Bankruptcy Act

A debtor commits an act of bankruptcy in each of the following cases -

In this Act, "a debtor" includes any person whether a subject of

His Majesty the Sultan and Yang Di-Pertuan or not, who at the time when any act of bankruptcy was done or suffered by him -

may specify an agent to act on behalf of the creditor in respect of any payment or other thing required by the notice to be made to, or done to the satisfactioil of, the creditor; and

shall not be invalidated by reason only that the sum specified in the notice as the amount due exceeds the amount actually due unless the debtor within the time allowed for payment gives notice to the creditor that he disputes the validity of the notice on the ground of such misstatement; but if the debtor does not give such notice, he is deemed to have complied with the bankruptcy notice if within the time allowed he takes such steps as would have constituted a compliance with the notice had the actual amount due been correctly specified therein.

Receiving order and Official Receiver

Subject to the provisions of section 7, a creditor shall not be entitled to present a bankruptcy petition against a debtor unless -

If the petitioning creditor is a secured creditor, he must in his petition either state that he is willing to give up his security for the benefit of the creditors in the event of the debtor being adjudged bankrupt, or give an estimate of the value of his security. In the latter case, he may be admitted as a petitioning creditor to the extent of the balance of the debt due to him after deducting the value so estimated in the same manner as if he were an unsecured creditor.

The following provisions shall have the effect in the case of a firm carrying on business in Brunei Darussalam -

The provisions of this section shall, so far as the nature of the case will permit, apply to any person carrying on business in Brunei

Darussalam in a name or style other than his own name.

Immediately on the filing of any petition, the Official Receiver may, in cases where he has reason to believe that any offence under this Act or any fraud has been or is about to be perpetrated -

It shall be the duty of the debtor to furnish the Official Receiver with all such information as it is in the debtor's power to give or to obtain.

If the debtor -

A creditor's petition shall be verified by affidavit of the creditor or of some person on his behalf having knowledge of the facts and shall be served in the same manner as a writ of summons unless some other manner of service is prescribed.

At the hearing, the Court shall require proof of -

If the Court is not satisfied with the proof of the petitioning creditor's debt or of the act of bankruptcy or of the service of the petition or is satisfied by the debtor that he is able to pay his debts or is not satisfied that the assets for division among the unsecured creditors, after payment of all costs, charges and expenses, and the debts which are preferential under this

Act, will be sufficient to pay a dividend of 15 per cent, or considers that for other sufficient cause no order ought to be made, the Court may dismiss the petition.

When the act of bankruptcy relied on is non-compliance with a bankruptcy notice to pay, secure or compound for a judgment debt or sum ordered to be paid, the Court may, if it thinks fit, stay or dismiss the petition on the ground that an appeal is pending from the judgment or order.

Where the debtor appears on the petition and denies that he is indebted to the petitioner or that he is indebted to such an amount as would justify the petitioner in presenting a petition against him, the Court, on such security (if any) being given as the Court may require for payment to the

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a petitioner of any debt which may be established against him in due course of law and of the costs of establishing the debt, may instead of dismissing the petition, stay all proceedings on the petition for such time as may be required for trial of the question relating to the debt.

Where proceedings are stayed, the Court may, if by reason of the delay caused by the stay of proceedings or for any other cause it thinks just, make a receiving order on the petition of some other creditor and shall a thereupon dismiss, on such terms as it thinks just, the petition in which proceedings have been stayed as aforesaid.

A creditor's petition shall not after presentation be withdrawn without the leave of the Court.

A debtor's petition shall allege that the debtor is unable to pay his debts and the presentation thereof is deemed an act of bankruptcy without the previous filing by the debtor of any declaration of inability to pay his debts and the Court shall thereupon make a receiving order:

Provided that it shall be lawful for the Court in its discretion to refuse the order if it is not satisfied that assets for division among the unsecured creditors after payment of all costs, charges and expenses, and the debts which are preferential under this Act, will be sufficient to pay a dividend of 15 per cent, or if the Court considers for other sufficient cause that no order ought to be made.

In this subsection, "sufficient cause" is deemed to include, among other things, the non-attendance of the debtor or, in the case of a firm, of at least one of the partners thereof, on the hearing of the petition, the absence of any material book of account or any fraud or misconduct not amounting to a fraud by the debtor in relation to his affairs.

A debtor's petition shall not after presentation be withdrawn without the leave of the Court.

On the making of a receiving order, the Oficial Receiver shall be thereby constituted receiver of the property of the debtor and thereafter, except as directed by this Act, no creditor to whom the debtor is indebted in respect of any debt provable in bankruptcy shall -

This section does not affect the power of any secured creditor to realise or otherwise deal with his security.

The Court may at any time after the presentation of a bankruptcy petition either stay any action, execution or other legal process against the property or person of the debtor or allow it to continue on such terms as it may think just.

Where the Court makes an order staying any action or proceeding, or staying proceedings generally, the order may be served by sending a copy thereof, under the seal of the Court, by post to the address for service of the plaintiff or other party prosecuting such proceeding or to the address of his advocate.

Without prejudice to the provisions of subsection (I), if the

Court orders the release of any debtor who is under execution for a civil debt, it may impose such conditions as it thinks fit and in particular it may require as a condition of such release that the debtor find security to attend in the subsequent bankruptcy proceedings and to abide by all orders of the Court relating to the proceedings.

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The Court may, on the application of the Official Receiver or of any creditor or creditors, and if satisfied that the nature of the debtor's estate or business or the interests of the creditors generally require the appointment of a special manager of the estate or business other than the Official

Receiver, appoint a manager thereof accordingly to act until a trustee is appointed, and with such powers (including any of the powers of a receiver)

a as may be entrusted to him by the Official Receiver.

The special manager shall give security and account in such manner as the Court may direct-

The special manager shall receive such remuneration as may be prescribed.

As soon as may be after the making of a receiving order against a debtor, a general meeting of his creditors shall be held for the purpose of considering whether a proposal for a composition or scheme of arrangement shall be accepted or whether it is expedient that the debtor shall be adjudged bankrupt and generally as to the mode of dealing with the debtor's property.

