XN000022-1986-07-02 — Page 10

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WEDNESDAY, JULY 2, 1986

HE SAID THAT UNDER THE EXISTING SECTIONS 9(3) AND 10(1) OF THE PRINCIPAL ORDINANCE, THE COURT MIGHT DISMISS A BANKRUPTCY PETITION 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, ON THE SAME GROUND AND ON THE APPLICATION OF ANY PERSON INTERESTED, AN ADJUDICATION ORDER IN BANKRUPTCY.+

ANNUL

HOWEVER, MR JACOBS SAID THE '15 PER CENT DIVIDEND' PROVISION HAD BEEN UTILISED BY UNSCRUPULOUS DEBTORS TO SEEK TO AVOID THE CONSEQUENCES OF THE BANKRUPTCY LAWS.

HE SAID IN THE PAST TWO YEARS NUMEROUS BANKRUPTCY PETITIONS HAD BEEN OPPOSED AND APPLICATIONS FOR ANNULMENT HAD BEEN MADE BY DEBTORS PLEADING THAT THEIR ASSETS WERE INSUFFICIENT TO PAY A 15 PER CENT DIVIDEND.

+ IT HAS BEEN FOUND THAT THE CONCEPT OF A FIXED PERCENTAGE OF DIVIDEND IS TOO RIGID, HE ADDED.

+FURTHERMORE, IT IGNORES THE BROADER OBJECTIVES OF THE LAW RELATING TO BANKRUPTCY.+

MR JACOBS SAID MUCH OF THE COURT'S TIME COULD BE WASTED IN DETERMINING WHETHER DEBTORS FELL WITHIN THE 15 PER CENT PROVISION, THUS ALLOWING INSUFFICIENT TIME FOR THE INVESTIGATION OF OTHER MORE IMPORTANT MATTERS SUCH AS THE REASONS FOR BANKRUPTCY, THE POSSIBILITY OF FRAUD, AND THE REHABILITATION OF THE BANKRUPT.

IN ORDER TO REMEDY THE UNSATISFACTORY SITUATION, THE BILL PROPOSED TO REMOVE THE 15 PER CENT DIVIDEND PROVISION FROM SECTIONS 9 AND 10 OF THE PRINCIPAL ORDINANCE SO THAT A PETITION COULD NOT BE DISMISSED ON THIS GROUND ALONE, HE SAID.

+THE COURT'S POWER UNDER SECTION 33 TO ANNUL THE ADJUDICATION SHOULD BE PRESERVED AND EXTENDED TO RESCISION OF A RECEIVING ORDER BUT IN FUTURE THIS POWER MAY BE INVOKED ONLY BY THE OFFICIAL RECEIVER AND NOT BY A DEBTOR,+ HE ADDED.

DEBATE ON THE BILL WAS ADJOURNED.

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