Insolvency Act 1985

• (3) For the purposes of this section an appeal against a conviction is pending—

• (a) in any case, until the expiration of the period of twenty eight days beginning with the date of conviction ;

• (b) if notice of appeal to the Court of Appeal is given during that period and during that period the appellant notifies the official receiver thereof, until the determination of the appeal and thereafter for so long as an appeal to the House of Lords is pending within the meaning of section 40(5) of the Powers of Criminal Courts Act 1973.

Duration of bankruptcy

Period of bankruptcy

126

• (1) The bankruptcy of an individual against whom a bankruptcy order has been made—

• (a) shall commence with the day on which that order is made; and

• (b) shall continue until that individual is discharged from bankruptcy under this Chapter.

• (2) Subject to subsection (4) below, a bankrupt is discharged from bankruptcy—

• (a) in the case of an individual who was adjudged bankrupt on a petition under section 119(1)(d) above or who had been an undischarged bankrupt at any time in the period of fifteen years ending with the commencement of the bankruptcy, by an order of the court under section 127 below ; and

• (b) in any other case, by the expiration of the relevant period.

• (3) Subject to subsection (4) below, the relevant period for the purposes of subsection (2)(b) above is—

• (a) where a certificate for the summary administration of the bankrupt's estate has been issued and is not revoked before the bankrupt's discharge, the period of two years beginning with the commencement of the bankruptcy; and

• (b) in any other case, the period of three years beginning with the commencement of the bankruptcy.

• (4) Where the court is satisfied on the application of the official receiver that an undischarged bankrupt in relation to whom subsection (2)(b) above applies has failed or is failing to comply with any of his obligations under this Part, the court may order that the relevant period shall cease to run for such period, or until the fulfilment of such conditions (including a condition requiring the court to be satisfied as to any matter), as may be specified in the order.

• (5) This section is without prejudice to any power of the court to annul a bankruptcy order.

Discharge by order of the court

127

• (1) An application for an order of the court discharging an individual from bankruptcy in a case falling within section 126(2)(a) above may be made by the bankrupt at any time after the end of the period of five years beginning with the commencement of the bankruptcy.

• (2) On an application under this section the court may—

• (a) refuse to discharge the bankrupt from bankruptcy;

• (b) make an order discharging him from bankruptcy absolutely ; or

• (c) make an order discharging him from bankruptcy subject to such conditions with respect to any income which may subsequently become due to him, or with respect to property devolving upon him, or acquired by him, after his discharge, as may be specified in the order;

and the court may provide for an order falling within paragraph (b) or (c) above to have immediate effect or to have its effect suspended for such period, or until the fulfilment of such conditions (including a condition requiring the court to be satisfied as to any matter), as may be specified in the order.

Effect of discharge

128

• (1) Subject to subsections (2) to (6) below, where a bankrupt is discharged from his bankruptcy, the discharge shall release him from all the bankruptcy debts but shall have no effect on the functions (so far as they remain to be carried out) of the trustee of his estate or on the operation, for the purposes of the carrying out of those functions, of the provisions of this Part and, in particular, shall not affect the right of any creditor of the bankrupt to prove in the bankruptcy for any debt from which the bankrupt is released.

• (2) Discharge from bankruptcy 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.

• (3) Discharge from bankruptcy shall not release a bankrupt from any bankruptcy debt which he incurred in respect of, or forbearance in respect of which was secured by means of, any fraud or fraudulent breach of trust to which he was a party.

• (4) Discharge from bankruptcy shall not release a bankrupt from any liability in respect of a fine imposed for an offence or from any liability under a recognisance except, in the case of a penalty imposed for an offence under any enactment relating to the public revenue or of a recognisance, with the consent of the Treasury.

• (5) Discharge from bankruptcy shall not, except to such extent and on such conditions as the court may direct, release a bankrupt from any bankruptcy debt which—

• (a) consists in a liability to pay damages for negligence, nuisance or breach of a statutory, contractual or other duty, being damages in respect of personal injuries to any person; or

• (b) arises under any order made in family proceedings or in domestic proceedings.

• (6) Discharge from bankruptcy shall not release a bankrupt from such other bankruptcy debts, not being debts provable in his bankruptcy, as are prescribed.

• (7) Discharge from bankruptcy 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.

• (8) In this section—

• " domestic proceedings " means domestic proceedings within the meaning of the Magistrates' Courts Act 1980 and any proceedings which would be such proceedings but for section 65(1)(ii) of that Act (proceedings for variation of order for periodical payments);

• " family proceedings " has the same meaning as in Part V of the Matrimonial and Family Proceedings Act 1984 ;

• " fine " has the same meaning as in the said Act of 1980 ;

• " personal injuries " includes death and any disease or other impairment of a person's physical or mental condition.

Power to annul bankruptcy order in certain cases

129

• (1) The court may annul a bankruptcy order if it at any time appears to the court—

• (a) that, on any grounds existing at the time the order was made, the order ought not to have been made ; or

• (b) that, to the extent required by the rules, the bankruptcy debts and the expenses of the bankruptcy have all, since the making of the order, been either paid or secured for to the satisfaction of the court.

• (2) The court may annul a bankruptcy order made against an individual on a petition under paragraph (a), (b) or (c) of subsection (1) of section 119 above if it at any time appears to the court, on an application by the Official Petitioner—

• (a) that the petition was pending at a time when a criminal bankruptcy order was made against the individual or was presented after such an order was so made; and

• (b) no appeal is pending (within the meaning of section 125 above) against the individual's conviction of any offence by virtue of which the criminal bankruptcy order was made;

and the court shall annul a bankruptcy order made on a petition under paragraph (d) of that subsection if it at any time appears to the court that the criminal bankruptcy order on which the petition was based has been rescinded in consequence of an appeal.

• (3) The court may annul a bankruptcy order whether or not the bankrupt has been discharged from the bankruptcy.

• (4) Where the court annuls a bankruptcy order (whether under this section or section 116 above)—

• (a) any sale or other disposition of property, payment made or other thing duly done under this Part by or under the authority of the official receiver or a trustee of the bankrupt's estate or by the court shall be valid ; but

• (b) if any of the bankrupt's estate is then vested under this Part, in such a trustee, it shall vest in such person as the court may appoint or, in default of any such appointment, revert to the bankrupt on such terms, if any, as the court may direct;

and the court may include in its order such supplemental provisions as may be authorised by the rules.

• (5) In determining for the purposes of section 126 above whether a person was an undischarged bankrupt at any time, any time when he was a bankrupt by virtue of an order that was subsequently annulled shall be disregarded.