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The Chief Justice may, with the approval of His Majesty the

Sultan and Yang Di-Pertuan in Council, make rules with respect to the summoning of and proceedings at the first and other meetings of creditors.

Where a receiving order is made against a debtor, he shall make out and submit to the Official Receiver a statement of and in relation to his affairs in the prescribed form, verified by affidavit, and showing -

The statement shall be so submitted within the following times -

If the debtor fails without reasonable excuse to comply with the requirements of this section, he may be punished for a contempt of court and the Court may, on the application of the Oficial Receiver or of any creditor, adjudge him bankrupt.

Any person stating himself to be a creditor of the bankrupt may, on payment of the prescribed fee, personally or by agent inspect the statement at all reasonable times and take any copy thereof or extract therefrom, but any person untruthfully so stating himself to be a creditor shall be guilty of a contempt of court and shall be punishable accordingly on the application of the trustee or Official Receiver.

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Public examination o f de btor

Where the Court makes a receiving order, it shall, save as in this Act provided, hold a public sitting, on a day to be appointed by the

Court, for the examination of the debtor and the debtor shall attend thereat and shall be examined as to his conduct, dealings and property.

a

The examination shall be held as soon as conveniently may be after the expiration of the time for the submission of the debtor's statement of affairs.

The Court may adjourn the examination.

Any creditor who has tended a proof, or his representative authorised in writing, may question the debtor concerning his affairs and the causes of his failure.

The Official Receiver shall take part in the examination of the debtor and, for the purpose thereof, if specially authorised by the Court, may employ an advocate. No advocate shall be allowed to take part in the examination on behalf of the debtor.

If a trustee is appointed before the conclusion of the examination, he may take part therein.

The Court may put such questions to the debtor as it may think expedient.

The debtor shall be examined upon oath and it shall be his duty to answer all such questions as the Court may put or allow to be put to him.

Such notes of the examination as the Court thinks proper -

When the Court is of opinion that the affairs of the debtor have been sufficiently investigated, it shall by order declare that his examination is concluded; but such order shall not be made until after the day appointed for the first meeting of creditors.

Where the debtor is a mentally disordered person or suffers from any such mental or physical affliction or disability as in the opinion of the Court makes him unfit to attend his public examination or is absent from

Brunei Darussalam the Court may make an order dispensing with such examination or directing that the debtor be examined on such terms, in such manner and at such place as to the Court seems expedient.

[S 25/2011]

(1 1) The Registrar may, under the general or special directions of the Court, hold the public examination of the debtor but the examination may at any time be adjourned by him to be heard before the Court.

Compositions and schemes of arrangement

Where a debtor intends to make a proposal for a composition in satisfaction of his debts or a proposal for a scheme of arrangement of his affairs, he shall, within 4 days of submitting his statement of affairs or within such time thereafter as the Official Receiver may fix, lodge with the Official

Receiver a proposal in writing, signed by him, embodying the terms of the composition or scheme which he is desirous of submitting for the consideration of his creditors and setting out particulars of any sureties or securities proposed.

In such case, the Official Receiver shall hold a meeting of creditors before the public examination of the debtor is concluded and send to each creditor before the meeting a copy of the debtor's proposal with a report thereon; and if at that meeting a majority in number and three-fourths in value of all the creditors who have proved resolve to accept the proposal, it is deemed to be duly accepted by the creditors and, when approved by the

Court, shall be binding on all the creditors.

The debtor may at the meeting amend the terms of his proposal if the amendment is in the opinion of the Oficial Receiver calculated to benefit the general body of creditors.

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Any creditor who has proved his debt may assent to or dissent from the proposal by a letter addressed to the Official Receiver so as to be received by him not later than the day preceding the meeting and any such assent or dissent shall have effect as if the creditor has been present and had voted at the meeting.

The debtor or the Official Receiver may, after the proposal is accepted by the creditors, apply to the Court to approve it and notice of the time appointed for hearing-the application shall-be given to each creditor who has proved.

The application shall not be heard until after the conclusion of the public examination of the debtor. Any creditor who has proved may be heard by the Court in opposition to the application notwithstanding that he may, at a meeting of creditors, have voted for the acceptance of the proposal.

For the purpose of approving a composition or scheme by joint debtors, the Court may, if it thinks fit and on the report of the Official

Receiver that it is expedient so to do, dispense with the public examination of any of the joint debtors if they are or any one of them is prevented from attending the examination by illness or absence from Brunei Darussalam but one at least of such joint debtors shall be publicly examined.

The Court shall before approving the proposal hear a report of the Official Receiver as to .the terms thereof and as to the conduct of the debtor and any objections which may be made by or on behalf of any creditor.

If the Court is of opinion that the terms of the proposal are not reasonable or are not calculated to benefit the general body of creditors or in any case in which the Court is required, where the debtor is adjudged bankrupt, to refuse his discharge, the Court shall refuse to approve the proposal.

If any facts are proved on proof of which the Court would be required either to refuse, suspend or attach conditions to the debtor's discharge were he adjudged bankrupt, the Court shall refuse to approve the proposal unless it provides reasonable security for the payment of not less than 25 per cent on all the unsecured debts provable against the debtor's estate.

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In any other case, the Court may either approve or refuse to approve the proposal.

If the Court approves the proposal, the approval may be testified by the seal of the Court being attached to the instrument containing the terms of the proposed composition or scheme, or by the terms being embodied in an order of the Court.

A composition or scheme accepted and approved in pursuance of this section shall be binding on all the creditors so far as relates to any debts due to them from the debtor and provable in bankruptcy.

A certificate of the Official Receiver that a composition or scheme has been duly accepted and approved shall, in the absence of fraud, be conclusive as to its validity.

The provisions of a composition or scheme under this section may be enforced by the Court on application by any person interested, and any disobedience of an order of the Court made on the application is deemed a contempt of court.

Part 3, so far as the nature of the case and the terms of the composition or scheme admit, applies thereto, the same interpretation being given to the words "trustee", "bankruptcy", "bankrupt" and "order of adjudication", as in subsection (1 7).

