ACT No. XXIII of 2022 AN ACT to amend the Commercial Code, Cap. 13.

I assent.

(L.S.)

GEORGE VELLA

President

23rd December, 2022

ACT No. XXIII of 2022

AN ACT to amend the Commercial Code, Cap. 13.

BE IT ENACTED by the President, by and with the advice and

consent of the House of Representatives, in this present Parliament

assembled, and by the authority of the same as follows:-

(1) The short title of this Act is the Commercial Code

(Amendment) Act, 2022, and this Act shall be read and construed as

one with the Commercial Code, hereinafter referred to as "the Code".

(2) This Act shall come into force on such date or dates as the

Minister responsible for commerce may, by notice in the Gazette,

establish, and different dates may be so established for different

provisions and, or different purposes of this Act.

(3) The scope of this Act is to amend the Code to strengthen the

existing legal framework on bankruptcy and discharge of debt and to

partially transpose certain provisions of Directive (EU) 2019/1023 of

the European Parliament and of the Council of 20 June 2019 on

preventive restructuring frameworks, on discharge of debt and

disqualifications, and on measures to increase the efficiency of

procedures concerning restructuring, insolvency and discharge of debt,

and amending Directive (EU) 2017/1132 (Directive on restructuring

and insolvency).

Part III - "Of Bankruptcy" of the Arrangement of the Code Amendment of

the

shall be amended by the following

Arrangement of

the Code.

(a) the words "Of the Rights and Duties of the Curator

of a Bankrupt" shall be substituted by the words "Of the Rights

and Duties of the Bankruptcy Trustee";

(b) the words "Of the Proof of Debts against the

Bankrupt’s Estate" shall be substituted by the words "Of the

Proof of Debts against the Bankruptcy Estate";

(c) the words "Of the Composition or Scheme of

Arrangement" shall be substituted by the words "Of Bankruptcy

with Debt Agreement";

(d) the words "Of the Ranking of Creditors" shall be

substituted by the words "Of Bankruptcy without Debt

Agreement"; and

(e) the words "Of the Rehabilitation and Discharge"

shall be substituted by the words "Of Bankruptcy in General".

Article 2 of the Code shall be substituted by the following Substitution of

article 2 of the

new article

Code.

"2. The commercial law relates to traders and

to acts of trade done by any person, even though

not a trader and, for the purposes of Part III alone

(a) extends to the persons referred to

in article 477;

(b) shall not extend

(i) to public corporations or

agencies established by law;

(ii) where any applicable law

creates a separate patrimony in the

hands of a person or where a person is

vested with ownership, has registered in

his name, holds, exercises control or

powers of disposition over property

subject to fiduciary obligations;

(iii) to any accrued occupational

pension entitlements;

(c)

shall not extend insofar as these

may be inconsistent with, or insofar as these

may be construed as limiting or restricting,

the application of the following laws or

instruments, or any transposing legislation,

as may be amended from time to time

(i) the

Convention

on

International Interests in Mobile

Equipment and its Protocol on Matters

Specific to Aircraft Equipment that was

opened for signature at Cape Town on

16 November 2001, as transposed or as

enforceable in terms of Maltese law;

(ii) Directive 98/26/EC of the

European Parliament and of the Council

of 19 May 1998 on settlement finality

in payment and securities settlement

systems, as transposed in terms of

Maltese law;

(iii) Directive 2002/47/EC of the

European Parliament and of the Council

of 6 June 2002 on financial collateral

arrangements, as transposed in terms of

Maltese law;

(iv) Regulation (EU) No. 648/

2012 of the European Parliament and of

the Council of 4 July 2012 on OTC

derivatives, central counterparties and

trade repositories;

(v) the safeguarding

requirements of funds for

(aa) payment institutions

laid down under Directive (EU)

2015/2366 of the European

Parliament and of the Council of

25 November 2015 on payment

services in the internal market,

amending Directives 2002/65/EC,

2009/110/EC and 2013/36/EU

and Regulation (EU) No. 1093/

2010, and repealing Directive

2007/64/EC, as transposed in

terms of Maltese law; and

(bb) electronic

money

institutions laid down under

Directive 2009/110/EC of the

European Parliament and of the

Council of 16 September 2009 on

the taking up, pursuit and

prudential supervision of the

business of electronic money

institutions amending Directives

2005/60/EC and 2006/48/EC and

repealing Directive 2000/46/EC,

as transposed in terms of Maltese

law;

(vi) the Financial Collateral

Arrangements Regulations and any

financial collateral arrangement in

terms thereof;

(vii) the Set-Off and Netting on

Insolvency Act.".

