FRIDAY, JUNE 20, 1986
6
REPEAL OF 15 PER CENT DIVIDEND' RULE PROPOSED
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THE GOVERNMENT HAS PROPOSED CERTAIN AMENDMENTS TO THE BANKRUPTCY ORDINANCE REGARDING THE 15 PER CENT DIVIDEND' RULE.
THE BANKRUPTCY (AMENDMENT) BILL 1986, GAZETTED TODAY (FRIDAY), SERVES TO REPEAL THE '15 PER CENT DIVIDEND' RULE STIPULATED UNDER SECTIONS 9(3) AND 10(1) OF THE BANKRUPTCY ORDINANCE (CHAPTER 6) AND TO AMEND SECTION 33 OF THE ORDINANCE IN ORDER TO PERMIT ONLY THE OFFICIAL RECEIVER TO INVOKE THE $15 PER CENT DIVIDEND' RULE WHEN APPLYING TO RESCIND A RECEIVING ORDER OR TO ANNUL AN ADJUDICATION ORDER OF BANKRUPTCY.
UNDER THE EXISTING SECTIONS 9(3) AND 10(1) OF THE BANKRUPTCY ORDINANCE, THE COURT MAY DISMISS A BANKRUPTCY PETITION AND REFUSE TO MAKE A RECEIVING ORDER IF IT IS SATISFIED THAT THE ASSETS FOR DIVISION AMONG THE UNSECURED CREDITORS, AFTER PAYMENT OF ALL COSTS, CHARGES, EXPENSES AND PREFERENTIAL DEBTS, ARE NOT SUFFICIENT TO PAY A 15 PER CENT DIVIDEND.
UNDER THE EXISTING SECTION 33(1), THE COURT MAY
THE COURT MAY, ON THE SAME GROUND AND ON THE APPLICATION OF ANY PERSON INTERESTED, RESCIND A RECEIVING ORDER OR ANNUL AN ADJUDICATION ORDER IN BANKRUPTCY.
THE ORIGINAL INTENTION OF THE 15 PER CENT DIVIDEND' PROVISION AIMED AT PREVENTING UNNECESSARY ADMINISTRATIVE EXPENDITURE PARTICULARLY IN RESPECT OF THE OFFICIAL RECEIVER AND THE COURT. IN BANKRUPTCY CASES WHERE THERE WOULD BE NO WORTHWHILE OUTCOME.
A GOVERNMENT SPOKESMAN SAID THAT DURING THE PAST TWO YEARS, NUMEROUS BANKRUPTCY PETITIONS HAD BEEN OPPOSED BY DEBTORS PLEADING THE '15 PER CENT DIVIDEND' PROVISION.
+THE INCREASING NUMBER OF SUCH DEFENCES HAS BROUGHT ABOUT A SITUATION IN WHICH THE INTENDED PURPOSE OF THE PROVISION, I.E. PREVENTING UNNECESSARY EXPENSE TO THE GOVERNMENT, IS NOT BEING ACHIEVED.
+SIMILAR UNMERITORIOUS AND TIME-CONSUMING APPLICATIONS HAVE ALSO BEEN MADE BY DEBTORS AFTER ADJUDICATION UNDER SECTION 33(1), + THE SPOKESMAN SAID.
HE ADDED THAT A HIGH COURT JUDGMENT IN 1985 HIGHLIGHTED THE UNSATISFACTORY ASPECTS OF THE '15 PER CENT DIVIDEND' PROVISION WHICH, IN PRACTICE, TENDED TO WORK IN FAVOUR OF THOSE DEBTORS SEEKING TO AVOID THE CONSEQUENCES OF THE BANKRUPTCY LAW.
+DY RULING