No composition or scheme shall be approved by the Court which does not provide for the payment in priority to other debts of all debts directed to be so paid in the distribution of the property of a bankrupt.

The acceptance by a creditor or a composition or scheme shall not release any person who under this Act would not be related by an order of discharge if the debtor had been adjudged bankrupt.

Where a receiving order is made against a debtor, then if -

The appointment of a trustee shall take effect as from the date of the certificate.

The creditors qualified to vote may at their first or any subsequent meeting, by resolution, appoint a committee of inspection for the purpose of superintending the administration of the bankrupt's property by the trustee.

The committee of inspection shall consist of not more than five nor less than three persons, possessing one or other of the following qualifications -

The committee of inspection shall meet at such times as they shall from time to time appoint and, failing such appointment, at least once a month, and the trustee or any member of the committee may also call a meeting of the committee as and when he thinks necessary.

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The committee may act by a majority of their members present at a meeting, but shall not act unless a majority of the committee are present at the meeting.

Any member of the committee may resign his office by notice in writing signed by him and delivered to the trustee.

If a member of the committee becomes bankrupt, or compounds or arranges with his creditors, or is absent from five consecutive meetings of the committee, his office shall thereupon become vacant.

Any member of the committee may be removed by an ordinary resolution at any meeting of creditors of which 7 days' notice has been given stating the object of the meeting.

On a vacancy occurring in the office of a member of the committee, the trustee shall forthwith summon a meeting of creditors for the purpose of filling the vacancy and the meeting may by resolution appoint another creditor or other person eligible as above to fill the vacancy.

The continuing members of the committee, provided there be not less than two such continuing members, may act notwithstanding any vacancy in their body, and where the number of members of the committee of inspection is for the time being less than five, the creditors may increase that number so that it does not exceed five.

If there is no committee of inspection, any act or thing or any direction or permission by this Act authorised or required to be done or given by the committee may be done or given by the Court on the application of the trustee.

Where a debtor is adjudged bankrupt, the creditors may, if they think fit, at any time after the adjudication, by a majority in number and three-fourths in value of all the creditors who have proved, resolve to accept a proposal or a composition in satisfaction of the debts due to them under the bankruptcy or for a scheme of arrangement of the bankrupt's affairs, and thereupon the same proceedings shall be taken and the same consequences shall ensue as in the case of a composition or scheme accepted before adjudication.

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CAP. 67 33

If the Court approves the composition or scheme, it may make an order annulling the bankruptcy and vesting the property of the bankrupt in him or in such other person as the Court may appoint, on such terms and subject to such conditions, if any, as the Court may declare.

Every debtor against whom a receiving order is made shall, unless prevented by sickness or other sufficient cause -

He shall -

He shall, if adjudged bankrupt, aid to the utmost of his power in the realisation of his property and the distribution of the proceeds among his creditors.

If a debtor wilfully fails -

The Court may, by warrant addressed to any person or persons named therein, cause a debtor to be arrested, and any books, papers, money and goods in his possession or under his control or relating to his affairs to be seized and him and them to be safely kept as prescribed until such time as the

Court may order under the following circumstances -

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CAP. 67 35

No payment or composition made or security given after arrest made under this section shall be exempt from the provisions of this Act relating to fraudulent preferences.

a

The Court may, on the application of the Official Receiver or trustee, at any time after a receiving order has been made against a debtor, summon before it -

If any person so summoned, after having been tendered a reasonable sum, refuses to come before the Court at the time appointed or refuses to produce any such document, having no lawful impediment made known to the Court at the time of its sitting and allowed by it, the Court may, by warrant, cause him to be apprehended and brought up for examination.

The Court may, by itself or by a commissioner appointed for the purpose, examine on oath, either by word of mouth or by written interrogatories, any person so brought before it concerning the debtor, his dealings or property.

If any person, on examination before the Court, admits that he is indebted to the debtor, the Court may, on the application of the Official

Receiver or trustee, order him to pay to the Official Receiver or trustee, at such time and in such manner as to the Court seems expedient, the amount admitted or any part thereof, either in full discharge of the whole amount in

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CAP. 67 37

question or not, as the Court thinks fit, with or without costs of the examination.

If any person, on examination before the Court, admits that he has in his possession any property belonging to the debtor, the Court may, on the application of the Oficial Receiver or trustee, order him to deliver to the

Official Receiver or trustee such property or any part thereof, at such time and in such manner and on such terms as to the Court may seem just.

•

The Court may, if it thinks fit, order that any person who if in

Brunei Darussalam would be liable to be brought before it under this section shall be examined in any place out of Brunei Darussalam by a commissioner appointed for the purpose.

Where a debtor or his wife or any other witness whose evidence has been duly taken under this Act dies, the deposition of the person so deceased purporting to be sealed with the seal of the Court or a copy thereof purporting to be so sealed shall, in all legal proceedings, be admitted as evidence of the matters therein deposed to saving all just exceptions.

Discharge of bankrupt

A bankrupt may, at any time after being adjudged bankrupt, apply to the Court for an order of discharge, and the Court shall appoint a day for hearing the application, but the application shall not be heard until the public examination of the bankrupt is concluded. The application shall, except when the Court in accordance with rules under this Act otherwise directs, be heard in open court.

a

Where the bankrupt does not of his own accord, within such time as the Court may deem reasonable, apply for his discharge the Court may, of its own motion or on the application of the Oficial Receiver or the trustee or any creditor who has proved, make an order calling upon the bankrupt to come up for his discharge on a day to be fixed by the Court and, on due service of the order, if the bankrupt does not appear on the day fixed thereby the Court may make such order as it thinks fit, subject to the provisions of this section, and the debtor shall, in addition to any other a punishment to which he may be subject, be guilty of a conten~pt of court and may be punished accordingly.

