Asset Adjustment
Bankruptcy Act 1988 (as amended)
Disclaimer of onerous property.
(1872, ss. 97 and 98; 33/1963, s. 290)
F34[56. (1) Subject to subsection (5), where any of the property (other than after- acquired property) of a bankrupt consists of—
(a) any unprofitable contract, or
(b) any other property which—
(i) is unsaleable,
(ii) is not readily saleable for any reason whatsoever (including because the property is subject to any mortgage, charge, lien or other security), or
(iii) gives rise to a liability to pay money or perform any other onerous act,
the Official Assignee, notwithstanding that he has endeavoured to sell or has taken possession of the property or exercised any act of ownership in relation thereto, may, with the leave of the Court and subject to the provisions of this section, by writing signed by him, at any time disclaim the property.]
(2) F35[…]
(3) The disclaimer shall operate to determine, as from the date of disclaimer, the rights, interests and liabilities of the bankrupt and his property in or in respect of the property disclaimed, and shall also discharge the Official Assignee from all personal liability in respect of the property disclaimed as from the date when the property vested in him, but shall not, except so far as is necessary for the purpose of releasing the bankrupt and his property and the Official Assignee from liability, affect the rights or liabilities of any other person.
(4) The Court, before or on granting leave to disclaim, may require the Official Assignee to give such notices to persons interested and impose such terms as a condition of granting leave, and make such other order in the matter as the Court thinks just.
(5) The Official Assignee shall not be entitled to disclaim any property under this section in any case where an application in writing has been made to him by any persons interested in the property requiring him to decide whether he will or will not disclaim, and the Official Assignee has not, within a period of twenty-eight days after the receipt of the application or such further period as may be allowed by the Court, given notice to the applicant that he intends to apply to the Court for leave to disclaim; and, in the case of a contract, if the Official Assignee, after such application as aforesaid, does not within the said period or extended period disclaim the contract, he shall be deemed to have adopted it.
(6) The Court may, on the application of any person who is, as against the Official Assignee, entitled to the benefit or subject to the burden of a contract made with the bankrupt, make an order rescinding the contract on such terms as to payment by or to either party of damages for the non-performance of the contract, or otherwise as the Court thinks just, and any damages payable under the order to any such person shall be deemed to be a debt proved and admitted in the bankruptcy.
(7) Subject to subsection (8), the Court may, on an application by any person who either claims any interest in any disclaimed property or is under any liability not discharged by this Act in respect of any disclaimed property and on hearing any such persons as it thinks fit, make an order for the vesting of the property in or the delivery of the property to any person entitled thereto, or to whom it may seem just that the property should be delivered by way of compensation for such liability as aforesaid, or a trustee for him, and on such terms as the Court may think just, and on any such vesting order being made, the property comprised therein shall vest accordingly in the person therein named in that behalf without any conveyance or assignment for the purpose.
(8) Where the property disclaimed is of a leasehold nature, the Court shall not make a vesting order in favour of any person claiming under the bankrupt, whether as under-lessee or as mortgagee by demise, except upon the terms of making that person—
(a) subject to the same liabilities and obligations as those to which the bankrupt was subject under the lease in respect of the property at the date of the adjudication; or
(b) if the Court thinks fit, subject only to the same liabilities and obligations as if the lease had been assigned to that person at that date;
and in either event (if the case so requires), as if the lease had comprised only the property comprised in the vesting order, and any mortgagee or under-lessee declining to accept a vesting order upon such terms shall be excluded from all interest in and security upon the property and, if there is no person claiming under the bankrupt who is willing to accept an order upon such terms, the Court shall have power to vest the estate and interest of the bankrupt in the property in any person liable either personally or in a representative character, and either alone or jointly with the bankrupt, to perform the lessee’s covenants in the lease, freed and discharged from all estates, encumbrances and interests created therein by the bankrupt.
(9) Any person damaged by the operation of a disclaimer under this section shall be deemed to be a creditor of the bankrupt to the amount of the damages, and may accordingly prove the amount as a debt in the bankruptcy.
Annotations:
Amendments:
F34
Substituted (29.01.2016) by Bankruptcy (Amendment) Act 2015 (60/2015), s. 8(a), S.I. No. 34 of 2016.
F35
Deleted (29.01.2016) by Bankruptcy (Amendment) Act 2015 (60/2015), s. 8(b), S.I. No. 34 of 2016.
Fraudulent and Voluntary Conveyances
Avoidance of fraudulent preferences.
(1872, s. 53; 33/1963, sch. 11, para. 1.)
