Part X Bankruptcy

PART X APPLIES WHERE PART IX DOES NOT SUITE YOU!

Part X of the Bankruptcy Act 1966 is designed to allow debtors to make arrangements with their creditors without becoming bankrupt. If you are ineligible to enter into a Debt Agreement under Part IX this may be the appropriate agreement for you.

Should you wish for your affairs to be dealt with in this way and with our advice you will proceed as follows:

• You will need to sign an authority authorising us to call a meeting of your creditors and take control of your property. You will lose control of your property until such time as creditors decide whether to deal under Part X of the Act 1966 or the authority lapses after four months. For instance you.would not be able to sell your house without the consent of the controlling trustee or solicitor.
• You would have to provide a number of documents and we will  produce reports for creditors prior to the meeting, all within certain time constraints.

Of course we will provide and assist you with these requirements.

Back

There are three basic types of proposal you may make to your creditors...

1. Deed of Assignment.

Under a deed of assignment you assign your assets to us. We take possession of the assets, sells them for the benefit of creditors and distribute the proceeds to creditors according to their debts.

2. Composition

A composition is designed to treat all creditors equally. A husband and wife, for instance may each have personal creditors as well as joint creditors. With a composition all these creditors would participate in a distribution regardless of where the funds came from.

Usually you would offer creditors a sum of money in lieu of their debts, either as a lump sum within a short period of time or monthly payments from your future income spread over a number of years. Other factors could be included in a composition such as money owing to yourself.

3.Deed of Arrangement

Deeds of arrangement are formal legal documents and are used where a deed of assignment is not appropriate and there is a need to treat creditors differently. It is possible for a creditor to insist on a priority over other creditors. Should he control property which is an essential part of your proposal, creditors may have to accede to his wishes. Deeds of arrangement can also be appropriate where you wish to continue to trade and also where creditors demand a fixed return on their debts.

The above is a brief outline of the options available. Of course each case needs to be treated individually and requires expert advice to select the appropriate procedure to adopt. Should you wish to discuss the matter further please contact this office.

Back