Acts of bankruptcy, Financial Accounting

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ACTS OF BANKRUPTCY

The following are the acts of bankruptcy on which a petition may be founded:

(a) Assignment of property to trustee:  whereby one gives up all his property to be managed by a trustee provided that:

  • The assignment is of substantially the whole of the debtor's property, and
  • It is for the benefit of the creditors generally.


Such an assignment will normally be void unless registered as a deed of arrangement.

(b) Fraudulent conveyance: the debtor unfairly transfers his property to one creditor, so that the other creditors have no assets to attach their claims on.

i.e. a transfer of any property to any person which gives one creditor an unfair advantage, or which tends to defeat or delay  creditors.

(c) Fraudulent preference: Where the preference constitutes a conveyance or transfer of property, or a charge thereon,

(d) Absenting: That is, departing or remaining out of the country, or departing from his dwelling-house, or otherwise absenting himself, or 'keeping house', with the intention of defeating or delaying his creditors.

(e) Execution against goods: This is committed when the bailiff has taken possession of goods and either sold them or retained them for 21 days.

(f) Petition by debtor: A bankruptcy petition by the debtor against himself, or a formal declaration of his inability to pay his debts filed with the court, operates as an act of bankruptcy.

(g) Non-compliance with bankruptcy notice: A bankruptcy notice may be issued by a judgement creditor in respect of a final judgment or order for any amount provided that execution has not been stayed or already levied: failure by the debtor to pay the amount of the judgment within seven days of service of the notice constitutes an act of bankruptcy, unless the debtor applies to have it set aside on the grounds of set off, etc.

(h) Notice of suspension of payment of debts: This may be in any form provided it shows a clear intention to suspend payment.


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