Thursday, August 20, 2009

The Bankruptcy In individual countries

In individual countries

Australia

The Bankruptcy Act 1966 (Commonwealth) is the legislation that governs bankruptcy in Australia. Only individuals can become bankrupt; insolvent companies go into liquidation or administration (see administration (insolvency)).

A person can declare himself or herself bankrupt by lodging a debtor's petition with the Official Receiver, which is the Insolvency and Trustee Service Australia (ITSA). A person can also be made bankrupt after a creditor's petition results in the making of a sequestration order in the Federal Magistrates Court.

All bankrupts are required to lodge a Statement of Affairs document with ITSA, which includes important information about their assets and liabilities. A bankruptcy cannot be annulled until this document has been lodged.

Ordinarily, a Part IV bankruptcy lasts three years from the filing of the Statement of Affairs with ITSA. In the case of a debtor's petition, the Statement of Affairs is filed with the petition and the three year period commences immediately. However, in the case of a creditor's petition, the Statement of Affairs will rarely be filed on the same day the court order is made. If the bankrupt fails to lodge the document within a certain period of time, he or she can be prosecuted.

If a bankruptcy trustee (in most cases this is the Official Receiver) has grounds to lodge an Objection to Discharge, the bankruptcy can be extended for a further two or five years, depending on the reason for the objection. Common reasons for objections to discharge include failure to pay income contributions and failure to provide details of income.

Bankrupts have certain restrictions placed upon them. For example, a bankrupt must obtain the permission of his or her trustee to travel overseas. Failure to do so may result in the bankrupt being stopped at the airport by the Australian Federal Police. Additionally, bankrupts are restricted in the assets that they are allowed to keep. If a house or car is above a certain value, the bankrupt can buy the interest back from the estate in order to keep the asset. If the bankrupt does not do this, the interest vests in the estate and the trustee is able to take possession of the asset and sell it.

Bankruptcies can be annulled prior to the expiration of the normal three year period if all debts are paid out in full. Sometimes a bankrupt may be able to raise enough funds to make an Offer of Composition to creditors, which would have the effect of paying the creditors some of the money they are owed. If the creditors accept the offer, the bankruptcy can be annulled after the funds are received.

Certain limited information on Bankruptcy Law in Australia can be found at the ITSA web site

In Brazil, the Bankruptcy Law (11,101/05) disciplines the judicial or extrajudicial recuperation & Bankruptcy and is applicable only to private companies, except financial institution, credit cooperative, consortia, entity of supplementary schemes, society that operates health care plan, society of capitalisation and other entities legally treated as issues. It's also not applicable to public companies.

The law covers three legal proceedings. The first is the bankruptcy ("Falência"). The bankruptcy is the judicial liquidation procedure for an insolvent merchant that promotes the removal of the debtor of its activities, aiming preserve and optimize the productive use of assets, assets and productive resources, including intangible assets, of the company. The final goal of the bankruptcy is the liquidation of the assets of the company and payment of the debtors.

The second one in the Judicial Recuperation ("Recuperação Judicial"). Its goal is to allow the overcoming of the economic-financial crisis situation of the debtor, in order to allow the continuation of the source producer, the employment of workers and the interests of creditors, promoting, thus, the preservation of the company, its social function and stimulate the economic activity. It's a judiciary procedure required by the debtor who exercice its activities more than 2 years and have to be approval by the judge.

The Extrajudicial Recuperation ("Recuperação Extrajudicial") is a private negotiation that involves creditors and debtors and, as the judicial recuperation, also have to be approved by Judiciary power.

Canada

Bankruptcy is filed when a person or a company becomes insolvent and cannot pay their debts as they become due.

Duties of trustees

Some of the duties of the trustee in bankruptcy are to:

  • Review the file for any fraudulent preferences or reviewable transactions
  • Chair meetings of creditors
  • Sell any non-exempt assets
  • Object to the bankrupt's discharge
  • Distribute funds to creditors

Creditors' meetings

Creditors become involved by attending creditors' meetings. The trustee calls the first meeting of creditors for the following purposes:

  • To consider the affairs of the bankrupt
  • To affirm the appointment of the trustee or substitute another in place thereof
  • To appoint inspectors
  • To give such directions to the trustee as the creditors may see fit with reference to the administration of the estate.

Consumer proposals in Canada

In Canada, a person can file a consumer proposal as an alternative to bankruptcy. A consumer proposal is a negotiated settlement between a debtor and their creditors.