CHAPTER III — Protection of Bankrupt's Estate and Investigation of his Affairs

Preliminary

Definition of bankrupt's estate

130

• (1) Subject to the following provisions of this section, a bankrupt's estate for the purposes of this Part shall comprise—

• (a) all property belonging to or vested in the bankrupt at the commencement of the bankruptcy ;

• (b) any property which by virtue of any of the following provisions of this Part is comprised in that estate or is treated as falling within paragraph (a) above.

• (2) Subject to section 155 below, subsection (1) above does not apply to—

• (a) such tools, books, vehicles and other items of equipment as are necessary to the bankrupt for use personally by him in his employment, business or vocation;

• (b) such clothing, bedding, furniture, household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his family.

• (3) Subsection (1) above does not apply to property held by the bankrupt on trust for any other person.

• (4) Subsection (1) above does not apply to the right of nomination to a vacant ecclesiastical benefice.

• (5) References in this Part to property, in relation to a bankrupt, include references to any power exercisable by him over or in respect of property except in so far as the power is exercisable over or in respect of property not for the time being comprised in the bankrupt's estate and—

• (a) is so exercisable at a time after either the official receiver has had his release in respect of that estate under section 146(2) below or a meeting summoned by the trustee of that estate under section 168 below has been held; or

• (b) cannot be so exercised for the benefit of the bankrupt;

and a power exercisable over or in respect of property shall be deemed for the purposes of this Part to vest in the person entitled to exercise it at the time of the transaction or event by virtue of which it is exercisable by that person (whether or not it becomes so exercisable at that time).

• (6) For the purposes of this Part property comprised in a bankrupt's estate is so comprised subject to the rights of any person other than the bankrupt (whether as a secured creditor of the bankrupt or otherwise) in relation thereto, but disregarding—

• (a) any rights in relation to which a statement such as is required by section 120(5)(a) above was made in the petition on which the bankrupt was adjudged bankrupt ; and

• (b) any rights which have been otherwise given up in accordance with the rules.

• (7) This section has effect subject to the provisions of any enactment not contained in this Act under which any property is to be excluded from a bankrupt's estate.

Restrictions applying after presentation of petition

Restrictions on dispositions of property

131

• (1) Where a person is adjudged bankrupt, any disposition of property made by that person in the period to which this section applies shall be void except to the extent that it is or was made with the consent of the court, or is or was subsequently ratified by the court.

• (2) Subsection (1) above applies to a payment (whether in cash or otherwise) as it applies to a disposition of property and, accordingly, where any payment is void by virtue of that subsection, the person paid shall hold the sum paid for the bankrupt as part of his estate.

• (3) This section applies to the period beginning with the day of the presentation of the petition for the bankruptcy order and ending with the vesting, under Chapter V of this Part, of the bankrupt's estate in a trustee.

• (4) The preceding provisions of this section shall not give a remedy against any person—

• (a) in respect of any property or payment which he received before the commencement of the bankruptcy in good faith, for value and without notice that the petition had been presented; or

• (b) in respect of any interest in property which derives from an interest in respect of which there is, by virtue of this subsection, no remedy.

• (5) Where after the commencement of his bankruptcy a bankrupt has incurred a debt to a banker or other person by reason of the making of a payment which is void under this section, that debt shall be deemed for the purposes of this Part to have been incurred before the commencement of the bankruptcy unless—

• (a) that banker or person had notice of the bankruptcy before the debt was incurred ; or

• (b) it is not reasonably practicable for the amount of the payment to be recovered from the person to whom it was made.

• (6) A disposition of property shall be void under this section notwithstanding that the property is not or, as the case may be, would not be comprised in the bankrupt's estate; but nothing in this section shall affect any disposition made by any person of property held by him on trust for any other person.

Restrictions on proceedings and remedies

132

• (1) At any time when proceedings on a bankruptcy petition are pending or an individual has been adjudged bankrupt the court may stay any action, execution or other legal process against the property or person of the debtor or, as the case may be, of the bankrupt.

• (2) Any court in which proceedings are pending against any individual may, on proof that a bankruptcy petition has been presented in respect of that individual or that he is an undischarged bankrupt, either stay the proceedings or allow them to continue on such terms as it thinks fit.

• (3) Subject to sections 179 and 180 below, after the making of a bankruptcy order no person who is a creditor of the bankrupt in respect of a debt provable in the bankruptcy shall—

• (a) have any remedy against the property or person of the bankrupt in respect of that debt; or

• (b) before the discharge of the bankrupt, commence any action or other legal proceedings against the bankrupt except with the leave of the court and on such terms as the court may impose.

• (4) Subject to subsection (5) below, subsection (3) above shall not affect the right of a secured creditor of the bankrupt to enforce his security.

• (5) Where any goods of an undischarged bankrupt are held by any person by way of pledge, pawn or other security, the official receiver may, after giving notice in writing of his intention to do so, inspect the goods; and where such a notice has been given to any person, that person shall not, without the leave of the court, be entitled to realise his security unless he has given the trustee of the bankrupt's estate a reasonable opportunity of inspecting the goods and of exercising the bankrupt's right of redemption.

• (6) References in this section to the property or goods of a bankrupt are references to any of his property or goods, whether or not comprised in his estate.

Receivership

Power to appoint interim receiver

133

• (1) The court may, if it is shown to be necessary for the protection of the debtor's property, at any time after the presentation of a bankruptcy petition and before making a bankruptcy order, appoint the official receiver to be interim receiver of the debtor's property.

• (2) Where the court has, on a debtor's petition, appointed a person under section 123(2) above and it is shown to the court as mentioned in subsection (1) above, the court may, without making a bankruptcy order, appoint that person, instead of the official receiver, to be interim receiver of the debtor's property.

• (3) The court may by an order appointing any person to be an interim receiver direct that his powers shall be limited or restricted in any respect but, save as so directed, an interim receiver shall have, in relation to the debtor's property, all the rights, powers, duties and immunities of a receiver and manager under section 134 below.

• (4) An order of the court appointing any person to be an interim receiver shall require that person to take immediate possession of the debtor's property, or, as the case may be, the part of it to which his powers as interim receiver are limited.

• (5) Where an interim receiver has been appointed under this section the debtor shall give the interim receiver such inventory of his property and such other information, and shall attend on the interim receiver at such times, as the interim receiver may for the purpose of carrying out his functions under this section reasonably require.

• (6) Where an interim receiver is appointed under this section, subsection (3) of section 132 above shall apply for the period between the appointment and the making of a bankruptcy order on the petition, or the dismissal of the petition, as if the appointment were the making of such an order.

• (7) A person shall cease to be interim receiver of a debtor's property if the bankruptcy petition relating to the debtor is dismissed, if a bankruptcy order is made on the petition or if the court by order otherwise terminates the appointment.

• (8) References in this section to the debtor's property are references to all his property, whether or not it would be comprised in his estate if he were adjudged bankrupt.