57.—(1) Every conveyance or transfer of property or charge made thereon, every payment made, every obligation incurred and every judicial proceeding taken or suffered by any person unable to pay his debts as they become due from his own money in favour of any creditor or of any person in trust for any creditor, with a view to giving such creditor, or any surety or guarantor for the debt due to such creditor, a preference over the other creditors, shall, F36[if the person making, incurring, taking or suffering the same is adjudicated bankrupt within F37[3 years] after the date of the making], incurring, taking or suffering the same, be deemed fraudulent and void as against the Official Assignee; but this section shall not affect the rights of any person making title in good faith and for valuable consideration through or under a creditor of the bankrupt.
(2) (a) Where a person is adjudicated bankrupt and anything made or done is void under subsection (1) or was void under the corresponding provisions of the law in force immediately before the commencement of this Act as a fraudulent preference of a person interested in property mortgaged or charged to secure the bankrupt’s debt, then (without prejudice to any rights or liabilities arising apart from this section) the person preferred shall be subject to the same liabilities and shall have the same rights as if he had undertaken to be personally liable as surety for the debt to the extent of the charge on the property or the value of his interest, whichever is the less.
(b) The value of the said person’s interest shall be determined as at the date of the transaction constituting the fraudulent preference, and shall be determined as if the interest were free of all encumbrances other than those to which the charge for the bankrupt’s debt was then subject.
(c) On any application made to the Court in relation to any payment on the ground that the payment was a fraudulent preference of a surety or guarantor, the Court shall have jurisdiction to determine any questions relating to the payment arising between the person to whom the payment was made and the surety or guarantor, and to grant relief in respect thereof notwithstanding that it is not necessary so to do for the purposes of the bankruptcy, and for that purpose may give leave to bring in the surety or guarantor as a third party as in the case of an action for the recovery of the sum paid.
(d) Paragraph (c) shall apply, with the necessary modifications, in relation to transactions other than the payment of money as it applies to payments.
Annotations:
Amendments:
F36
Substituted (2.08.2011) by Civil Law (Miscellaneous Provisions) Act 2011 (23/2011), s. 30(c), commenced on enactment.
F37
Substituted (3.12.2013) by Personal Insolvency Act 2012 (44/2012), s. 152, S.I. No. 462 of 2013.
Modifications (not altering text):
C18
Application of section restricted (1.09.2008) by Criminal Justice (Mutual Assistance) Act 2008 (7/2008), s. 40(3)(a), S.I. No. 338 of 2008.
Bankruptcy of defendant, etc.
40. —…
(3) Where a person is adjudicated bankrupt and has directly or indirectly made a gift—
(a) no decision as to whether the gift is void shall be made under section 57, 58 or 59 of the said Act of 1988 in respect of the making of the gift at any time when property of the person to whom the gift was made is subject to a freezing co-operation order, and
(b) any decision as to whether it is void made under any of those sections after the discharge of the freezing co-operation order shall take into account any realisation under this Act of property held by the person to whom the gift was made.
…
Avoidance of certain transactions.
(New)
58.—(1) F38[If within F39[3 years]] before he is adjudicated bankrupt a debtor commits an act of bankruptcy and thereafter either sells any of his property at a price which, in the opinion of the Court, is substantially below its market value or enters into or is a party to any other transaction which, in the opinion of the Court, has the effect of substantially reducing the sum available for distribution to the creditors, such transaction shall be void as against the Official Assignee, unless the transaction was bona fide entered into and the other party had not at the time of the transaction notice of any prior act of bankruptcy committed by the bankrupt.
(2) Subsection (1) shall not affect the rights of any person making title in good faith and for valuable consideration through or under a person (other than the bankrupt) who is party to a transaction mentioned therein.
(3) Subsection (1) shall not apply to any transaction mentioned in section 57(1) or 59.
Annotations:
Amendments:
F38
Substituted (2.08.2011) by Civil Law (Miscellaneous Provisions) Act 2011 (23/2011), s. 30(d), commenced on enactment.
F39
Substituted (3.12.2013) by Personal Insolvency Act 2012 (44/2012), s. 153, S.I. No. 462 of 2013.
Modifications (not altering text):
C19
Application of section restricted (1.09.2008) by Criminal Justice (Mutual Assistance) Act 2008 (7/2008), s. 40(3)(a), S.I. No. 338 of 2008.
Bankruptcy of defendant, etc.
