver shall be the trustee for the purposes of this Act—

(a)   until a trustee is appointed pursuant to sub-section (1);

(b)   during any vacancy in the office of trustee.

22.   Committee of inspection

   (1) The creditors qualified to vote may, at their first or any subsequent meeting by resolution, appoint a committee of inspection for the purpose of superintending the administration of the bankrupt’s property by the trustee:

Provided that, if the official receiver is the trustee for the purposes of this Act, the appointment of a committee of inspection shall only be made if the official receiver shall have previously consented thereto.

   (2) The committee of inspection shall consist of not more than five nor less than three persons, possessing one or other of the following qualifications—

      (a)   that of being a creditor or holder of a general proxy or general power of attorney from a creditor:

Provided that, no creditor and no holder of a general proxy or general power of attorney from a creditor shall be qualified to act as a member of the committee of inspection until the creditor has proved his debt and the proof has been admitted; or

      (b)   that of being a person to whom a creditor intends to give a general proxy or general power of attorney:

Provided that no such person shall be qualified to act as a member of the committee of inspection until he holds such a proxy or power of attorney, and until the creditor has proved his debt and the proof has been admitted.

   (3) The committee of inspection shall meet at such times as they shall from time to time appoint and, failing such appointment, at least once a month; and the trustee or any member of the committee may also call a meeting of the committee as and when he thinks necessary.

   (4) The committee may act by a majority of their members present at the meeting, but shall not act unless a majority of the committee are present at the meeting.

   (5) Any member of the committee may resign his office by notice in writing signed by him, and delivered to the trustee.

   (6) If a member of the committee becomes bankrupt, or compounds or arranges with his creditors, or is absent from five consecutive meetings of the committee, his office shall thereupon become vacant.

   (7) Any member of the committee may be removed by an ordinary resolution at any meeting of creditors of which seven days, notice has been given stating the object of the meeting.

   (8) On a vacancy occurring in the office of a member of the committee, the trustee shall forthwith summon a meeting of creditors for the purpose of filling the vacancy, and the meeting may by resolution appoint another creditor or other person eligible as above to fill the vacancy.

   (9) The continuing members of the committee, provided there be not less than two such continuing members, may act notwithstanding any vacancy in their body and, where the number of members of the committee of inspection is for the time being less than five, the creditors may increase that number so that it does not exceed five.

   (10) If there be no committee of inspection, any act or thing or any direction or permission by this Act authorised or required to be done or given by the committee may be done or given by the official receiver on the application of the trustee.

CONTROL OVER PERSON AND PROPERTY OF DEBTOR

23.   Duties of debtor as to discovery and realisation of property

   (1) Every debtor against whom a receiving order is made shall attend the first meeting of his creditors, and shall submit to such examination and give such information as the meeting may require:

Provided that, the proceedings at any meeting shall not be invalidated by reason only of the absence of the debtor therefrom.

   (2) He shall give such inventory of his property, such list of his creditors and debtors and of the debts due to and from them respectively, submit to such examination in respect of his property or his creditors, attend such other meetings of his creditors, wait at such times on the official receiver, special manager or trustee, execute such powers of attorney, conveyances, deeds and instruments, and generally do all such acts and things in relation to his property and the distribution of the proceeds amongst his creditors, as may be reasonably required by the official receiver, special manager or trustee, or as may be prescribed by general rules made under this Act, or be directed by the Court by any special order or orders made in reference to any particular case, or made on the occasion of any special application by the official receiver, special manager or trustee or any creditor or person interested.

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