Deeds of arrangement-bankruptcy and liquidation, Financial Accounting


1. Nature of a D of A:

To avoid the expense and delay involved in a bankruptcy, a debtor in trouble may make a private arrangement with the creditors to accept payment of a smaller sum of money in full discharge of their debts before a bankruptcy petition has been presented. 

2. Registration of a D of A and assent of creditors:
A D of A will be void unless it is registered with the Registrar within 7 clear days after first execution and is properly stamped (DAA s.4).

Within 21 days after registration a deed for the benefit of creditors generally must be assented to by a majority in number and value of the creditors concerned

3. Effect of bankruptcy:
A D of A made for the benefit of creditors generally will be an act of bankruptcy and therefore a bankruptcy petition may be presented against the debtor within 3 months of its execution by a creditor who has not assented to the D of A (but if such creditor has been served by the trustee under the D of A with a notice of the execution of the D of A the time is reduced to 1 month). 

4. Appointment of trustee:
The trustee is nominated by the parties to the deed and, his appointment is made and his remuneration fixed by the deed. 

5. Trustee's security:
Within 7 days from the filing of the declaration of assent by the requisite creditors, the trustee of a D of A for the benefit of creditors generally must give security to the local bankruptcy registrar in a sum equal to the estimated assets available for distribution among the unsecured creditors

6. Trustee's accounts and audit:
A Trustee under a D of A must account annually to the Official Receiver and every 6 months to all assenting creditors.  A majority in number and in value of creditors can demand an audit during the administration or within 12 months from the rendering of the final accounts to the O.R.

7. Trustee's duties in administering the D of A:
To carry out the trusts of the D of A and to distribute the property assigned to him in accordance with the provisions of the D of A.

8. Discharge of trustee:
The trustee is automatically discharged as soon as he has carried out his duties under the D of A — he does not have to obtain a formal release.

Posted Date: 12/13/2012 1:28:55 AM | Location : United States

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