In article 4 of the Code, the words "commercial Amendment of

partnership." shall be substituted by the words "commercial article

4 of the

Code.

partnership:" and immediately thereafter there shall be added the

following new proviso

"Provided that, for the purposes of Part III, the term

"trader" shall have the meaning assigned to it in article 477.".

Title I of Part III of the Code shall be substituted by the Substitution of

Title I of Part III

following new Title

of the Code.

"Title I

OF THE DECLARATION OF BANKRUPTCY

477. (1) Every trader who, having regard

State of

bankruptcy.

also to his contingent and prospective liabilities, is

unable to pay his commercial debts, shall suspend

the payment of all his debts, and shall, upon the

suspension thereof, be in a state of bankruptcy.

(2) Without prejudice to the provisions of

sub-article (1), if a commercial debt due by the

trader has remained unsatisfied in whole or in part

after twenty-four (24) weeks from the

enforcement of an executive title against the trader

by any of the executive acts specified in article

273 of the Code of Organization and Civil

Procedure, the trader shall suspend the payment of

all his debts and be deemed to be in a state of

bankruptcy.

(3) For the purposes of this Part, the term

"trader" shall, in addition to the persons referred to

in article 4, also include any other natural or legal

person, in respect of commercial debts for which

such person is, or becomes, liable, whether as

principal debtor or otherwise.

(4) In this Part, unless the context

otherwise requires, the following expressions have

the meaning hereby assigned to them

(a) "commercial debt" means any

liability incurred by any person, whether as

principal debtor or otherwise, insofar as that

liability was incurred, or otherwise arises as

a result of any liability which was originally

incurred in the course of, in connection with,

or for the purposes of, the exercise of any

trade, business, craft or profession by the

original debtor, and any other liabilities as

the Minister responsible for the Malta

Business Registry may, by regulations

prescribe;

(b) "personal debt" means any

liability incurred by any person, whether as

principal debtor or otherwise, which is not a

commercial debt;

(c) "debt", when used alone, means

any liability incurred by any person, whether

as principal debtor or otherwise, and whether

a commercial debt or a personal debt; and

(d) "competent authority" means the

same as the definition assigned to it in the

Act No. XXV

of 2022.

Insolvency Practitioners Act, 2022.

(5) A debt falling under sub-article (4)(a),

which is not exclusively incurred in the pursuit of

the activities described in sub-article (4)(a), shall,

for the purposes of this Part, be treated as a

commercial debt to the extent of that part of the

debt which has been incurred, or which has arisen

as a result of the activities provided for in sub-

article (4)(a), and the term "commercial debt"

shall, for the purposes of this Part, be read and

construed accordingly.

(6) Any transfer of assets, payment of

debts, or act of trade made by a trader who is in a

state of bankruptcy, and which are made between

the date of the suspension of payments and the

date of the judgment declaring bankruptcy, shall,

unless a determination is made by the court in

accordance with article 482(3) that the debtor is

not in a state of bankruptcy, be null and void.

478. Upon the suspension of payments,

Declaration in

court.

every trader shall, without undue delay, file a

declaration of bankruptcy in the Civil Court

(Commercial Section).

479. (1) The declaration of bankruptcy

Contents of the

declaration of

filed by the trader must be confirmed on oath and

bankruptcy.

include the following

(a) the trader’s name and his

identification or registration number;

(b) the nature of the trade, business,

craft or profession, in respect of which the

debts have been incurred;

(c) the name, identification or

registration number, and other particulars of

each of the trader’s creditors together with

their registered address or, in the absence of

a registered address, the address of their

place of business or place of residence;

(d) the value and nature of the

trader’s debts, both commercial and

personal, and the security, if any, enjoyed by

the respective creditors; and

(e) such other information as the

Minister may, by notice, prescribe.