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Bankruptcy

On the hearing of the application or on the day on which the bankrupt has been ordered to come up for his discharge or any subsequent day, the Court shall take into consideration a report of the Official Receiver as to the baiIkruyt's conduct and affairs (including a report as to the bankrupt's conduct during the proceedings under his bankruptcy) and may either -

grant an order of discharge subject to any conditions with respect to any earnings or income which may afterwards become due to the bankrupt or with respect to property which may afterwards be acquired by him:

Provided that where the bankrupt has committed any offence under this

Act, or any other offence connected with his bankruptcy or where in any case any of the facts mentioned in subsection (4) are proved, the Court shall -

The facts referred to in the proviso to subsection (3) are -

The Court may, on proof to its satisfaction of any of the facts mentioned in subsection (4)(b), (c), (d), Cf), (g), (h), (9 or (I) summarily sentence the bankrupt to imprisonment for one year.

For the purpose of this section, a bankrupt's assets is deemed of a value equal to 50 per cent of his unsecured liabilities when the Court is satisfied that the property of the bankrupt has realised or is likely to realise or with due care in realisation might have realised an amount equal to 50 per cent of his unsecured liabilities and a report by the Official Receiver or trustee shall, until the contrary is proved, be evidence of the amount of such liabilities.

For the purposes of this section, the report of the Oficial

Receiver shall, until the contrary is proved, be evidence of the statements therein contained.

Notice of the appointment by the Court of the day for hearing the application for discharge shall be published as the Court may direct or as may be prescribed and shall be sent 14 days at least before the day so appointed to each creditor who has proved and the Court may hear the

Official Receiver and the trustee and may also hear any creditor. At the hearing, the Court may put such questions to the debtor and receive such evidence as it may think fit.

The powers of suspending and of attaching conditions to a bankrupt's discharge may be exercised concurrently.

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A discharged bankrupt shall, notwithstanding his discharge, give such assistance as the trustee may require in the realisation and distribution of such of his property as is vested in the trustee, and if he fails to do so he is guilty of a contempt of court; and the Court may also, if it thinks fit, revoke his discharge but without prejudice to the validity of any sale, disposition or payment duly made or thing duly done subsequent to the discharge but before its revocation.

The trustee may, in his discretion and subject to section 30B, issue a certificate discharging a bankrupt from bankruptcy.

The trustee shall not issue a certificate discharging a bankrupt from bankruptcy under subsection (1) unless -

Notice of every discharge under subsection (1) shall be given to the Registrar and be published in the Gazette and advertised in any local newspaper.

The trustee shall, upon the application of a bankrupt or his creditor or other interested person, issue to the applicant a copy of the certificate of discharge upon the payment of the prescribed fee.

Objection by creditor to discharge of bankrupt under section 30A a 30B.

Before issuing a certificate of discharge under section 30A, the trustee shall serve on each creditor who has filed a proof of debt, a notice of his intention to discharge the bankrupt, together with a statement of his reasons for wanting to do so.

A creditor who has been served with a notice under subsection

and who wishes to enter an objection to the trustee issuing a certificate discharging the bankrupt may, within 21 days from the date of the trustee's notice, furnish the trustee a statement of the grounds of his objection.

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Bankruptcy

A creditor who does not furnish to the trustee a statement of the grounds of his objection in accordance with subsection (2) is deemed to have no objection to the discharge.

A creditor who has furnished the trustee with a statement of the grounds of his objection in accordance with subsection (2) may, within 21

days of being informed by the trustee that his objection has been rejected, make an application to the Court for an order prohibiting the trustee from issuing a certificate of discharge.

Every application under subsection (4) shall be served on the trustee and on the bankrupt and the Court shall hear the trustee and the bankrupt before making an order on the application.

On an application made under subsection (4), the Court may, if it thinks it just and expedient -

in the case of a settlement made before and in consideration of marriage where the settlor is not at the time of making the settlement able to pay all his debts without the aid of the property comprised in the settlement; or

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in the case of any covenant or contract made in consideration of marriage for the future settlement on, or for the settler's wife or children of, any money or property, wherein he had not at the date of his marriage any estate or interest (not being money or property of or in right of his wife), if the settlor is adjudged bankrupt or compounds or arranges with his creditors and it appears to the Court that such settlement, covenant or contract was made in order to defeat or delay creditors or was unjustifiable having regard to the state of the settlor's affairs at the time when it was made, the Court may refuse or suspend an order of discharge or grant an order subject to conditions or refuse to approve a composition or arrangement, as the case may be. in like manner as in cases where the debtor has been guilty of fraud.

Subject to this section and any condition imposed by the Court under section 30 or 3 OB, where a bankrupt is discharged, the discharged shall released him from all his debts provable in the bankruptcy but shall have no effect -

Discharge shall not release the bankrupt from -

A bankrupt may be discharged from any debt referred to in subsection (2) only by a certificate in writing of the Minister.

Discharge shall not affect the right of any secured creditor of the bankrupt to enforce his security for the payment of a debt from which the bankrupt is released.

Discharge shall not release the bailkrupt from -

Discharge shall not, except to such extent and on such conditions as the Court may direct, release the bankrupt from any debt which has been proved and which -

Discharge shall not release any person other than the bankrupt from any liability (whether as partner or co-trustee of the bankrupt or otherwise) from which the bankrupt is released by the discharge, or from any liability as surety for the bankrupt or as a person in the nature of such a surety.

For the purposes of subsection (6), "personal injuries" includes death and any disease or other impairment of a person's physical or mental condition.

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a

Where -

Where an adjudication is annulled under this section, all sales and dispositions of property and payments duly made and all acts theretofore done by the Official Receiver, trustee or other person acting under their authority or by the Court shall be valid, but the property of the debtor who was adjudged bankrupt shall vest in such person as the Court may appoint or in default of any such appointment revert to the debtor for all his estate or interest therein on such terms and subject to such conditions, if any, as the

Court may declare by order.

Notice of the order annulling an adjudication shall be forthwith gazetted and shall be advertised in a local newspaper.

For the purposes of this section -

Demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust shall not be provable in bankruptcy.

A person having notice of any act of bankruptcy available against the debtor shall not prove under the order for any debt or liability contracted by the debtor subsequently to the date of his so having noticed.