Receivership pending appointment of trustee

134

• (1) Between the making of a bankruptcy order and the time at which the bankrupt's estate vests in a trustee under Chapter V of this Part the official receiver shall be the receiver and (subject to section 198 below) the manager of the bankrupt's estate and shall be under a duty to act as such,

• (2) The function of the official receiver while acting as receiver or manager of the bankrupt's estate under this section shall be to protect the bankrupt's estate and for this purpose—

• (a) he shall have the same powers as if he were a receiver or manager appointed by the High Court; and

• (b) he shall be entitled to sell or otherwise dispose of any perishable goods comprised in the bankrupt's estate and any other goods so comprised the value of which is likely to diminish if they are not disposed of.

• (3) The official receiver while acting as receiver or manager of the bankrupt's estate under this section shall take all such steps as he thinks fit for protecting any property which may be claimed for the estate by the trustee of that estate.

• (4) The official receiver while acting as receiver or manager of the bankrupt's estate under this section shall not, except in pursuance of directions given by the Secretary of State, be required to do anything that involves his incurring expenditure.

• (5) The official receiver while acting as the receiver or manager of the bankrupt's estate under this section may, if he thinks fit, at any time summon a general meeting of the bankrupt's creditors ; and the official receiver shall summon such a meeting if he is directed to do so by the court.

• (6) Where—

• (a) the official receiver acting as receiver or manager of the bankrupt's estate under this section seizes or disposes of any property which is not comprised in the bankrupt's estate; and

• (b) at the time of the seizure or disposal the official receiver believes, and has reasonable grounds for believing, that he is entitled (whether in pursuance of an order of the court or otherwise) to seize or dispose of that property,

the official receiver shall not be liable to any person in respect of any loss or damage resulting from the seizure or disposal except in so far as that loss or damage is caused by his negligence and shall have a lien on the property, or the proceeds of its sale, for such of the expenses of the bankruptcy as were incurred in connection with the seizure or disposal.

• (7) This section shall not apply where by virtue of section 144 below a bankrupt's estate vests in a trustee immediately on the making of the bankruptcy order.

Ascertainment and investigation of bankrupt's affairs

Statement of affairs

135

• (1) Where a bankruptcy order has been made otherwise than on a debtor's petition the bankrupt shall submit a statement of his affairs to the official receiver before the end of the period of twenty-one days beginning with the commencement of the bankruptcy.

• (2) The statement of affairs shall contain—

• (a) such particulars of the bankrupt's creditors and of his debts and other liabilities and of his assets as may be prescribed; and

• (b) such other information as may be prescribed.

• (3) The official receiver may, if he thinks fit—

• (a) release the bankrupt from his duty under subsection (1) above; or

• (b) extend the period specified in that subsection ;

and where the official receiver has refused to exercise a power conferred by this section, the court, if it thinks fit, may exercise it.

• (4) A bankrupt who without reasonable excuse fails to comply with the obligation imposed by this section or without reasonable excuse submits a statement of affairs that does not comply with the prescribed requirements shall, in addition to any other punishment to which he may be subject, be guilty of a contempt of court and liable to be punished accordingly.

Investigatory duties of official receiver

136

• (1) Subject to subsection (5) below, it shall be the duty of the official receiver to investigate the conduct and affairs of every bankrupt and to make such report (if any) to the court as he thinks fit.

• (2) Where an application is made by the bankrupt under section 127 above for his discharge from bankruptcy, it shall be the duty of the official receiver to make a report to the court with respect to the prescribed matters; and the court shall consider that report before determining what order (if any) to make under that section.

• (3) A report by the official receiver under this section shall, in any proceedings, be prima facie evidence of the facts stated therein.

• (4) In subsection (1) above the reference to the conduct and affairs of a bankrupt includes a reference to his conduct and affairs before the making of the order by which he was adjudged bankrupt.

• (5) Where a certificate for the summary administration of the bankrupt's estate is for the time being in force, the official receiver shall carry out an investigation under subsection (1) above only if he thinks fit.

Public examination of bankrupt

137

• (1) Where a bankruptcy order has been made, the official receiver may at any time before the discharge of the bankrupt apply to the court for the public examination of the bankrupt.

• (2) Unless the court otherwise orders, the official receiver shall make an application under subsection (1) above if notice requiring him to do so is given to him, in accordance with the rules, by one of the bankrupt's creditors with the concurrence of not less than one-half, in value, of those creditors (including the creditor giving notice).

• (3) On an application under subsection (1) above, the court shall direct that a public examination of the bankrupt shall be held on a day appointed by the court; and the bankrupt shall attend on that day and be publicly examined as to his affairs, dealings and property.

• (4) The following may take part in the public examination of a bankrupt and may question the bankrupt concerning his affairs, dealings and property and the causes of his failure, namely—

• (a) the official receiver and, in the case of an individual adjudged bankrupt on a petition under section 119(1)(d) above, the Official Petitioner ;

• (b) the trustee of the bankrupt's estate, if his appointment has taken effect;

• (c) any person who has been appointed as special manager of the bankrupt's estate or business ;

• (d) any creditor of the bankrupt who has tendered a proof in the bankruptcy.

• (5) If a bankrupt without reasonable excuse fails at any time to attend his public examination under this section he shall, in addition to any other punishment to which he may be subject, be guilty of contempt of court and liable to be punished accordingly.

Duties of bankrupt in relation to official receiver

Duties of bankrupt in relation to official receiver

138

• (1) Where a bankruptcy order has been made, the bankrupt shall be under a duty—

• (a) to deliver possession of his estate to the official receiver;

• (b) to deliver up to the official receiver all books, papers and other records of which he has possession or control and which relate to his estate and affairs (including any which would be privileged from disclosure in any proceedings); and

• (c) in the case of any part of his estate which consists of things possession of which cannot be delivered to the official receiver and in the case of any property that may be claimed for the bankrupt's estate by the trustee of that estate, to do all such things as may reasonably be required by the official receiver for the protection of those things or that property.

• (2) Subsection (1) above shall not apply where by virtue of section 144 below a bankrupt's estate vests in a trustee immediately on the making of the bankruptcy order.

• (3) A bankrupt shall give the official receiver such inventory of his estate and such other information, and shall attend on the official receiver at such times, as the official receiver may for any of the purposes of this Chapter reasonably require.

• (4) Subsection (3) above shall apply to a bankrupt after his discharge.

• (5) If a bankrupt without reasonable excuse fails to comply with any obligation imposed by this section he shall, in addition to any other punishment to which he may be subject, be guilty of contempt of court and liable to be punished accordingly.

