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201.12 - 2 - Insolvency Act-1997
201.12 - 2 - Insolvency Act-1997
After the independence of Bangladesh, both of the acts are approved by the first parliamentary session.
a)The first act was applied for Dhaka and
The second was applied for remain of the country.
But at last the act was changed again in 1997 that was known as – “The Insolvency Act-1997”
What is Insolvency?
An insolvent is one who is unable to pay his debt. But no man can be called “ insolvent” unless the competent
court declares him an insolvent.
Usually used to refer to a business, insolvency refers to the inability of a company to pay off its debts
Act of Insolvency
An act of insolvency is some act of the debtor which shows that he is financially embarrassed.
Only those acts which are listed as such by the act are considered to be acts of insolvency.
(2). If he makes a transfer of his property or any part thereof, with the intend to defraud or to delay his
creditors.
(3). If he makes a transfer of his property or any part thereof it would under this act or any other enactment for
the time being in force, be void as a fraudulent preference if he were adjudged as insolvent.
(5). If any of his property has been sold or attached for a period of not less than 21 days in execution of the
decree of any court for the payment of money.
(6). If he petitions to be adjudged an insolvent
(7). If he gives notice to any of his creditors that he has suspended, or that he is about to suspend, payment of
his debt.
(8). If he is imprisoned in execution of the decree of any court for the payment of money.
(9). If a creditor has served an “insolvency notice” in respect of any decree or order for payment of money, and
if the debtor has not paid the money within the period specified in notice.
The rules regarding notice are stated below:
(a) The notice must be given according to the prescribed form and prescribed manner
(b) It must specify the amount due.
(c) It must specify the period for its compliance, i.e., not less than 01 month.
(d) It must specify the consequences of non-compliance ( the practice of obeying rules).
A secured creditor can present an insolvency petition if the following conditions are satisfied:
a)He abandoned his security in favor of all the creditors, or
b)The security is insufficient to meet his claim of minimum Tk 500,000.
Any person, man or women, who has attained majority can be declared insolvent if the conditions laid down in
the insolvency act.
The following persons can be considered:
(a) Companies: A company can not be declared insolvent. Because companies are directed by the Company Act-
1994 approved by the govt.
(b) Govt. Body: Any govt. body can not be declared insolvent. If any creditor claim any due from the govt.
organization, it is considered as the liability to the government. And government is bound to pay the amount at
any time.
(d) Deceased Person: A dead man can not be declared insolvent. If a debtor dies after the presentation of the
insolvency petition, his estate will be administered by the Official Assignee as upon insolvency, unless the court
otherwise directs.
(e) Minor: A minor is not personally responsible for his debts and is not capable of entering into the contracts.
Therefore a minor can not be declared an insolvent.
(f) Partner: Since every partner is responsible for his debts of the firm, the creditor of a firm can file an
insolvency petition against any partner or all of the partners for any debt due and owned by the firm.