UNIVERSITY OF NAIROBI
COLLEGE OF HUMANITIES AND SOCIAL SCIENCES
SCHOOL OF LAW
LL.B. III MODULE 2: DAY
TERM PAPER: GPR 317:BANKRUPTCY AND COMMERCIAL SECURITIES
AUGUST 2013
G34/36801/2010
QUESTION: Critically examine the salient features, reforms and innovations relating to individual insolvency as enshrined in the Kenyan Insolvency Bill 2012 as contrasted with the Bankruptcy Act, cap 53, Laws of Kenya.
INTRODUCTION
The Kenyan Insolvency Bill 2012 is an act of parliament to: amend and consolidate the law relating to the insolvency of natural persons and incorporated and unincorporated bodies; to provide alternative procedures to bankruptcy that will enable the affairs of insolvent natural persons to be managed for
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The insolvency practitioner would be required to be qualified and the aim of the legislation was to “help the profession to clean up its act”. Challenges to implementation were, amongst other things:
Legislating for a modern insolvency legal framework
The acceptance of that framework by society;
Explaining to stakeholders how the system would Function
Ensuring that the laws were passed by Parliament and then establishing the institutions necessary to implement them
The presence of sufficient legal and economic expertise to implement the new regime.
SALIENT FEATURES RELATING TO INDIVIDUAL INSOLVENCY AS ENSHRINED IN INSOLVENCY BILL 2012
The most important and noticeable features relating to individual insolvency are substantially similar to those of corporate bodies’ insolvency however the provisions of liquidation and winding up are more detailed and exclusive to incorporated and unincorporated bodies alike.
These salient features are as follows:
1. Circumstances where the individual is insolvent include where he has insufficient assets with which to discharge his debts and financial liabilities.
NOTE: An individual may be insolvent but not be bankrupt however cannot be bankrupt without being declared insolvent first.
2. Once insolvency is established a receiving order is prepared and granted by the court upon application of a bankruptcy petition filed by either the creditors or the debtor. NOTE: Once an order has been made against an
When considering bankruptcy, pre-bankruptcy planning is one of the most important steps for Harv and Lois. In a Chapter 7 bankruptcy, the TIB will take all non-exempt valuable property that he can sell to distribute the money to the creditors. The main idea behind the Chapter 7 bankruptcy is ‘liquidation’. However, Harv and
Chapter 7 bankruptcy is often referred to as the liquidation bankruptcy because your non-exempt assets are sold (liquidated) by a bankruptcy trustee, with the proceeds (money) being distributed among creditors in order of highest priority to lowest.
Source of payments: The petitioners claim liquidity and the ability to pay interest or principal on amount owed, but conclusive findings show the insufficiency to pay interest or principal balance. This factor supports the treatment of the advances as equity.
Under the United States Constitution, any valid bankruptcy system must be federally enacted. Two separate provisions of Article I necessitate this conclusion. Article I, Section 10, Clause 1 of the Constitution prohibits any state from passing, “. . . any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, . . . .” No bankruptcy system can realistically exist without the ability to impair the obligations of contracts. The entire purpose of a bankruptcy proceeding is to allow a financially distressed debtor to discharge its debt obligations after paying off as much of its debt as possible. A large majority of a municipal debtor’s debt will come from some contractual obligation that the States are explicitly prohibited from impairing. Therefore, Article I, Section
An insolvency practitioner can conduct a solvency review of your company and outline available options, these may include refinancing, restructuring or changing your company’s activities, or appointing an external administrator.
6) It will pave way for the inclusion of representative legal actors within the governing authorities
Most people file for bankruptcy because they’re indebted to a person or corporation, like a bank for example. When you file for Chapter 7 bankruptcy, an impartial trustee is appointed to your case and handles the liquidation of
b. Other indications of financial difficulties (default on loan or similar agreements, arrearages in dividends, denial of usual trade credit from suppliers, restructuring of debt, noncompliance with statutory capital requirements, the need to seek new sources or methods of financing, or the need to dispose of substantial assets).
When reviewing the American Bankruptcy Institutes website I was researching the total number of bankruptcies in 2012, the total number of non-bankruptcies in 2012, and the total number of business bankruptcies in 2012. My findings concluded that the total number of bankruptcies in 2012 which consists of business and non-business fillings which includes the states and D.C. was 1,232,294 (ABI, 2013). The total number of non-business filings in the states and D.C. in 2012 was 1,232,294. The report shows that there were 811,789 non-business Chapter 7 filings and 352,553 non business Chapter 13 filings in 2012 (ABI, 2013).
Not everyone qualifies for Chapter 7 bankruptcy. Therefore, filing for this type of protection is only a good option for you if you meet the eligibility requirements. Among other qualifications, your income must be under the state median in order to file Chapter 7 bankruptcy, according to the United States Courts. If your income is over the median, you may still qualify if you are able
Chapter Seven personal bankruptcy is many times known as "straight" or alternatively "liquidation" bankruptcy -- it cancels your current debt, but one may have to let the bankruptcy court liquidate some of an individual's possessions for the benefit of your debt collectors. ("Chapter 7" pertains to the section of the particular federal government Bankruptcy Code which has the bankruptcy legislations.)
• Explain that the remedies can be covered in court enforceable undertakings or ordered by the Court.
From the begin, a great insolvency legal counselor ought to help you to figure out which section of liquidation to record and will offer sound reasons why. In the event that you don't know anything about the diverse sections, this is a fantastic motivation to start counseling a legal counselor. Numerous legal advisors will even offer a free conference where you can just case the exhortation and proceed onward to deal with the rest of the case yourself. Regularly, however, legal counselors will charge by visit or by action, for example, showing up at the courthouse or recording printed
Over the years, the process of declaring bankruptcy has become incredibly simple. Because of this change, the number of people declaring bankruptcy is at an all time high. Today, bankruptcy is a common thing among companies and individuals alike. The American bankruptcy law allows people to avoid paying their debts by offering the debtors a discharge without a harsh consequence. By not having repercussions for their actions, bankruptcy filers often plan future bankruptcies, allowing them to steal even more money from creditors with no punishment. There are 13 different chapters in the bankruptcy system with the principal chapters being 7,11, and 13. You can only file for bankruptcy under these three chapters, the others are there to
The first Indication of financial distress is when firm does not have enough liquid assets (short-term assets) to cover (pay for) current