CHAPTER IV — Trustees in Bankruptcy

Tenure of office as trustee

Power to make appointments

139

• (1) The power to appoint a person as trustee of a bankrupt's estate (whether the first such trustee or a trustee appointed to fill any vacancy) shall be exercisable—

• (a) except at a time when a certificate for the summary administration of the bankrupt's estate is in force, by a general meeting of the bankrupt's creditors;

• (b) under section 142(2), 143(2) or 147(6) below, by the Secretary of State; or

• (c) under section 144 below, by the court.

• (2) No person may be appointed as trustee of a bankrupt's estate unless he is, at the time of the appointment, qualified to act as an insolvency practitioner in relation to the bankrupt.

• (3) Any power to appoint a person as trustee of a bankrupt's estate shall include power to appoint two or more persons as joint trustees of that estate; but such an appointment must make provision as to the circumstances in which the trustees must act together and the circumstances in which one or more of them may act for the others.

• (4) The appointment of any person as trustee of a bankrupt's estate shall take effect only if that person accepts the appointment in accordance with the rules.

• (5) Subject to subsection (4) above, the appointment of any person as trustee of a bankrupt's estate shall take effect at the time specified in his certificate of appointment.

• (6) This section is without prejudice to the provisions of this Chapter under which the official receiver is, in certain circumstances, to be trustee of a bankrupt's estate.

Summoning of meeting to appoint first trustee

140

• (1) Subject to sections 141(3) and 144(6) below, where a bankruptcy order has been made otherwise than on a petition under section 119(1)(d) above and no certificate for the summary administration of the bankrupt's estate has been issued, it shall be the duty of the official receiver, as soon as practicable in the period of twelve weeks beginning with the day on which the order was made, to decide whether to summon a general meeting of the bankrupt's creditors for the purpose of appointing a trustee of the bankrupt's estate.

• (2) Subject to section 141(3) below, if the official receiver decides not to summon such a meeting, he shall, before the end of the said period of twelve weeks, give notice of his decision to the court and to every creditor of the bankrupt who is known to the official receiver or is identified in the bankrupt's statement of affairs.

• (3) As from the giving to the court of a notice under subsection (2) above, the official receiver shall be trustee of the bankrupt's estate.

Power of creditors to require meeting to be summoned

141

• (1) Where in the case of any bankruptcy—

• (a) the official receiver has not yet summoned, or has decided not to summon, a general meeting of the bankrupt's creditors for the purpose of appointing the trustee of the bankrupt's estate ; and

• (b) a certificate for the summary administration of the bankrupt's estate is not for the time being in force. any creditor of the bankrupt may request the official receiver to summon such a meeting for that purpose.

• (2) If such a request appears to the official receiver to be made with the concurrence of not less than one-quarter, in value, of the bankrupt's creditors (including the creditor making the request), it shall be the duty of the official receiver to summon the requested meeting.

• (3) Accordingly, where the duty imposed by subsection (2) above has arisen, the official receiver shall be required neither to reach a decision for the purposes of subsection (1) of section 140 above nor (if he has reached one) to serve any notice under subsection (2) of that section.

Failure of meeting to appoint trustee

142

• (1) If a meeting summoned under section 140 or 141 above is held but no appointment of a person as trustee of the bankrupt's estate is made, it shall be the duty of the official receiver to decide whether to refer the need for an appointment to the Secretary of State.

• (2) On a reference made in pursuance of a decision under subsection (1) above, the Secretary of State shall either make an appointment or decline to make one.

• (3) If—

• (a) the official receiver decides not to refer the need for an appointment to the Secretary of State; or

• (b) on such a reference the Secretary of State declines to make an appointment,

the official receiver shall give notice of his decision or, as the case may be, of the Secretary of State's decision to the court.

• (4) As from the giving of a notice under subsection (3) above in a case in which no notice has been given under section 140(2) above, the official receiver shall be trustee of the bankrupt's estate.

Appointment of trustee by Secretary of State

143

• (1) At any time when the official receiver is the trustee of a bankrupt's estate by virtue of any provision of this Chapter other than section 144(1) below he may apply to the Secretary of State for the appointment of a person as trustee of that estate instead of the official receiver.

• (2) On an application under subsection (1) above the Secretary of State shall either make an appointment or decline to make one.

• (3) An application may be made under subsection (1) above notwithstanding that the Secretary of State has declined to make an appointment either on a previous application under that subsection or on a reference made in pursuance of section 142 above or section 147(4) below.

• (4) Where the trustee of a bankrupt's estate has been appointed by the Secretary of State (whether under this section or otherwise), the trustee shall give notice to the bankrupt's creditors of his appointment or, if the court so allows, shall advertise his appointment in accordance with the directions of the court and in that notice or advertisement shall—

• (a) state whether he proposes to summon a general meeting of the bankrupt's creditors for the purpose of establishing a committee under section 148 below; and

• (b) if he does not propose to summon such a meeting, set out the power of the creditors under this Part to require him to summon one.

Special cases

144

• (1) Where a bankruptcy order is made on a petition under section 119(1)(d) above, the official receiver shall be trustee of the bankrupt's estate.

• (2) Subject to subsection (3) below, where the court issues a certificate for the summary administration of a bankrupt's estate, the official receiver shall, as from the issue of that certificate, be trustee of the bankrupt's estate.

• (3) Where such a certificate is issued or is in force, the court may, if it thinks fit, appoint a person other than the official receiver as trustee of the bankrupt's estate.

• (4) Where a bankruptcy order is made in a case in which a report has been submitted to the court under section 123(3) above but no certificate for the summary administration of the bankrupt's estate is issued, the court, if it thinks fit, may on making the order appoint the person who made the report as trustee of the bankrupt's estate.

• (5) Where a bankruptcy order is made (whether or not on a petition under section 119(1)(c) above) at a time when there is a supervisor of a composition or scheme approved in relation to the bankrupt under Chapter I of this Part, the court, if it thinks fit, may on making the order appoint the supervisor of the composition or scheme as trustee of the bankrupt's estate.

• (6) Where an appointment is made under subsection (4) or (5) above, the official receiver shall not be under the duty imposed by section 140(1) above.

• (7) Where the trustee of a bankrupt's estate has been appointed by the court, the trustee shall give notice to the bankrupt's creditors of his appointment or, if the court so allows, shall advertise his appointment in accordance with the directions of the court and in that notice or advertisement shall—

• (a) state whether he proposes to summon a general meeting of the bankrupt's creditors for the purpose of establishing a committee under section 148 below ; and

• (b) if he does not propose to summon such a meeting, set out the power of the creditors under this Part to require him to summon one.

Removal of trustee and vacation of office

145

• (1) Subject to the following provisions of this section, the trustee of a bankrupt's estate may be removed from office only by an order of the court or by a general meeting of the bankrupt's creditors summoned specially for that purpose in accordance with the rules.

• (2) Where the official receiver is trustee of a bankrupt's estate by virtue of section 144(1) above, he shall not be removed from office under this section.

