The immediate effects of a bankruptcy order on the bankrupt

The following Restructuring & Insolvency practice note provides comprehensive and up to date legal information covering:

  • The immediate effects of a bankruptcy order on the bankrupt
  • What happens after the bankruptcy order is made
  • What is the period of bankruptcy, and when is the bankrupt discharged?
  • The circumstances that would give rise to further sanctions being imposed
  • Additional effects of a bankruptcy order or BRO/BRU

The immediate effects of a bankruptcy order on the bankrupt

The purpose of a bankruptcy order is two-fold:

  1. first, it is to secure the bankrupt's estate for the benefit of the bankrupt's creditors so that it can be realised to share out among the creditors by way of a dividend

  2. secondly, it is to allow rehabilitation to the bankrupt by releasing them from their debts (with certain exceptions), which now fall exclusively on the bankruptcy estate

In order to police this policy properly—and ensure that it is fair to creditors—the trustee in bankruptcy (trustee) is given significant powers of investigation and, where necessary, to reverse the effects of antecedent transactions which had the effect of prejudicing the creditors. This Practice Note examines what happens after a bankruptcy order is made, its main effects, the period of bankruptcy, the bankrupt's discharge from bankruptcy, and the circumstances which might give rise to further sanctions being imposed on the bankrupt.

This Practice Note does not examine the powers and duties of the trustee, or the way the trustee will deal with the bankruptcy estate. For further reading on this, see our Practice Notes:

  1. Roles, powers, functions and duties of a trustee in bankruptcy

  2. What assets vest in the trustee in bankruptcy and what steps does the official receiver or trustee in bankruptcy need to take?

What happens after the bankruptcy order

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