Application for Discharge:
Section 129 and BR 186 to 197.
- The Bankrupt can apply for his discharge at any time after adjudication but the application cannot be heard until after the public examination is concluded.
- The registrar of the court must give 28 days notice of the time and place of the Hearing to the official receiver and the Trustee.
- The official receiver must forthwith send notice thereof for gazetting and must give 14 days notice of the Hearing to every creditor.
- At the hearing of the application which is held in open court the official receiver submits a report as to the bankrupt’s conduct during the proceedings of his bankruptcy.
- A copy of this report must be forwarded to the bankrupt not less than 7 days before the hearing and if the bankrupt wishes to dispute any statement therein, he must notify the official receiver of this fact not less than 2 days before the hearing.
A creditor who wishes to oppose the discharge on any ground other than those mentioned in the official receiver’s report must not less than 2 days before the hearing file in the court a written notice of his intended opposition stating the grounds thereof and serve a copy on the official receiver and the bankrupt.
Courses Available to the Court:
At the Hearing the court may do any of the following things:
1. Grant an absolute and immediate discharge;
2. Refuse the discharge;
3. Grant an order of discharge but suspend its operation
4. Grant order of discharge subject to conditions with respect to any earnings or income due to the bankrupt or with respect to his after-acquired property;
The court will normally only grant an unconditional absolute discharge where the bankrupt is entitled to a certificate of misfortune i.e. a certificate of the court to the effect that the bankruptcy was brought about by causes beyond the debtor’s control without any misconduct on his part. This has the effect of releasing the debtor from those statutory disqualifications which will otherwise attach to him after discharge. There are no cases in which the court is bound to refuse a discharge but it cannot grant an immediate and unconditional discharge. Where the bankrupt has been convicted of any offence connected with his bankruptcy or where any of the following facts have been proved against him:
These facts as contained in Section 30 BA
(a) That his assets are not of a value equal to 10 shillings in the pound on the amount of his unsecured liabilities unless this is due to circumstances for which he cannot justly be held responsible;
(b) That he has omitted to keep such books of accounts as are usual and proper in the business carried on by him within 3 years immediately preceding his bankruptcy;
(c) That he has continued to trade after knowing himself to be insolvent;
(d) That he has contracted any debt provable in the bankruptcy without having at the time of contracting any reasonable or probable expectation of being able to pay it;
(e) That he has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet his liabilities;
(f) That he has brought on or contributed to his bankruptcy by rash and hazardous speculations or by unjustifiable extravagance in living or by gambling or by neglect of his business affairs;
(g) That he has put any of his creditors to unnecessary expense by frivolous or vexatious defence to any action properly brought against him;
(h) That he has brought on or contributed to his bankruptcy by incurring unjustifiable expense in bringing a frivolous or vexatious action;
(i) That he has within 3 months preceding the date of the receiving order when unable to pay his debts as they became due given undue preference to any of his creditors;
(j) That he has within 3 months preceding the date of the receiving order incurred liabilities with a view to making his assets equal to 10 shillings in the pound on the amount of his unsecured liabilities;
(k) That he has on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors; and
(l) That he has been guilty of any fraud or fraudulent breach of trust.
Where any such facts or offences are proved the court may either
(i) Refuse the discharge or;
(ii) Suspend the discharge for such period as it thinks fit; or
(iii) Suspend the discharge until a dividend of not less than 10 shillings in the pound has been paid to the creditors; or
(iv) Grant a discharge subject to the condition that the bankrupt consents to a judgment being entered against him for any balance or part of any balance of the debts still remaining unpaid to be discharged out of his future earnings or after acquired property.
The court has a similar power where the BANKRUPT has made a settlement of property before and in consideration of marriage at a time when he was unable to pay his debts without the aid of such settled property or has contracted in consideration of marriage to settle on his wife or children property to be subsequently acquired by him and it appears to the court that the settlement or contract was made in order to defeat or delay creditors or was unjustifiable having regard to the state of affairs at the time it was made. (This is called a fraudulent settlement within the context of Section 30 of BA)
Where a bankrupt is discharged unconditionally, it is his duty until the judgment or condition is satisfied to give the official receiver any information he may require about his earnings or after acquired property and to file in court an annual statement verified by affidavit giving particulars of any property or income acquired since discharge.
At any time after the expiration of 2 years from the date of the order, the terms and conditions of that order may be varied by the court if the bankrupt can satisfy the court that there is no reasonable probability of his being in a position to comply with them. A discharged bankrupt notwithstanding his discharge must continue to give the trustee any assistance he may require in the realisation and distribution of the estate and if he fails to do so, he is guilty of contempt of court. The court may also revoke his discharge if it thinks fit but without prejudice to the validity of any disposition of his property which occurred after the discharge and before its revocation.
Effect of Order of Discharge:
An order of discharge under Section 32 BA releases the bankrupt from all debts provable in bankruptcy except the following:
1. Debts due to the government for breach of a statute relating to any branch of the public revenue or on a recognizance unless the Permanent Secretary to the Treasury gives a written consent to his release therefrom;
2. Debts incurred by fraud or fraudulent breach of trust;
3. 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 correspondent in a matrimonial cause unless the court orders otherwise;
Sec. 32(2) an order of discharge shall release the bankrupt from all other debts provided in the discharge.
Sec. 32(3) the order shall be conclusive evidence of the bankruptcy and any proceedings that shall be instituted against bankrupt who has obtained an order of discharge in respect of any debt from which he is released by the order the bankrupt may plead the cause of action occurred before his discharge.
Sec. 32(4) An order of discharge does not release any person who at the date of the receiving order was a partner, co-trustee or surety of the bankrupt. The order releases the bankrupt from all personal disabilities imposed upon him as a result of the adjudication other than those which by statute continue to apply for a fixed period after his discharge. He is only released from this if he obtains a certificate of misfortune. The Order will not however free him from any liability to be prosecuted for any bankruptcy offences which he may have committed.
Revocation of discharge
The order of discharge may be revoked or varied at the court’s discretion on the following grounds;
a) Failure by the debtor to give all necessary aid to trustee for realisation of estate, or
b) Failure to file a verified statement or attend court for examination when required or to answer any questions put to him by the court.