• (3) A general meeting of the bankrupt's creditors shall not be held for the purpose of removing the trustee of his estate at any time when a certificate for the summary administration of that estate is in force.

• (4) Where the official receiver is the trustee of a bankrupt's estate by virtue of section 140(3) or 142(4) above or a trustee is appointed by the Secretary of State or, otherwise than under section 144(5) above, by the court, a general meeting of the bankrupt's creditors shall be summoned for the purpose of replacing the trustee only if the trustee thinks fit or the court so directs or the meeting is requested by one of the bankrupt's creditors with the concurrence of not less than one-quarter, in value, of those creditors (including the creditor making the request).

• (5) The trustee of a bankrupt's estate who was appointed by the Secretary of State may be removed from office by a direction of the Secretary of State.

• (6) The trustee of a bankrupt's estate, not being the official receiver, shall vacate office if he ceases to be a person who is for the time being qualified to act as an insolvency practitioner in relation to the bankrupt.

• (7) The trustee of a bankrupt's estate may, in the prescribed circumstances, resign his office by giving notice of his resignation to the court.

• (8) The trustee of a bankrupt's estate shall vacate office on giving notice to the court that a final meeting has been held under section 168 below and of the decisions (if any) of that meeting.

• (9) The trustee of a bankrupt's estate shall vacate office if the bankruptcy order is annulled.

Release of trustee

146

• (1) Where the official receiver has ceased to be the trustee of a bankrupt's estate and a person is appointed in his stead, the official receiver shall have his release with effect from the following time, that is to say—

• (a) where that person is appointed by a general meeting of the bankrupt's creditors or by the Secretary of State, the time at which the official receiver gives notice to the court that he has been replaced ; and

• (b) where that person is appointed by the court, such time as the court may determine.

• (2) If the official receiver while he is the trustee of a bankrupt's estate gives notice to the Secretary of State that the administration of the bankrupt's estate in accordance with Chapter V of this Part is for practical purposes complete, he shall have his release with effect from such time as the Secretary of State may determine.

• (3) A person other than the official receiver who has ceased to be the trustee of a bankrupt's estate shall have his release with effect from the following time, that is to say—

• (a) in the case of a person who has been removed from office by a general meeting of the bankrupt's creditors that has not resolved against his release or who has died, the time at which notice is given to the court in accordance with the rules that that person has ceased to hold office ;

• (b) in the case of a person who has been removed from office by a general meeting of the bankrupt's creditors that has resolved against his release or by the court or the Secretary of State or who has vacated office under section 145(6) above, such time as the Secretary of State may, on an application by that person, determine;

• (c) in the case of a person who has resigned, such time as may be prescribed;

• (d) in the case of a person who has vacated office under subsection (8) of section 145 above—

• (i) if the final meeting referred to in that subsection has resolved against that person's release, such time as the Secretary of State may, on an application by that person, determine; and

• (ii) if that meeting has not resolved against that person's release, the time at which he vacated office.

• (4) Where a bankruptcy order is annulled the trustee of the bankrupt's estate at the time of the annulment shall have his release with effect from such time as the court may determine.

• (5) Where the official receiver or the trustee of a bankrupt's estate has his release under this section, he shall, with effect from the time specified in the preceding provisions of this section, be discharged from all liability both in respect of acts or omissions of his in the administration of the bankrupt's estate and otherwise in relation to his conduct as trustee; but nothing in this section shall prevent the exercise, in relation to a person who has had his release under this section, of the court's powers under section 151 below.

Vacancy in office of trustee

147

• (1) This section applies where the appointment of any person as trustee of a bankrupt's estate fails to take effect or, such an appointment having taken effect, there is otherwise a vacancy in the office of trustee of a bankrupt's estate.

• (2) The official receiver shall be trustee until the vacancy is filled.

• (3) The official receiver may summon a general meeting of the bankrupt's creditors for the purpose of filling the vacancy and shall summon such a meeting if required to do so in pursuance of section 160(8) below.

• (4) If at the end of the period of twenty-eight days beginning with the day on which the vacancy first came to the official receiver's attention he has not summoned, and is not proposing to summon, a general meeting of creditors for the purpose of filling the vacancy, he shall refer the need for an appointment to the Secretary of State.

• (5) Where a certificate for the summary administration of the bankrupt's estate is for the time being in force—

• (a) the official receiver may refer the need to fill any vacancy to the court or, if the vacancy arises because a person appointed by the Secretary of State has ceased to hold office, to the court or the Secretary of State; and

• (b) subsections (3) and (4) above shall not apply.

• (6) On a reference to the Secretary of State under subsection (4) or (5) above the Secretary of State shall either make an appointment or decline to make one.

• (7) If on a reference under subsection (4) or (5) above no appointment is made, the official receiver shall continue to be trustee of the bankrupt's estate but without prejudice to his power to make a further reference.

• (8) References in this section to a vacancy include references to a case where it is necessary, in relation to any property which is or may be comprised in a bankrupt's estate, to revive the trusteeship of that estate after the holding of a final meeting summoned under section 168 below or the giving of a notice under section 146(2) above.

Control of trustee

Committee of creditors

148

• (1) Subject to subsection (2) below, a general meeting of a bankrupt's creditors (whether summoned under the preceding provisions of this Chapter or otherwise) may, in accordance with the rules, establish a committee to exercise the functions conferred on it by or under this Part.

• (2) A general meeting of a bankrupt's creditors shall not establish a committee under this section, or confer any functions on such a committee, at any time when the official receiver is the trustee of the bankrupt's estate, except in connection with an appointment made by that meeting of a person to be trustee instead of the official receiver.

Exercise by Secretary of State of functions of committee of creditors

149

• (1) A committee established under section 148 above by a general meeting of a bankrupt's creditors shall not be able or required to carry out its functions at any time when the official receiver is the trustee of the bankrupt's estate, but at any such time the functions of that committee under this Part shall be vested in the Secretary of State, except to the extent that the rules otherwise provide.

• (2) Where in the case of any bankruptcy there is for the time being no committee established under section 148 above and the trustee of the bankrupt's estate is a person other than the official receiver, the functions of such a committee shall be vested in the Secretary of State, except to the extent that the rules otherwise provide.

General control of trustee by court

150

• (1) If a bankrupt or any of his creditors or any other person is dissatisfied by any act, omission or decision of a trustee of the bankrupt's estate, he may apply to the court; and on such an application the court may confirm, reverse or modify any act or decision of the trustee, may give him directions or may make such other order as it thinks fit.

• (2) The trustee of a bankrupt's estate may apply to the court for directions in relation to any particular matter arising under the bankruptcy.

