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Last Updated: 1 August 2020
AN ACT RELATING TO BANKRUPTCY
[BAN 18] Compositions and schemes of arrangement18
18
(2) In such case the official receiver shall hold a meeting of creditors, before the public examination of the debtor is concluded, and send to each creditor, before the meeting, a copy of the debtor’s proposal, with a report thereon; and if at that meeting a majority in number and three-fourths in value of all the creditors who have proved, resolve to accept the proposal, it shall be deemed to be duly accepted by the creditors, and when approved by the court shall be binding on all the creditors.
(3) The debtor may at the meeting amend the terms of his or her proposal, if the amendment is, in the opinion of the official receiver, calculated to benefit the general body of creditors.
(4) Any creditor who has proved his or her debt may assent to or dissent from the proposal by a letter, in the prescribed form, addressed to the official receiver, so as to be received by him or her not later than the day preceding the meeting, and any such assent or dissent shall have effect as if the creditor had been present and had voted at the meeting.
(5) The debtor or the official receiver may, after the proposal is accepted by the creditors, apply to the court to approve it, and notice of the time appointed for hearing the application shall be given to each creditor who has proved.
(6) The application shall not be heard until after the conclusion of the public examination of the debtor. Any creditor who has proved may be heard by the court in opposition to the application, notwithstanding that he or she may at a meeting of creditors have voted for the acceptance of the proposal.
(7) For the purpose of approving a composition or scheme by joint debtors, the court may, if it thinks fit, and on the report of the official receiver that it is expedient so to do, dispense with the public examination of one of the joint debtors if he or she is unavoidably prevented from attending the examination by illness or absence from Fiji.
(8) The court shall, before approving the proposal, hear a report of the official receiver as to the terms thereof, and as to the conduct of the debtor, and any objections which may be made by or on behalf of any creditor.
(9) If the court is of opinion that the terms of the proposal are not reasonable, or are not calculated to benefit the general body of creditors, the court shall refuse to approve the proposal.
(10) If any facts are proved on proof of which the court would be required either to refuse, suspend or attach conditions to the debtor’s discharge, were he or she adjudged bankrupt, the court shall refuse to approve the proposal, unless it provides reasonable security for the payment of not less than 25 cents in the dollar on all the unsecured debts provable against the debtor’s estate.
(11) In any other case the court may either approve or refuse to approve the proposal.
(12) If the court approves the proposal, the approval may be testified by the seal of the court being attached to the instrument containing the terms of the proposed composition or scheme, or by the terms being embodied in an order of the court.
(13) A composition or scheme accepted and approved in pursuance of this section shall be binding on all the creditors so far as relates to any debts due to them from the debtor or provable in bankruptcy, but shall not release the debtor from any liability under a judgment against him or her in an action for seduction, or under an affiliation order, or under a judgment against him or her as a co-respondent in a matrimonial cause, except to such an extent and under such conditions as the court expressly orders in respect of such liability.
(14) A certificate of the official receiver that a composition or scheme has been duly accepted and approved shall, in the absence of fraud, be conclusive as to its validity.
(15) The provisions of a composition or scheme under this section may be enforced by the court on application by any person interested, and any disobedience of an order of the court made on the application shall be deemed a contempt of court.
(16) If default is made in payment of any instalment due in pursuance of the composition or scheme, or if it appears to the court, on satisfactory evidence, that the composition or scheme cannot, in consequence of legal difficulties, or for any sufficient cause, proceed without injustice or undue delay to the creditors or to the debtor, or that the approval of the court was obtained by fraud, the court may, if it thinks fit, on application by the official receiver or the trustee or by any creditor, adjudge the debtor bankrupt, and annul the composition or scheme, but without prejudice to the validity of any sale, disposition or payment duly made or things duly done, under or in pursuance of the composition or scheme.
Where a debtor is adjudged bankrupt under this subsection any debt provable in other respects, which has been contracted before the adjudication, shall be provable in the bankruptcy.
(17) If under or in pursuance of a composition or scheme a trustee is appointed to administer the debtor’s property or manage his or her business, or to distribute the composition, section 27 and Part 5 shall apply as if the trustee were a trustee in a bankruptcy, and as if the terms “bankruptcy”, “bankrupt” and “order of adjudication” included respectively a composition or scheme of arrangement, a compounding or arranging debtor, and an order approving the composition or scheme.
(18) Part 3 shall, so far as the nature of the case and the terms of the composition or scheme admit, apply thereto, the same interpretation being given to the words “trustee”, “bankruptcy”, “bankrupt” and “order of adjudication” as in subsection (17).
(19) No composition or scheme shall be approved by the court which does not provide for the payment in priority to other debts of all debts directed to be so paid in the distribution of the property of a bankrupt.
(20) The acceptance by a creditor of a composition or scheme shall not release any person who under this Act would not be released by an order of discharge if the debtor had been adjudged bankrupt.