Bankruptcy order in respect of individuals and partnership firms

A repayment plan was tried and failed: the creditors rejected it, or the debtor stopped paying halfway. The debtor still owes lakhs, the creditors are still unpaid, and everyone is back where they started, only poorer. What now? Chapter IV of Part III answers with the last resort, a bankruptcy order: the debtor's property passes to a trustee, creditors share it out, and after a period the debtor is discharged. This topic covers how the order is obtained, what it does to the debtor, and how the trustee's office works.

In two minutes

A bankruptcy order under s.126 is available only after the insolvency resolution process ends in one of the ways s.121 lists; it vests the debtor's estate in a trustee, stops creditors' actions, imposes disqualifications and restrictions on the bankrupt, and ends with discharge under s.138.

The rest of this chapter

The full explanation, the cheat sheet, every previous-year question at every mark weight, the quiz and the answer skeletons are part of Bankruptcy Laws on LexBlox Semester. Sign in to unlock the subject, or read Module 1 of Legal Language and Writing free.