Liability of trustee

151

• (1) Without prejudice to any liability arising apart from this section, where on an application under this section the court is satisfied—

• (a) that the trustee of a bankrupt's estate has misapplied or retained, or become accountable for, any money or other property comprised in the bankrupt's estate ; or

• (b) that a bankrupt's estate has suffered any loss in consequence of any misfeasance or breach of fiduciary or other duty by a trustee of that estate in the carrying out of his functions,

the court may order the trustee, for the benefit of the bankrupt's estate, to repay, restore or account for money or other property (together with interest at such rate as the court thinks just) or, as the case may require, to pay such sum by way of compensation in respect of the misfeasance or breach of fiduciary or other duty as the court thinks just.

• (2) An application under this section may be made by the official receiver, the Secretary of State, a creditor of the bankrupt or (whether or not there is, or is likely to be, a surplus for the purposes of section 167(5) below) the bankrupt himself, but the leave of the court shall be required for the making of an application if it is to be made by the bankrupt or if it is to be made after the trustee has had his release under section 146 above.

• (3) Where—

• (a) the trustee of a bankrupt's estate seizes or disposes of any property which is not comprised in the bankrupt's estate; and

• (b) at the time of the seizure or disposal the trustee believes, and has reasonable grounds for believing, that he is entitled (whether in pursuance of an order of the court or otherwise) to seize or dispose of that property,

the trustee shall not be liable to any person (whether under this section or otherwise) in respect of any loss or damage resulting from the seizure or disposal except in so far as that loss or damage is caused by the negligence of the trustee and shall have a lien on the property, or the proceeds of its sale, for such of the expenses of the bankruptcy as were incurred in connection with the seizure or disposal.

CHAPTER V — Administration by Trustee

Preliminary

Preliminary

152

• (1) This Chapter applies in relation to any bankruptcy where either—

• (a) the appointment of a person as trustee of a bankrupt's estate takes effect; or

• (b) the official receiver becomes trustee of a bankrupt's estate.

• (2) The function of the trustee shall be to get in, realise and distribute the bankrupt's estate in accordance with the following provisions of this Chapter; and in the carrying out of that function and in the management of the bankrupt's estate the trustee shall be entitled, subject to those provisions, to use his own discretion.

• (3) It shall be the duty of the trustee, if he is not the official receiver—

• (a) to furnish the official receiver with such information;

• (b) to produce to the official receiver, and permit inspection by the official receiver of, such books, papers and other records; and

• (c) to give the official receiver such other assistance,

as the official receiver may reasonably require for the purpose of enabling him to carry out his functions in relation to the bankruptcy.

• (4) The official name of the trustee shall be " the trustee of the estate of , a bankrupt" (inserting the name of the bankrupt); but he may be referred to as " the trustee in bankruptcy " of the particular bankrupt.

Vesting of property in trustee etc.

Vesting of bankrupt's estate in trustee

153

• (1) The bankrupt's estate shall vest in the trustee immediately on his appointment taking effect or, in the case of the official receiver, on his becoming trustee.

• (2) Where any property which is, or is to be, comprised in the bankrupt's estate vests in the trustee (whether under this section or under any other provision of this Part), it shall so vest without any conveyance, assignment or transfer.

After-acquired property

154

• (1) Subject to the following provisions of this section, the trustee may by notice in writing claim for the bankrupt's estate any property which has been acquired by, or has devolved upon, the bankrupt since the commencement of the bankruptcy.

• (2) A notice under subsection (1) above shall not be served in respect of—

• (a) any property falling within subsections (2) to (4) of section 130 above;

• (b) any property which by virtue of any other enactment is excluded from the bankrupt's estate; or

• (c) without prejudice to section 127(2)(c) above, any property which is acquired by, or devolves upon, the bankrupt after his discharge.

• (3) Subject to subsection (4) below, upon the service on the bankrupt of a notice under subsection (1) above the property to which the notice relates shall vest in the trustee as part of the bankrupt's estate; and the trustee's title to that property shall have relation back to the time at which the property was acquired by, or devolved upon, the bankrupt.

• (4) Where, whether before or after the service of a notice under this section—

• (a) a person acquires property in good faith, for value and without notice of the bankruptcy ; or

• (b) a banker enters into a transaction in good faith and without such notice,

the trustee shall not in respect of that property or transaction be entitled by virtue of this section to any remedy against that person or banker, or any person whose title to any property derives from that person or banker.

• (5) Except with the leave of the court, a notice under subsection (1) above shall not be served after the end of the period of forty-two days beginning with the day on which it first came to the knowledge of the trustee that the property in question had been acquired by, or had devolved upon, the bankrupt.

• (6) For the purposes of subsection (5) above—

• (a) anything which comes to the knowledge of the trustee shall be deemed in relation to any successor of his as trustee to have come to the knowledge of the successor at the same time; and

• (b) anything which comes, otherwise than under paragraph (a) above, to the knowledge of a person before he is the trustee shall be deemed to come to his knowledge on his appointment taking effect or, in the case of the official receiver, on his becoming trustee.

• (7) References in this section to property shall not include any property which, as part of the bankrupt's income, may be the subject of an order under section 156 below.

Vesting in trustee of tools, clothes etc. that exceed value of reasonable replacement

155

• (1) Where—

• (a) property is excluded by virtue of section 130(2) above from the bankrupt's estate; and

• (b) it appears to the trustee that the realisable value of the whole or any part of that property exceeds the cost of a reasonable replacement for that property or that part of it,

the trustee may by notice in writing claim that property or, as the case may be, that part of it for the bankrupt's estate.

• (2) Upon the service on the bankrupt of a notice under subsection (1) above, the property to which the notice relates shall vest in the trustee as part of the bankrupt's estate; and, except against a purchaser in good faith, for value and without notice of the bankruptcy, the trustee's title to that property shall have relation back to the commencement of the bankruptcy.

• (3) Except with the leave of the court, a notice under subsection (1) above shall not be served after the end of the period of forty-two days beginning with the day on which the property in question first came to the knowledge of the trustee; and subsection (6) of section 154 above shall apply for the purposes of this subsection as it applies for the purposes of subsection (5) of that section.

• (4) The trustee shall apply funds comprised in the bankrupt's estate to the purchase by or on behalf of the bankrupt of a reasonable replacement for any property vested in the trustee under this section ; and the duty imposed by this subsection shall have priority over the obligation of the trustee to distribute the bankrupt's estate.

• (5) For the purposes of this section property shall be a reasonable replacement for other property if it is reasonably adequate for meeting the needs met by the other property.

Income payments orders

156

• (1) The court may, on the application of the trustee, make an order (" an income payments order ") claiming for the bankrupt's estate so much of the income of the bankrupt during the period for which the order is in force as may be specified in the order.

• (2) The court shall not make an income payments order the effect of which would be to reduce the income of the bankrupt below what appears to the court to be necessary for meeting the reasonable domestic needs of the bankrupt and his family.