Save as provided in subsection (2), all debts and liabilities, present or future, certain or contingent, to which the debtor is subject at the date of the receiving order or to which he may become subject before his discharge by reason of any obligation incurred before the date of the receiving order, is deemed to be debts provable in bankruptcy.

An estimate shall be made by the trustee of the value of any debt or liability provable as provided in subsection (3) which, by reason of its being subject to any contingency or contingencies or for any other reason, does not bear a certain value.

Any person aggrieved by any estimate made by the trustee as provided in subsection (4) may appeal to the Court.

If in the opinion of the Court the value of the debt or liability is incapable of being fairly estimated the Court may make an order to that effect, and thereupon the debt or liability shall, for the purposes of this Act, be deemed to be a debt not provable in bankruptcy.

If in the opinion of the Court the value of the debt or liability is capable of being fairly estimated, the Court may direct the value to be assessed before the Court itself without the intervention of a jury and may give all necessary directions for this purpose and the amount of the value when assessed is deemed to be a debt provable in bankruptcy.

For the purposes of this Act, "liability" shall include -

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Where there have been mutual credits, mutual debts or other mutual dealings between a debtor against whom a receiving order is made under this Act and any other person proving or claiming to prove a debt under the receiving order, an account shall be taken of what is due from the one party to the other in respect of such mutual dealings and the sum due from the one party shall be set off against any sum due from the other party and the balance of the account and no more, shall be claimed or paid on either side respectively.

A person shall not be entitled under this section to claim the benefit of any set-off against the property of a debtor in any case where he had, at the time of giving credit to the debtor, notice of an act of bankruptcy committed by the debtor and available against him.

The assets remaining after payment of the actual expenses incurred in realising any of the assets of the debtor shall, subject to any order

48

Bankruptcy of the Court, first be liable to the following payments which shall be made in the following order of priority -

Whenever the Court is satisfied that property of a debtor in respect of whose estate a receiving order has been made has been preserved for the benefit of the creditors by means of legal proceedings brought by a creditor against the debtor without notice of any available act of bankruptcy committed by the debtor, the Court may in its discretion order the payment of the costs of such legal proceedings or any part of them (taxed as between party and party) out of the estate with the same priority as to payment as is provided in this section in respect of the taxed costs of the petitioner.

In the distribution of the property of a bankrupt, there shall be paid in priority to all other debts -

The debts mentioned in subsection (1) shall rank equally between themselves and shall be paid in full unless the property of the bankrupt is insufficient to meet them, in which case they shall abate in equal proportions between themselves.

Subject to the provisions contained in section 37 and to the retention of such sums as may be necessary for the costs of administration or otherwise, the debts mentioned in subsection (1) shall be discharged forthwith so far as the property of the debtor is sufficient to meet them.

In the event of a landlord or other person distraining or having distrained on any goods or effects of a bankrupt within 3 months next before the date of the receiving order, the debts to which priority is given by this section shall be a first charge on the goods or effects so distrained on or the proceeds of the sale thereof:

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Bankruptcy

Provided that in respect of any money paid under any such charge, the landlord or other person shall have the same rights of priority as the person to whom such payment is made.

This section applies in the case of a deceased person who dies insolvent as if he were a bankrupt and as if the date of his death were substituted for the date of the receiving order.

Subject to the provisions of this Act, all debts proved in the bankruptcy shall be paid pari passu.

If there is any surplus after payment of the foregoing debts, it shall be applied in payment of interest from the date of the receiving at the rate of 8 per cent per annum on all debts proved in the bankruptcy.

if any money has been paid by or on behalf of the apprentice or clerk to the bankrupt as a fee, the trustee may, on the application of the apprentice or clerk or of some person on his behalf, pay such sum as the trustee, subject to an appeal to the

Court, thinks reasonable out of the bankrupt's property to or for the use of the apprentice or clerk, regard being had to the amount paid by him or on his behalf and to the time during which he served with

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the bankrupt under the indenture or articles before the commencement of the bankrupt and to the other circumstances of the case.

Where it appears expedient to a trustee he may, on the application of any apprentice or articled clerk to the bankrupt or any person acting on behalf of such apprentice or articled clerk, instead of acting under subsection (I), transfer the indenture of apprenticeship or articles of a agreement to some other person.

Where a married women has been adjudged bankrupt, her husband shall not be entitled to claim any dividend as a creditor in respect of any money or other estate, lent or entrusted by him to her, until all claims of the other creditors of his wife for valuable consideration in money or money's worth have been satisfied.

a

Where a debtor has been adjudged bankrupt, any money or other estate of his wife, lent or entrusted by her to him, shall be treated as assets of his estate and the wife shall not be entitled to claim any dividend as a creditor in respect of any such money or other estate until all claims of the other creditors of the debtor for valuable consideration in money or money's worth have been satisfied.

a

In this section, "married woman" and "wife"

include concubine.

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Property available .for payment of debts

the time of the act of bankruptcy being committed on which a receiving order is made against him; or

if the bankrupt is proved to have committed more acts of bankruptcy than one, the time of the first of the acts of bankruptcy proved to have been committed by the bankrupt within 3 months next preceding the date of the presentation of the bankruptcy petition, but no bankruptcy petition, receiving order or adjudication shall be rendered invalid by reason of any act of bankruptcy anterior to the debt of the petitioning creditor.

property held by the bankrupt on trust for any other person;

and

the tools (if any) of his trade and the necessary wearing apparel and bedding of himself and his family dependent on and residing with him to a value, inclusive of tools and apparel and bedding, not exceeding $5,000 in the whole.

But it shall comprise the following particulars -

all such property as may belong to or be vested in the bankrupt at the commencement of the bankruptcy or may be acquired by or devolve on him before his discharge;

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CAP. 67 53

Where a second or subsequent receiving order is made against a bankrupt, or where an order is made for the administration in bankruptcy of the estate of a deceased bankrupt, then for the purposes of any proceedings consequent upon such order, the trustee in the last preceding bankruptcy is deemed to be a creditor in respect of any unsatisfied balance of the debts provable against the property of the bankrupt in that bankruptcy.

