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Recovery Procedures (I) (Factors to consider before legal proceedings…

- - - - Payment has to be made to the court for the benefit of the lender
      - Enables creditor to recover debt from unencumbered funds due to debtor
      - Prevents the third party from making payment to the debtor
      - Joint accounts cannot be garnished unless judgment has been obtained on both
    - - The Court appoints the Official Assignee to administer the bankruptcy estate
      - It represents the last stage of the legal proceedings for individuals
      - A process whereby the debtor is publicly recognised to be financially insolvent
    - - Writ may be enforced against movable/immovable properties & securities
      - However
        
        Goods that belong to the spouse cannot be seized
        
        If debt is satisfied before sale, goods can be released
        
        If there's other creditors, priority depends on date of indebtedness created
        
        If company wound-up prior to completion of execution by seizure and sale, judgement creditor is not entitled to retain the benefit
      - Obtain Warrant of Execution
- - - - To realise as much assets as possible for distribution to creditors
      - To assist to obtain discharge for bankrupt
    - - Apply to High Court for bankrupt's discharge
      - Mediate in disputes between creditors and bankrupt
      - Payment of dividends
      - Help bankrupts to discharge
      - Adjudication of creditors' claims
  - - - Exceptions (fines for breaching law & taxes)
      - Demands for payment/notice of court action forwarded to OA
      - No further legal proceedings against bankrupt
    - - Balance from sales proceeds to creditors
      - Security must be realised within 6 months from date of bankruptcy order/as approved by OA otherwise not entitled to claim interest for debts
      - Right to sell off property/goods if bankrupt is unable to pay when due
      - Unsecured creditors rank after secured & preferential creditors
  - - - Consider following factors: i) Age, ii)Earning capacity, iii) Assets, iv) Payments to creditors, v) Co-operation given to OA
    - - Conditions for discharge
        
        a) 3 years has lapsed from date of bankruptcy
        
        b) Debts not exceeding $500,000
      - Factors to consider: i) Cause of bankruptcy, ii) Period of bankruptcy, iii) Bankrupt's assets & payments to bankruptcy a/c, iv) Bankrupt person's conduct, v) Level of cooperation given to OA in the administration of his affairs
    - - Debts are paid in full
      - Offers of composition/schemes of arrangement are accepted by creditors (Payment of fixed % of debts/Payment of different % debts of different creditors)
- - - - Any disposal of co's property, transfer of shares/changes in member's status is void after commencement of winding-up
      - Court may allow disposal of assets for continuation of business beneficial to co and to unsecured creditors
    - - Rights to deal/realise his security over the co's assets not affected by winding-up order but not entitled to interest if security is not realised within 6 months
    - - After presentation of winding-up petition and before winding-up order, apply to court to stay/restrain pending proceedings against co.
      - After liquidator is appointed, no action/proceedings shall be proceeded/commenced against co except with court's approval
    - - Not longer have the rights upon commencement of winding-up order. Unsecured creditor are paid on pari-passu basis (paid equally). Any balance will be paid to co's contributories
  - - - Creditor may appeal to Court if dissatisfied
      - Co's debts are settled according to order of priority including liquidation costs
      - Liquidator admit/reject claims/adjudicate claims
      - Surplus, if any, capital will be returned to members
      - Creditors to file proof of debt