• (3) An income payments order shall, in respect of any payment of income to which it is to apply, either—

• (a) require the bankrupt to pay the trustee an amount equal to so much of that payment as is claimed by the order; or

• (b) require the person making the payment to pay so much of it as is so claimed to the trustee, instead of to the bankrupt.

• (4) Where the court makes an income payments order it may, if it thinks fit, discharge or vary any attachment of earnings order that is for the time being in force to secure payments by the bankrupt.

• (5) Sums received by the trustee under an income payments order shall form part of the bankrupt's estate.

• (6) An income payments order shall not be made after the discharge of the bankrupt, and if made before, shall not have effect after his discharge except—

• (a) in the case of a discharge under section 126(2)(a) above, by virtue of a condition imposed under section 127(2)(c) above; or

• (b) in the case of a discharge under section 126(2)(b) above, by virtue of a provision of the order requiring it to continue in force for a period ending after the discharge but no later than three years after the making of the order.

• (7) For the purposes of this section the income of the bankrupt comprises every payment in the nature of income which is from time to time made to the bankrupt or to which he from time to time becomes entitled, including any payment in respect of the carrying on of any business or in respect of any office or employment.

Control and realisation of bankrupt's estate etc.

Acquisition by trustee of control

157

• (1) The trustee shall take possession of all books, papers and other records which relate to the bankrupt's estate or affairs and which belong to him or are in his possession or under his control (including any which would be privileged from disclosure in any proceedings).

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

• (3) Where any part of the bankrupt's estate consists of stock or shares in a company, shares in a ship or any other property transferable in the books of a 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.

• (4) Where any part of the bankrupt's estate consists of things in action, they shall be deemed to have been assigned to the trustee; but notice of the deemed assignment shall not be required to be given except in so far as it is necessary, in a case where the deemed assignment is from the bankrupt himself, for protecting the priority of the trustee.

• (5) Where any goods comprised in the bankrupt's estate are held by any person by way of pledge, pawn or other security and no notice has been served in respect of those goods by the official receiver under subsection (5) of section 132 above, the trustee may serve such a notice in respect of those goods; and whether or not a notice has been served under this subsection or that subsection, the trustee may, if he thinks fit, exercise the bankrupt's right of redemption in respect of any such goods.

• (6) A notice served by the trustee under subsection (5) above shall have the same effect as a notice served by the official receiver under section 132(5) above.

Obligations to surrender control to trustee

158

• (1) Without prejudice to his general duties under section 169 below, the bankrupt shall deliver up to the trustee possession of any property, books, papers or other records of which the trustee is required to take possession and of which the bankrupt has possession or control.

• (2) If any of the following is in possession of any property, books, papers or other records of which the trustee is required to take possession, namely—

• (a) the official receiver ;

• (b) a person who has ceased to be trustee of the bankrupt's estate; or

• (c) a person who has been the supervisor of a composition or scheme approved in relation to the bankrupt under Chapter I of this Part,

the official receiver or, as the case may be, that person shall deliver up possession of the property, books, papers or records to the trustee.

• (3) Any banker or agent of the bankrupt or any other person who holds any property to the account of, or for, the bankrupt shall pay or deliver to the trustee all property in his possession or under his control which forms part of the bankrupt's estate and which he is not by law entitled to retain as against the bankrupt or trustee.

• (4) If any person without reasonable excuse fails to comply with any obligation imposed by this section he shall, in addition to any other punishment to which he may be subject, be guilty of contempt of court and liable to be punished accordingly.

Charge on dwelling house

159

• (1) Where any property consisting of an interest in a dwelling house which is occupied by the bankrupt or by his spouse or former spouse is comprised in the bankrupt's estate and the trustee is, for any reason, unable for the time being to realise that property, the trustee may apply to the court for an order imposing a charge on the property for the benefit of the bankrupt's estate.

• (2) If on an application under this section the court imposes a charge on any property, the benefit of that charge shall be comprised in the bankrupt's estate and shall be enforceable, up to the value from time to time of the property secured, for the payment of any amount which is payable otherwise than to the bankrupt out of the bankrupt's estate and of interest on that amount at the prescribed rate.

• (3) An order under this section made in respect of property vested in the trustee shall provide, in accordance with the rules, for the property to cease to be comprised in the bankrupt's estate and, subject to the charge (and any prior charge), to vest in the bankrupt.

• (4) Subsections (1) and (2) and (4) to (6) of section 3 of the Charging Orders Act 1979 (which contain supplemental provisions with respect to charging orders) shall have effect in relation to orders under this section as they have effect in relation to charging orders under that Act.

General powers of trustee

160

• (1) The trustee may—

• (a) sell any part of the property for the time being comprised in the bankrupt's estate, including the goodwill and book debts of any business ;

• (b) give receipts for any money received by him, being receipts which effectually discharge the person paying the money from all responsibility in respect of its application ;

• (c) prove, rank, claim and draw a dividend in respect of such debts due to the bankrupt as are comprised in the bankrupt's estate;

• (d) exercise in relation to any property comprised in the bankrupt's estate any powers the capacity to exercise which is vested in the trustee under this Part;

• (e) deal with any property comprised in the bankrupt's estate to which a bankrupt is beneficially entitled as tenant in tail in the same manner as the bankrupt might have dealt with it.

• (2) With the permission of the committee established under section 148 above or the court, the trustee may—

• (a) carry on any business of the bankrupt so far as may be necessary for winding it up beneficially and so far as he is able to do so without contravening any requirement imposed by or under any enactment;

• (b) bring, institute or defend any action or legal proceedings relating to the property comprised in the bankrupt's estate;

• (c) accept as the consideration for the sale of any property comprised in the bankrupt's estate a sum of money payable at a future time subject to such stipulations as to security or otherwise as the committee or the court thinks fit;

• (d) mortgage or pledge any part of the property comprised in the bankrupt's estate for the purpose of raising money for the payment of his debts;

• (e) where any right, option or other power forms part of the bankrupt's estate, make payments or incur liabilities with a view to obtaining, for the benefit of the creditors, any property which is the subject of the right, option or power;

• (f) refer to arbitration, or compromise on such terms as may be agreed on, any debts, claims or liabilities subsisting or supposed to subsist between the bankrupt and any person who may have incurred any liability to the bankrupt;

• (g) make such compromise or other arrangement as may be thought expedient with creditors, or persons claiming to be creditors, in respect of bankruptcy debts ;

• (h) make such compromise or other arrangement as may be thought expedient with respect to any claim arising out of or incidental to the bankrupt's estate made or capable of being made on the trustee by any person or by the trustee on any person.

