The Insolvency Act - help in times of financial trouble [Part 3]


March 14, 2016

In the last two columns, I focused attention on various aspects of the Insolvency Act, 2014 [hereinafter called the 'Act']. This week, I will continue to do so in the final of the three-part series. I will look particularly on what constitutes acts of bankruptcy under the Act, as well as on the provisions that relate to the appointment of trustees.

Section 57 of the Act sets out in detail the various actions of the debtor that would constitute bankruptcy. This includes when the debtor makes an assignment of his property to a trustee for the benefit of creditors generally; makes any disposition of his property as a fraudulent preference in Jamaica or outside; incurs any obligation or takes judicial proceedings in favour of any creditor; or ceases to meet liabilities generally when they become due.

It is also considered an act of bankruptcy where the debtor departs from Jamaica or being outside of Jamaica, remains outside of Jamaica or departs from his dwelling house or otherwise absent himself with intent to defeat or delay his creditors. Similarly, it is an act of bankruptcy when the debtor gives notice in writing to any of his creditors that he is about to suspend payment of his debts or with intent to defeat or delay any creditor, he assigns, removes, secretes or disposes of his property or attempts to do any of those acts in relation to his property.


A creditor, having observed an act of bankruptcy by a debtor, may file an application in court for a receiving order. The application should state the debt owed to the creditor, which shall not be less than $300,000, and that the debtor has committed an act of bankruptcy within six months immediately preceding the application. A secured creditor may also make a similar application, but he is required to provide certain particulars as specified in the Act. The application should be supported by affidavit sworn to by the creditor or anyone duly authorised to do so on his behalf.

Creditors who claim against a partnership may file an application against one or more partners in the firm.


The court will require proof of the facts alleged in the application and of the service of the application. Upon being satisfied of those matters, it may make the receiving order. On the other hand, the court may dismiss the application if the facts alleged in the application are not proved, if service is not proved or if the debtor has shown that he can pay the debt. The court may also make an order staying the proceedings altogether or for a specific time.

The court, upon making a receiving order, shall appoint a trustee of the property of the bankrupt and, in doing so, must have regard to the wishes of the creditors. The court also has the authority to appoint a trustee as an interim receiver for the protection of the estate of the debtor, if the circumstances so warrant.

On the appointment of an interim receiver, the court is required to make certain specified orders, including the fees to be the paid to the receiver. A receiver who is appointed shall act in accordance with his instrument of appointment and the directions of the court.

The process under the Act may be long and winding, but it may very well be the panacea for many Jamaicans in times of financial trouble.

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