In the event of -

Where the trustee in any bankruptcy receives notice of a subsequent petition in bankruptcy against the bankrupt or, after his decease,

B. L. R.O. 71,3021

54

Bankruptcy of a petition for the administration of his estate in bankruptcy, the trustee shall -

Where a creditor has issued execution against the property of a debtor or has attached any debt due to him, he shall not be entitled to retain the benefit of the execution or attachment against the trustee in bankruptcy of the debtor unless he has completed the execution or attachment before the date of the receiving order and before notice of the presentation of any bankruptcy petition by or against the debtor, or of the commission of any available act of bankruptcy by the debtor.

For the purposes of this Act, an execution is deemed to be completed -

An execution completed as mentioned in subsection (2), is not invalid by reason only of its being an act of bankruptcy, and a person who purchases the goods in good faith under a sale by the bailiff shall in all cases acquire a good title to them against the trustee in bankruptcy.

Receiver;

Where, under an execution in respect of ajudgment for a sum exceeding $1 0,000, the property of a debtor is sold or money is paid in order to avoid sale -

[S 78/20] 21

Any settlement of property not being -

Any covenant or contract made by any person (hereinafter called the settlor) in consideration of his or her marriage, either for the future payment of money for the benefit of the settlor's wife, husband or children or for the future settlement on or for the settlor's wife, husband or children of property, wherein the settlor had not at the date of the marriage any estate or interest, whether vested or contingent, in possession or remainder, and not being money or property in right of the settlor's wife or husband, shall if

Bankruptcy

CAP. 67 57

the settlor is adjudged bankrupt and the covenant or contract has not been executed at the date of the commencement of his bankruptcy, be void against the trustee in the bankruptcy except so far as it enables the persons entitled under the covenant or coi~tract to claim for dividend in the settlor's bankruptcy under or in respect of the covenant or contract, but any such claim to dividend shall be postponed until all claims of the other creditors for valuable consideration in money or money's worth have been satisfied.

Any payment of money (not being payment of premiums on a policy of life assurance), or any transfer of property made by the settlor in pursuance of such a covenant or contract as aforesaid, shall be void against the trustee in the settlor's bankruptcy unless the persons to whom the payment or transfer was made prove that -

For the purposes of this section, "settlement" shall include any conveyance or transfer of property.

Where a person engaged in any trade or business makes an assignment to any other person of his existing or future book debts or any a class thereof and is subsequently adjudicated bankrupt, the assignment shall be void against the trustee as regards any book debts which have not been

58

Bankruptcy paid at the commencement of the bankruptcy unless the assignment has been registered with the Registrar in a register to be kept by him for that purpose:

Provided that nothing in this section shall have effect so as to render void any assignment of books debts due at the date of the assignment from specified debtors or of debts growing due under specified contracts or any assignment of book debts included in a transfer of a business made in good faith and for value, or in any assignment of assets for the benefit of creditors generally.

For the purposes of this section, "assignment" includes assignment by way of security and other charges on book debts.

Every -

This section does not affect the rights of any person making title in good faith and for valuable consideration through or under a creditor of the bankrupt.

Subject to the provisions of this Act with respect to the effect of bankruptcy on an execution or attachment and with respect to the avoidance of certain settlements, assignments and preferences, nothing in this Act shall invalidate, in the case of a bankruptcy-Bankruptcy

CAP. 67 59

Where -

before the actual date on which the receiving order is made;

without notice of the presentation of a bankruptcy petition;

and

is either pursuant to the ordinary course of business or otherwise in good faith.

Where any individual, company or firm has ascertained that a person having a deposit, whether a deposit in respect of capital or not, or a credit balance with such individual, company or firm is an undischarged bankrupt, then it shall be the duty of such individual, company or firm forthwith to inform the Oficial Receiver and the trustee in the bankruptcy of the existence of the deposit or credit balance, and such individual, company or firm shall not make any payment out of or in respect of the deposit or

Bankruptcy

CAP. 67 61

credit balance except under an order of the Court or in accordance with instructions from the Official Receiver or the trustee in the bankruptcy.

In the case of any contravention of the provisions of subsection (2), the individual or the directors and officers of the company, or the partners and manager of the firm, as the case may be, is guilty of an offence and liable on conviction to a fine of $5,000 and imprisonment for 2 years.

Realisation ofproperty

The trustee shall, as soon as may be, take possession of the deeds, books and documents of the bankrupt and all other parts of his property capable of manual delivery.

The trustee shall, in relation to and for the purpose of acquiring or retaining possession of the property of the bankrupt, be in the same position as if he were a receiver of the property appointed by the Court, and the Court may on his application enforce such acquisition or retention accordingly.

Where any part of the property of the barikrupt consists of stock, shares in ships, shares, or any other property transferable in the books of any company, office or person, the trustee may exercise the right to transfer the property to the same extent as the bankrupt might have exercised it if he had not become bankrupt.

Where any part of the property of the bankrupt consists of things in action, such things is deemed to have been duly assigned to the trustee.

Subject to the provisions of this Act with respect to property acquired by a binkrupt after adjudication, any treasurer or-other officer, or any banker, attorney, clerk, servant, comprador, employer or agent, of a bankrupt, shall pay and deliver to the trustee all money and securities in his possession or power, which he is not by law entitled to retain as against the bankrupt or the trustee. If he does not, he shall be guilty of a contenlpt of court and may be punished accordingly on the application of the trustee.

62

Bankruptcy

seize any part of the property of a bankrupt, or of a debtor against whom a receiving order has been made, in the custody or possession of the bankrupt or the debtor or of any other person; and

with a view to such seizure, break open any house, building or room of the bankrupt or the debtor where the bankrupt or the debtor is supposed to be, or any building or receptacle of the bankrupt or the debtor where any of his property is supposed to be, and where the Court is satisfied that there is reason to believe that property of a bankrupt, or of a debtor against whom a receiving order has been made, is concealed in a house or place not belonging to him, the Court may if it thinks fit grant a search warrant to any police officer or officer of the Court, who may execute it according to its tenor.