• (3) With the permission of the committee established under section 148 above or the court, the trustee may appoint the bankrupt

• (a) to superintend the management of the bankrupt's estate, or any part of it;

• (b) to carry on his business (if any) for the benefit of his creditors; or

• (c) in any other respect to assist in administering that estate in such manner and on such terms as the trustee may direct.

• (4) A permission given for the purposes of subsection (2) or (3) above shall not be a general permission but shall relate to a particular proposed exercise of the power in question; and a person dealing with the trustee in good faith and for value shall not be concerned to enquire whether any permission required by either of those subsections has been given.

• (5) Where the trustee has done anything without the permission required by subsection (2) or (3) above, the court or the committee established under section 148 above may, for the purpose of enabling him to meet his expenses out of the bankrupt's estate, ratify what the trustee has done; but that committee shall not do so unless it is satisfied that the trustee has acted in a case of urgency and has sought its ratification without undue delay.

• (6) For the purposes of, or in connection with, the exercise of any of his powers under this Part, the trustee shall be able, by his official name, to hold property of every description, to make contracts, to sue and be sued, to enter into engagements binding on himself and, in respect of the bankrupt's estate, on his successors in office, to employ an agent, to execute any power of attorney, deed or other instrument and to do any other act which is necessary or expedient for the purposes of or in connection with the exercise of those powers.

• (7) Where the trustee (not being the official receiver) in exercise of the powers conferred on him by this Part—

• (a) disposes of any property comprised in the bankrupt's estate to an associate of the bankrupt; or

• (b) employs a solicitor,

he shall, if there is for the time being a committee established under section 148 above, give notice to the committee of that exercise of his powers.

• (8) Without prejudice to the generality of subsection (6) above, the trustee may, if he thinks fit, at any time summon a general meeting of the bankrupt's creditors; and, subject to the preceding provisions of this Part, the trustee shall summon such a meeting if he is requested to do so by a creditor of the bankrupt and the request is made with the concurrence of not less than one-tenth, in value, of the bankrupt's creditors (including the creditor making the request).

• (9) Nothing in this Act shall be construed as restricting the capacity of the trustee to exercise any of his powers outside England and Wales.

Power to disclaim onerous property

161

• (1) Subject to the provisions of this section, the trustee may, by the giving of the prescribed notice, disclaim any onerous property and may do so notwithstanding that he has taken possession of it, endeavoured to sell it or otherwise exercised rights of ownership in relation to it.

• (2) The following is onerous property for the purposes of this section, that is to say—

• (a) any unprofitable contract; and

• (b) any other property comprised in the bankrupt's estate which is unsaleable or not readily saleable or is such that it may give rise to a liability to pay money or perform any other onerous act.

• (3) A disclaimer under this section shall—

• (a) operate so as to determine, as from the date of the disclaimer, the rights, interests and liabilities of the bankrupt and his estate in or in respect of the property disclaimed; and

• (b) discharge the trustee from all personal liability in respect of that property as from the commencement of his trusteeship;

but shall not, except so far as is necessary for the purpose of releasing the bankrupt, the bankrupt's estate and the trustee from any liability, affect the rights or liabilities of any other person.

• (4) A notice of disclaimer shall not be given under this section in respect of any property that has been claimed for the bankrupt's estate under section 154 or 155 above except with the leave of the court.

• (5) A notice of disclaimer shall not be given under this section in respect of any property if—

• (a) a person interested in the property has applied in writing to the trustee or one of his predecessors as trustee requiring the trustee or that predecessor to decide whether he will disclaim or not; and

• (b) the period of twenty-eight days beginning with the day on which that application was made has expired without a notice of disclaimer having been given under this section in respect of that property ;

and the trustee shall be deemed to have adopted any contract which by virtue of the preceding provisions of this subsection he is not entitled to disclaim.

• (6) The disclaimer of any property of a leasehold nature shall not take effect unless a copy of the disclaimer has been served (so far as the trustee is aware of their addresses) on every person claiming under the bankrupt as underlessee or as mortgagee and either—

• (a) no application under section 162 below is made with respect to that property before the end of the period of fourteen days beginning with the day on which the last notice served under this subsection was served ; Or

• (b) where such an application has been made, the court directs that the disclaimer shall take effect.

• (7) Where the court gives a direction under subsection (6)(b) above it may also, instead of or in addition to any order it makes under section 162 below, make such orders with respect to fixtures, tenant's improvements and other matters arising out of the lease as it thinks fit.

• (8) Without prejudice to subsection (6) above, the disclaimer of any property in a dwelling house shall not take effect unless a copy of the disclaimer has been served (so far as the trustee is aware of their addresses) on every person in occupation of or claiming a right to occupy the dwelling house and either—

• (a) no application under section 162 below is made with respect to that property before the end of the period of fourteen days beginning with the day on which the last notice served under this subsection was served; or

• (b) where such an application has been made, the court directs that the disclaimer shall take effect.

• (9) Where, in consequence of the disclaimer under this section of any land subject to a rentcharge, that land vests by operation of law in the Crown or any other person, the Crown or that person and the successors in title of the Crown or that person shall not be subject to any personal liability in respect of any sums becoming due under that rentcharge except sums becoming due after the Crown or that person or some person claiming under or through the Crown or that person has taken possession or control of the land or has entered into occupation of it.

• (10) Any person sustaining loss or damage in consequence of the operation of a disclaimer under this section shall be deemed to be a creditor of the bankrupt to the extent of the loss or damage and accordingly may prove for the loss or damage as a bankruptcy debt.

Powers of court in respect of disclaimed property

162

• (1) This section applies where the trustee has disclaimed any property under section 161 above.

• (2) An application may be made to the court under this section by—

• (a) any person who claims an interest in the disclaimed property;

• (b) any person who is under any liability in respect of the disclaimed property, not being a liability discharged by the disclaimer; or

• (c) where the disclaimed property is property in a dwelling house, any person who at the time when the bankruptcy petition was presented was in occupation of or entitled to occupy the dwelling house.

• (3) Subject to subsections (4) and (5) below, the court may, on an application under this section, make an order on such terms as it thinks fit for the vesting of the disclaimed property in, or for its delivery to—

• (a) a person entitled to it or a trustee for such a person;

• (b) a person subject to such a liability as is mentioned in subsection (2)(b) above or a trustee for such a person; or

• (c) where the disclaimed property is property in a dwelling house, any person who at the time when the bankruptcy petition was presented was in occupation of or entitled to occupy the dwelling house.

• (4) The court shall not make an order by virtue of paragraph (b) of subsection (3) above except where it appears to the court that it would be just to do so for the purpose of compensating the person subject to the liability in respect of the disclaimer.

• (5) The court shall not make an order under this section vesting property of a leasehold nature in any person, except on terms making that person—

• (a) subject to the same liabilities and obligations as the bankrupt was subject to under the lease on the day the bankruptcy petition was presented ; or