40. —…
(3) Where a person is adjudicated bankrupt and has directly or indirectly made a gift—
(a) no decision as to whether the gift is void shall be made under section 57, 58 or 59 of the said Act of 1988 in respect of the making of the gift at any time when property of the person to whom the gift was made is subject to a freezing co-operation order, and
(b) any decision as to whether it is void made under any of those sections after the discharge of the freezing co-operation order shall take into account any realisation under this Act of property held by the person to whom the gift was made.
…
Avoidance of certain settlements.
(1857, s. 314; 1872, s. 52)
59.—(1) Any settlement of property, not being a settlement made before and in consideration of marriage F40[or civil partnership within the meaning of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010], or made in favour of a purchaser or incumbrancer in good faith and for valuable consideration, shall—
(a) if the settlor is adjudicated bankrupt within F41[3 years] after the date of the settlement, be void as against the Official Assignee, and
(b) if the settlor is adjudicated bankrupt at any subsequent time within five years after the date of the settlement, be void as against the Official Assignee unless the parties claiming under the settlement prove that the settlor was, at the time of making the settlement, able to pay all his debts without the aid of the property comprised in the settlement and that the interest of the settlor in such property passed to the trustee of such settlement on the execution thereof.
(2) A covenant or contract made by any person (in this section called the settlor) in consideration of his or her marriage, either for the future payment of money for the benefit of the settlor’s spouse or children, or for the future settlement, on or for the settlor’s spouse or children, of property wherein the settlor had not at the date of the marriage any estate or interest, whether vested or contingent, in possession or remainder, shall, if the settlor is adjudicated bankrupt and the covenant or contract has not been executed at the date of the adjudication, be void as against the Official Assignee, except so far as it enables the persons entitled under the covenant or contract to claim for dividend in the settlor’s bankruptcy under or in respect of the covenant or contract, but any such claim to dividend shall be postponed until all the claims of the other creditors for valuable consideration in money or money’s worth have been satisfied.
F40[(2A) A covenant or contract made by any person (in this section called the settlor) in consideration of his or her entry into civil partnership within the meaning of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010, either for the future payment of money for the benefit of the settlor’s civil partner, or for the future settlement, on or for the settlor’s civil partner, of property wherein the settlor had not at the date of the registration of the civil partnership any estate or interest, whether vested or contingent, in possession or remainder, shall, if the settlor is adjudicated bankrupt and the covenant or contract has not been executed at the date of the adjudication, be void as against the Official Assignee, except so far as it enables the civil partner entitled under the covenant or contract to claim for dividend in the settlor’s bankruptcy under or in respect of the covenant or contract, but any such claim to dividend shall be postponed until all the claims of the other creditors for valuable consideration in money or money’s worth have been satisfied.]
(3) Any payment of money (not being payment of premiums on a policy of life assurance) or any transfer of property made by the settlor in pursuance of a covenant or contract to which subsection (2) applies shall be void as against the Official Assignee in the settlor’s bankruptcy, unless the persons to whom the payment or transfer was made prove that:
(a) the payment or transfer was made more than F41[3 years] before the date of the adjudication of the settlor, or
(b) at the date of the payment or transfer, the settlor was able to pay all his debts without the aid of the money so paid or the property so transferred, or
(c) the payment or transfer was made in pursuance of a covenant or contract to pay or transfer money or property expected to come to the settlor from or on the death of a particular person named in the covenant or contract, and was made within three months after the money or property came into the possession or under the control of the settlor;
but, in the event of any such payment or transfer being declared void, the persons to whom it was made shall be entitled to claim for dividend under or in respect of the covenant or contract in like manner as if it had not been executed at the date of the adjudication.
(4) In this section “settlement” includes any conveyance or transfer of property.
Annotations:
Amendments:
F40
Inserted (1.01.2011) by Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 (24/2011), s. 170 and sch. part 5 item 9, S.I. No. 648 of 2010.
F41
Substituted (3.12.2013) by Personal Insolvency Act 2012 (44/2012), s. 154, S.I. No. 462 of 2013.
Modifications (not altering text):
C20
Application of section restricted (1.09.2008) by Criminal Justice (Mutual Assistance) Act 2008 (7/2008), s. 40(3)(a), S.I. No. 338 of 2008.
Bankruptcy of defendant, etc.
40. —…
(3) Where a person is adjudicated bankrupt and has directly or indirectly made a gift—
(a) no decision as to whether the gift is void shall be made under section 57, 58 or 59 of the said Act of 1988 in respect of the making of the gift at any time when property of the person to whom the gift was made is subject to a freezing co-operation order, and
(b) any decision as to whether it is void made under any of those sections after the discharge of the freezing co-operation order shall take into account any realisation under this Act of property held by the person to whom the gift was made.
…