Where a bankrupt is an officer of the aimed forces and the police force of Brunei Darussalam or public officer or where a bankrupt is in receipt of any pay or pension from the Government or is entitled to any allowance or compensation granted by the Government, the trustee shall receive for distribution among the creditors so much of the bankrupt's pay, salary, pension, allowance or compensation as the Court, with the consent of

His Majesty the Sultan and Yang Di-Pertuan, on the application of the trustee, may direct.

Where a bankrupt is in receipt of a salary or income other than as mentioned in subsection (I), the Court on the application of the trustee may make such order as it thinks just for the payment of the salary or income or of any part thereof to the trustee to be applied by him in such manner as the Court may direct.

Bun kr uptcy

CAP. 67 63

Nothing in this section shall take away or abridge any power to dismiss a bankrupt or to declare the pay, pension, allowance, compensation, salary or income of any bankrupt to be forfeited.

Until a trustee is appointed, the Official Receiver shall be the trustee for the purposes of this Act, and immediately on a debtor being adjudged bankrupt, the property of the bankrupt shall vest in the trustee.

On the appointment of a trustee the property shall forthwith pass to and vest in the trustee appointed.

The property of the b a r h p t shall pass from trustee to trustee, including under that term the Official Receiver when he fills the office of trustee, and shall vest in the trustee for the time being during his continuance in office, without any conveyance, assignment or transfer whatever.

Where any part of the property of the bankrupt consists of -

The disclaimer shall -

A trustee shall not be entitled to disclaim a lease without the leave of the Court, except in any cases which may be prescribed by general rules, and the Court may, before or on granting such leave -

The trustee shall not be entitled to disclaim any property in pursuance of this section in any case where -

Bankruptcy

CAP. 67 65

The Court may, on the application of any person who is. as against the trustee, entitled to the benefit or subject to the burden of a contract made with the bankrupt, make an order rescinding the contract on such terms as to payment by or to either party of damages for the non-perfomlance of the contract, or otherwise. as to the Court may seem equitable, and any damages payable under the order to any such person may be proved by him as a debt under the barkruptcy.

The Court may -

Where on the release, removal, resignation or death of a trustee in bankruptcy the Official Receiver is acting as trustee, he may disclaim any property which might be disclaimed by a trustee under the foregoing provisions, notwithstanding that the time prescribed by this section for such disclaimer has expired, but such power of disclaimer shall be exercisable only within 12 months after the Official Receiver has become trustee in the circumstances aforesaid or has become aware of the existence of such property, whichever period may last expire.

Any person injured by the operation of a disclaimer under this section is deemed to be a creditor of the bankrupt to the extent of the injury and may accordingly prove the same as a debt under the bankruptcy.

sell all or any part of the property of the bankrupt

(including the goodwill of the business. if any, and the book debts due or growing due to the bankrupt). by public auction or private contract, with power to transfer the whole thereof to any person or company, or to sell the same in parcels, and any transfer of a business of a bankrupt by the Oficial Receiver or trustee is deemed to be exempted from the provisions of any written law relating to the fraudulent transfer of businesses;

give receipts for any money received by him, which receipts shall effectually discharge the person paying the money from all responsibility in respect of the application thereof;

prove, rank, claim and draw a dividend in respect of any debt due to the bankrupt; and

exercise any powers the capacity to exercise which is vested in the trustee under this Act and execute any powers of attorney, deeds and other instruments for the purposes of carrying into effect the provisions of this Act.

The trustee may, with the permission of the committee of inspection, do all or any of the following things -

The permission given for the purposes of this section shall not be a general permission to do all or any of the things mentioned in subsection

but shall only be a permission to do the particular thing or things for which permission is sought in the specified case or cases.

The trustee may, if he thinks it necessary for the purposes of ensuring that a bankrupt does not leave Brunei Darussalam during the administration of his estate, issue a direction to the Controller of Immigration to request that the bankrupt be prevented from leaving Brunei Darussalam.

Subject to any order issued or made under any written law relating to banishment or immigration, the Controller of Immigration shall, pursuant to the direction under subsection (I), take or cause to be taken by any immigration officer such measures as may be necessary to prevent the bankrupt named in the direction from leaving Brunei Darussalam, including the detention of the bankrupt's passport, certificate of identity or travel document authorising the bankrupt to leave or enter Brunei Darussalam.

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CAP. 67 69

Where the Controller of Immigration has detained the passport, certificate of identity or other travel document of a bankrupt under subsection (2), the Controller shall forthwith forward the passport, certificate of identity or travel document to the trustee.

Notwithstanding subsections (I), (2) and (9, the trustee may, if he thinks fit, detain any passport, certificate of identity or other travel document authorising the bankrupt to leave or enter Brunei Darussalam.

The trustee may, if he thinks fit, retain or return to the bankrupt the passport, certificate of identity or travel document forwarded to him by the Controller of Immigration under subsection (3) or detained by him under subsection (4).

superintend the management of the property of the bankrupt or of any part thereof; or

carry on the trade (if any) of the bankrupt for the benefit of his creditors, and in any other respect to aid in administering the property, in such manner and on such terms as the trustee may direct.

the trustee shall not be entitled to sell or authorise the sale of any copies of the work, or to perform or authorise the performance of the work, except on the terms of paying to the author such sums by way of royalty or share of the profits as would have been payable by the bankrupt;

nor shall he, without the consent of the author or of the

Court, be entitled to assign the right or transfer the interest or to grant any interest in the right by licence, except upon terms which will secure to the author payments by way of royalty or share of the profits at a rate not less than that which the bankrupt was liable to

Pay.

the Official Receiver or trustee has seized or disposed of any goods, chattels, property or other effects in the possession or on the premises or under the control of a debtor against whom a receiving order has been made; and

it is thereafter made to appear that the goods, chattels, property or other effects were not at the date of the receiving order the property of the debtor, the Official Receiver or trustee shall not be personally liable for any loss or damage arising from the seizure or disposal sustained by any person claiming such property nor for the costs of any proceedings taken to establish a claim thereto, unless the Court is of opinion that the Official Receiver or trustee has been guilty of bad faith or of gross negligence in respect of the property.