A typical proposal would involve a debtor making monthly payments for a maximum of five years, with the funds distributed to their creditors. Even though most proposals call for payments of less than the full amount of the debt owing, in most cases, the creditors will accept the deal, because if they don’t, the next alternative may be personal bankruptcy, where the creditors will get even less money. The creditors have 45 days to accept or reject the consumer proposal. Once the proposal is accepted the debtor makes the payments to the Proposal Administrator each month, and the creditors are prevented from taking any further legal or collection action. If the proposal is rejected, the debtor may have no alternative but to declare personal bankruptcy.

A consumer proposal can only be made by a debtor with debts in excess of $5,000 to a maximum of $75,000 (not including the mortgage on their principal residence). If debts are greater than $75,000, the proposal must be filed under Division 1 of Part III of the Bankruptcy and Insolvency Act. The assistance of a Proposal Administrator is required. A Proposal Administrator is generally a licensed trustee in bankruptcy, although the Superintendent of Bankruptcy may appoint other people to serve as administrators.

In 2006, there were 98,450 personal insolvency filings in Canada: 79,218 bankruptcies and 19,232 consumer proposals


The Netherlands

The Dutch bankruptcy law is governed by the Dutch Bankruptcy Code ("Faillissementswet"). The code covers three separate legal proceedings. The first is the bankruptcy ("Faillissement"). The goal of the bankruptcy is the liquidation of the assets of the company. The bankruptcy applies to individuals and companies. The second legal proceeding in the Faillissementswet is the "Surseance". The Surseance only applies to companies. Its goal is to reach an agreement with the creditors of the company. The third proceeding is the "Schuldsanering". This proceeding is designed for individuals only.

Switzerland

Sweden

In Sweden, bankruptcy (Swedish: konkurs) is a process that can be done for companies and for private people. A creditor or the company itself can apply for bankruptcy. A person or a company in bankruptcy can not access its assets with some exceptions. It is common for companies in Sweden to reduce its debts through bankruptcy. The owner or a new owner starts a new company that buys the important assets including the name from the old company, which is left behind with its debts.

The formal bankruptcy process is rarely done for individuals[8]. Creditors can claim money through the Enforcement Administration anyway, and people themselves don't benefit from it at all, because there are extra costs and the debts remain. People who are really insolvent can clean their debts with a process called debt cleaning (Swedish:skuldsanering). After an application they get a payment plan where they pay as much as they can for five years, and then all remaining debts are canceled. This process was introduced in 2006. Before that, all debts remained during the life of a person.

United Kingdom

A trustee in bankruptcy must be either an Official Receiver (a civil servant) or a licensed insolvency practitioner.

Current law in England and Wales derives in large part from the enactment of the Insolvency Act 1986. Following the introduction of the Enterprise Act 2002, a UK bankruptcy will now normally last no longer than 12 months and may be less, if the Official Receiver files in Court a certificate that his investigations are complete.

It was expected that the UK Government's liberalisation of the UK bankruptcy regime would increase the number of bankruptcy cases; The Insolvency Service statistics appear to bear this out -

UK Bankruptcy statistics
Year Bankruptcies IVA’s Total
2004 35,989 10,752 46,741
2005 47,291 20,293 67,584
2006 62,956 44,332 107,288
2007 64,480 42,165 106,645
2008 67,428 39,116 106,544

After the increase in 2005 and 2006 the figures have remained stable.

Bankruptcy and Pensions in the UK

The UK bankruptcy law was changed in May 2000, effective May 29, 2000. Debtors may now retain occupational pensions while in bankruptcy, except in rare cases.

United States

While bankruptcy cases are always filed in United States Bankruptcy Court (an adjunct to the U.S. District Courts), bankruptcy cases, particularly with respect to the validity of claims and exemptions, are often dependent upon State law. State law therefore plays a major role in many bankruptcy cases, and it is often not possible to generalize bankruptcy law across state lines.

Generally, a debtor declares bankruptcy to obtain relief from debt, and this is accomplished either through a discharge of the debt or through a restructuring of the debt. Generally, when a debtor files a voluntary petition, his or her bankruptcy case commences.

1 comment:


  1. Given the nuanced contrasts between these two types of monetary trouble, it ought to be anything but difficult to perceive any reason why it is worthwhile to contact a corporate bankruptcy administration.Servicii de Insolventa Anglia

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