After-acquired property-bankruptcy, Financial Accounting

AFTER-ACQUIRED PROPERTY

All property acquired by the bankrupt between the commencement of bankruptcy and his discharge passes to the trustee, except as stated above and below.

(a) Rule in Cohen v Mitchel:
Property acquired by the bankrupt after adjudication may be validly transferred by him to a third party taking in good faith and for value, before the trustee has intervened to claim the property; the bankrupt must then account to the trustee of the consideration received.

Payments to or by a banker are deemed to be for value for this purpose, but a banker who discovers that a customer is an undischarged bankrupt must not make payments out of his account without informing the trustee of its existence and seeking his instructions.

(b) Salary and other income:
The bankrupt's income from whatever source, passes to the trustee, unless otherwise provided by statute as, e.g. in the case of certain pensions.In respect of personal earnings, however the bankrupt is entitled to keep sufficient for the maintenance of himself and his family.The trustee can apply to the court for any periodical payments due to the bankrupt to be paid directly to himself.

(c) Subsequent bankruptcies:
If an undischarged bankrupt is adjudicated for a second or further time, property acquired by him after the first adjudication vests in the trustee in the subsequent bankruptcy, unless it had been distributed at the time the subsequent petition was presented.

A trustee having notice of a subsequent petition must retain after-acquired property in his possession for transfer of the trustee in the subsequent bankruptcy, and may prove for its value in that bankruptcy.

Posted Date: 12/13/2012 12:34:25 AM | Location : United States







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