Bankruptcy Act 1988 – Legal Office Notice No. 5 of 2013

The Bankruptcy Act 1988, which consolidated with amendments the law relating to bankruptcy, came into operation on the 1st January 1989.

Section 103 of the Registration of Title Act 1964, which deals with bankruptcy in relation to registered land, was not repealed and the practice under it relating to the registration and cancellation of inhibitions continues. The reference to registered land being vested in assignees and trustees in sub-section (4) of Section 103, as amended by Section 8 and Schedule 1 of the Land and Conveyancing Law Reform Act 2009, must be read in the light of the Bankruptcy Act 1988 as amended.

Section 44 of the Bankruptcy Act 1988 provides that the property of an adjudicated bankrupt vests in the Official Assignee on the date of adjudication for the benefit of the creditors of the bankrupt. A Certificate of the vesting of registered land shall be issued to the Official Assignee by the Court under Section 46 and he shall cause it to be registered as soon as may be as if it were a conveyance. The date of vesting is to be taken as the date of registration. Registration of the Certificate shall have the like effect as registration of a conveyance would have had. Similar provisions are made in the case of an arranging debtor (Section 93) and in the case of the administration in bankruptcy of the estate of a person dying insolvent. (Section 118).

Provision is made in Section 110 of the Bankruptcy Act 1988 for the winding up of the estate of a bankrupt by a trustee and committee of inspection if the Court so orders and, where it does so order, the Official Assignee shall be divested of the property of the bankrupt (as Section 111 provides) and it shall vest in the trustee who shall have the powers and perform the functions conferred by the Act on the Official Assignee in relation to the property vested in him (Section 112).

The Official Assignee may sell and transfer the property of a bankrupt, arranging debtor or person dying insolvent whose estate is being administered in bankruptcy but he must not sell property which comprises a family home without the prior sanction of the Court as any disposition made without sanction is void. (Section 61(4))

Under Section 85 of the Bankruptcy Act 1988, as originally enacted, any bankruptcy subsisting on 1st January 1989 was discharged. Subject to payment of expenses, fees, costs and preferential payments, the property of a bankrupt so discharged was deemed revested in the bankrupt as and from 1st January 1989.

Section 85(6) of the Bankruptcy Act 1988 provided that any order of discharge or annulment of bankruptcy shall provide that any property still vested in the Official Assignee shall be revested in the bankrupt. Any such order is deemed to be a conveyance, assignment or transfer of the property and may be registered accordingly.

Civil Law (Miscellaneous Provisions) Act 2011

Section 30(g) of the Civil Law (Miscellaneous Provisions) Act 2011, which commenced on 10th October 2011, amended Section 85 of the Bankruptcy Act 1988. Section 85(1) was amended to provide that every bankruptcy shall, on the 12th anniversary of the making of the adjudication order, stand discharged unless discharged or annulled prior to that. Any property remaining vested in the Official Assignee is deemed, (subject to payment of fees, cost and expenses relating to the bankruptcy and preferential payments), revested in the bankrupt on and from the date that the bankruptcy stands discharged.

On 6th October 2011, the High Court (Bankruptcy) made a Practice Direction to the effect that the statutory revesting under Section 85(2) was enabled once the Official Assignee, (having satisfied him/herself in regard to the payment of fees, cost and expenses relating to the bankruptcy and preferential debts), certified accordingly.

In these cases, the discharged bankrupt may be registered as owner on foot of the Official Assignee’s certificate or an official copy thereof.  A Court order revesting the property will not be required.

 Personal Insolvency Act 2012

Section 157 of the Personal Insolvency Act 2012, which commenced on 3rd December 2013, further amended Section 85 of the Bankruptcy Act 1988. Subject to the other provisions of Section 85 and the additional Section 85A, the bankruptcy is now discharged on the third anniversary thereof. If the adjudication was made more than 3 years prior to the commencement of Section 157, it shall be deemed discharged 6 months after that date.

The new Section 85A provides that on the showing of cause by the Official Assignee, the trustees in bankruptcy or a creditor prior to the discharge under Section 85, the Court may extend the 3 years referred to in Section 85(1) to a longer period not exceeding 8 years.

Section 85B of the Bankruptcy Act 1988, inserted by Section 157 of the Personal Insolvency Act 2012, sets out the conditions under which a bankrupt would be entitled to an order discharging him/her from bankruptcy. A person whose bankruptcy has been discharged under this Section may apply to the Official Assignee for a certificate of discharge. Section 85C makes provision for the Court to annul a bankruptcy. The order of annulment shall provide that property vested in the Official Assignee or trustees in bankruptcy shall be returned to the bankrupt. Any such order operates as a conveyance, assignment or transfer and may be registered accordingly.

Section 157 inserts a new Section 85(3) into the Bankruptcy Act 1988. This provides that where a bankruptcy is discharged by virtue of Section 85, the unrealised property of the bankrupt shall remain vested in the Official Assignee for the benefit of creditors.

Therefore, where a bankruptcy is discharged pursuant to Section 85 as amended, bankrupts now require a Deed of Transfer, (or a Conveyance or Assignment as the case may be),  from the Official Assignee to have property revested in them.

Bankruptcy Act 1988 – Legal Office Notice 03-Apr-88 is rescinded.

Fergus Hayden

Deputy Registrar

17th December 2013