(2) In case of the bankruptcy of a legal

person, the declaration must also include the name

and the place of residence of each of the natural

persons jointly and severally liable for the debts of

the legal person.

480. On making the declaration mentioned

Production of

books.

in the foregoing articles, the trader shall, at the

same time, file in the Civil Court (Commercial

Section), all his commercial books, records and

other papers

Provided that, where the trader is not a

person bound to keep trade books in terms of

article 13, it shall be sufficient for such person to

file in the Civil Court (Commercial Section), all

information and documentation as may be

necessary to ascertain the circumstances in which

the respective debts were incurred, together with a

statement of the financial position of the person at

the time listing all assets and liabilities of such

person.

481. (1) Any creditor may, whether the

Declaration of

bankruptcy on

debt owing to him is a commercial debt or

demand of

creditor.

otherwise, and even though such debt has not yet

fallen due, proceed summarily before the Civil

Court (Commercial Section), against a trader who

is his debtor, or his lawful representative,

demanding a declaration that such trader is in a

state of bankruptcy.

(2) A declaration of bankruptcy may not be

Declaration

may not be

sought by a child against their parent, or by a

sought by

child against

parent against their child, or by one spouse against

parent or vice

the other.

versa, etc.

(3) The bankruptcy of a trader, being a

When

declaration

natural person, may be declared after his death, if

may be sought

after death of

prior to his death he had suspended payments; in

trader.

such case the declaration of bankruptcy cannot be

demanded by the creditors except within three (3)

months from the death of the debtor.

(4) In the case of a demand for a

Creditor

demanding

declaration of bankruptcy as provided in this

adjudication of

bankruptcy to

article, the creditor making the demand shall,

give security.

simultaneously with the demand, give security in

an amount that shall be equivalent to the greater of

ten percent (10%) of the debt owing to such

creditor, or one thousand euro (€1,000) in favour

of the party against whom the demand is made, for

the due prosecution of the case without delay and

the substantiation of his claim; in default whereof,

the court may order the amount of the security to

be paid, in whole or in part, to the party in whose

favour such security has been given

Provided that such payment shall not

operate as a bar to an action against the creditor

for damages and interest arising from such

proceedings.

482. (1) Where

a

declaration

of

Summoning of

creditors.

bankruptcy has been filed in terms of article 479,

the registrar shall, by notice, call upon the

creditors mentioned in the declaration to appear

before the Civil Court (Commercial Section), on

such date, and at such a time, as shall be specified

in the relevant notice, being a date not later than

thirty (30) days from the date on which the

declaration is made, to show cause why their

debtor should not be declared to be in a state of

bankruptcy, and to make representations

concerning the appointment by the court of a

bankruptcy trustee. The registrar shall cause the

notice to be served on the creditors mentioned in

the declaration, and for the notice together with

the declaration to be published by means of a

notice containing an abstract in the Gazette and in

one (1) or more daily newspapers.

(2) Where a declaration of bankruptcy is

demanded in terms of article 481, the registrar

shall, by notice, call upon the debtor mentioned in

the declaration to appear before the Civil Court

(Commercial Section), on such date, and at such a

time, as shall be specified in the relevant notice,

being a date not be later than thirty (30) days from

the date on which the declaration is demanded, to

show cause why he should not be declared to be in

a state of bankruptcy. The registrar shall cause the

notice to be served on the creditor making the

demand, and for the notice together with the

declaration to be published by means of a notice

containing an abstract in the Gazette and in one (1)

or more daily newspapers, calling upon interested

persons to show cause why the debtor should not

be declared to be in a state of bankruptcy, and to

make representations concerning the appointment

by the court of a bankruptcy trustee.

(3) Where

the

court,

during

the

proceedings referred to above, is satisfied that

cause has been shown why the debtor should not

be declared to be in a state of bankruptcy, the court

shall, by judgment, declare that the debtor is not in

a state of bankruptcy and shall award costs against

the party cast. The court shall also order that an

abstract of the judgment be published, by means

of a notice in the Gazette.