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CAP. 67 71

Distribution ofproperty

Subject to the retention of such sums as may be necessary for

.the costs of administration, or otherwise, the trustee shall with all convenient speed declare and distribute dividends amongst the creditors who have proved their debts.

The first dividend, if any, shall be declared and distributed within 4 months after the conclusion of the first meeting of creditors, unless the trustee satisfies the Court that there is sufficient reason for postponing the declaration to a later date.

Subsequent dividends shall, in the absence of sufficient reason to the contrary, be declared and distributed at intervals of not more than 6

months.

Before declaring a dividend, the trustee shall cause notice of his intention to do so to be gazetted and shall also send reasonable notice thereof to each creditor mentioned in the bankrupt's statement who has not proved his debt.

When the trustee has declared a dividend, he shall cause to be gazetted and shall send to each creditor who has proved a notice showing the amount of the dividend and when and how it is payable.

Where one partner of a firm is adjudged bankrupt, a creditor to whom the bankrupt is indebted jointly with the other partners of the firm, or any of them, shall not receive any dividend out of the separate property of the bankrupt until all the separate creditors have received the full amount of a their respective debts.

Where joint and separate properties are being administered, dividends of the joint and separate properties shall, unless otherwise directed by the Court on the application of any person interested, be declared together and the expenses of and incidental to such dividends shall be fairly apportioned-by the trustee between the joint and separate properties, regard being had to the work done for and the benefit received by each property.

B. L. R.O. 7/,302/

72

Bankruptcy

In the calculation and distribution of a dividend, the trustee shall make provision for debts provable in bankruptcy appearing from the bankrupt's statements, or otherwise, to be due to persons resident in places so distant from Brunei Darussalam that in the ordinary course of communication, they have not had sufficient time to tender their proofs or to establish them if disputed and also for debts provable in bankruptcy the subject of claims not yet determined.

He shall also make provision for any disputed proofs or claims and for the expenses necessary for the administration of the estate or otherwise.

Subject to the provisions in this section, he shall distribute as dividend all money in hand.

Where a debt has been proved and the debt includes interest, such interest shall, for the purposes of dividend, be calculated at a rate not exceeding 8 per cent per annum and be calculated only up to the date of the receiving order, without prejudice to the right of a creditor to receive out of the estate any higher rate of interest to which he may be entitled after all the debts proved in the state have been paid in full.

In dealing with the proof of the debt, the following rules shall be observed -

For the purposes of this section, "interest" includes any pecuniary consideration in lieu of interest and any penalty or late payment charge by whatever name called.

When the trustee has realised all the property of the bankrupt or so much thereof as can be realised without needlessly protracting the trusteeship, he shall declare a final dividend but before so doing he shall give notice in manner prescribed to the persons whose claims to be creditors have been notified to him but not established to his satisfaction that if they do not establish their claims to the satisfaction of the Court within a time limited by the notice, he will proceed to make a final dividend without regard to their claims.

After the expiration of the time so limited or if the Court on application by any such claimant grants him further time for establishing his claim, then on the expiration of such further time, the property of the bankrupt shall be divided among the creditors who have proved their debts, without regard to the claims of any other persons.

B.L.R.O. 7/_30_31

74

Bankruptcy

A bankrupt shall, in addition to any other duty specified in this

Act -

Where a bankrupt has changed his residential address and has made a report of the change under regulation 13 of the National Registration

Regulations (Rg 1 of Chapter 19) made pursuant to section 6 of the National

Registration Act (Chapter 19) -

In addition to any disqualification under any other written law.

a bankrupt shall be disqualified from being appointed or acting as a trustee or personal representative in respect of any trust, estate or settlement, except with leave of the court.

Any disqualification to which a bankrupt is subject under this section shall cease when -

Any person who acts as a trustee or personal representative while he is disqualified by virtue of subsection (1) is guilty of an offence and liable on conviction to a fine not exceeding $5,000, imprisonment for a term not exceeding 12 months or both.

Where a bankrupt has not obtained his discharge -

he shall not leave, remain or reside outside Brunei

Darussalam without the previous permission of the trustee.

A bankrupt who fails to comply with this section is guilty of an offence and liable on conviction to a fine not exceeding $10,000, imprisonment for a term not exceeding 2 years or both.

Bankruptcy

CAP. 67 77

For the purposes of this section, references to the "trustee" shall include references to the "Official Receiver". as the case may be.

Subject to the provisions of subsection (2). His Majesty the

Sultan and Yang Di-Pertuan may appoint such persons as he thinks fit to be

Official Receiver and deputy official receiver of debtors' estates under this

Act.

The Official Receiver shall act under the general authority and direction of the Minister* and shall also be an officer of the Court.

Every deputy official receiver shall have all the powers conferred on the Official Receiver by this Act.

Every deputy official receiver shall act under the general authority and direction of the Official Receiver for the time being or. if there is no Official Receiver for the time being, under the general authority and direction of the Minister, and shall also be an officer of the Court.

The duties of the Official Receiver shall have relation both to the conduct of the debtor and to the administration of his estate.

The Official Receiver may, for the purpose of affidavits verifying proofs, petitions or proceedings under this Act, administer oaths.

a

All provisions in this Act or any other written law referring to the trustee in a bankruptcy shall, unless the context otherwise requires or the

Act otherwise provides, include the Official Receiver when acting as trustee.

* Transferred from the Minister to the Permanent Secretary, Ofice of Prime Minister with effect from 26th July 1 999 -

[S 3 7/1999]

78

Bankruptcy

The trustee shall -

to investigate the conduct of the debtor and to report to the

Court stating whether there is reason to believe that the debtor has committed any act which constitutes a misdemeanor under this Act or which would justify the Court in refusing, suspending or qualifying an order for his discharge;

to conduct the public examination of the debtor; and

to take such part and give such assistance in relation to the prosecution of any fraudulent debtor as the Public Prosecutor may direct.

As regards the estate of a debtor, it shall be the duty of the

Official Receiver -

For the purpose of his duties as interim receiver or manager, the

Official Receiver -