(4) Where

the

court,

during

the

proceedings referred to above, is satisfied that

cause has been shown why the debtor should be

declared to be in a state of bankruptcy, the court

shall deliver a judgment declaring the bankruptcy.

(5) In the event that the court is of the view

that the declaration of bankruptcy made by the

debtor in terms of article 479, or the declaration of

bankruptcy demanded by the creditor in terms of

article 481, is frivolous or vexatious, the court

may award double costs against the party cast.

483. (1) If the creditor on whose demand

Suing out of

acts and

the bankruptcy has been declared neglects to sue

proceedings.

out, at his own expense, such acts and proceedings

as are necessary to arrive at the making of a

bankruptcy order, any other creditor, or even the

bankrupt himself, may proceed to sue out such

acts or proceedings.

(2) Subject to the provisions of article 499,

Reimburse-

ment of

all necessary expenses incurred during bankruptcy

expenses

incurred by the

proceedings shall be repaid to the creditor

creditor.

disbursing them, out of moneys received on

account of the bankruptcy estate in preference to

any other debt.

484. (1) The execution of claims of a

Stay of claims.

monetary nature against the bankrupt or the

bankruptcy estate shall be stayed in respect of all

debts referred to in article 487 upon the delivery

of the judgment declaring bankruptcy.

(2) The stay of the execution of claims as

provided for in sub-article (1) shall cease with

regard to the bankrupt, upon the rehabilitation of

the bankrupt in terms of articles 524(1)(b) or

534(1)(b), as the case may be.

485. Every act transferring property,

Acts in fraud

of creditors are

whether corporeal or incorporeal, including any

void or

voidable.

renunciation of any succession or of an acquired

prescription, and every obligation incurred, or

other act made by the bankrupt which defrauds his

creditors, shall be null and void, even though the

parties interested have acted, and, or are in good

faith.

486. (1) Upon the appointment of a

The bankrupt

is relieved of

bankruptcy trustee in accordance with article 488,

ownership of

property.

the bankrupt shall be ipso jure relieved of his

existing title to all assets other than those assets

referred to in article 492, whether corporeal or

incorporeal, and whether relating to his business

or not. The ownership of such assets shall, by

operation of law, devolve upon and vest in the

bankruptcy trustee who shall receive and hold

such assets for the benefit of the body of creditors.

All debts, including the debts referred to in article

487, shall, by operation of law, become due and

payable by the bankruptcy estate as vested in the

bankruptcy trustee

Provided

that,

notwithstanding

anything stated in any other law, no charge, levy

or other dues shall become payable in Malta by

way of tax, duty or other government tariff or levy,

notwithstanding the manner in which it is

described, upon, or as a result of the transfers

contemplated in terms of this article.

(2) Everything that devolves on the

bankrupt after the bankruptcy but prior to the

occurrence of the events referred to in articles

524(1) or 534(1), as the case may be, shall, by

operation of law, when and as the same so

devolves, vest in the bankruptcy trustee who shall

receive and hold the thing for the benefit of the

body of creditors

Provided

that,

notwithstanding

anything stated in any other law, no charge, levy

or other dues shall become payable in Malta by

way of tax, duty or other government tariff or levy,

notwithstanding the manner in which it is

described, upon, or as a result of the transfer

contemplated in terms of this article.

(3) Any assets that shall devolve upon the

bankruptcy trustee by operation of sub-articles (1)

and (2) shall be received by the bankruptcy trustee

subject to any third-party rights, whether real or

personal, in existence at the time, which rights

shall be preserved and shall not be prejudiced

thereby.

487. Debts owing by the bankrupt which

Debts owing

by bankrupt

have not fallen due, even if privileged, secured by

not yet due,

become

pledge or hypothecary, shall become payable upon

payable on

the judgment of the court declaring the

declaration of

bankruptcy.

bankruptcy.".

Title II of Part III of the Code shall be substituted by the

following new Title

"Title II

OF THE RIGHTS AND DUTIES OF THE BANKRUPTCY

TRUSTEE

488. (1) The court shall, in the judgment

Appointment

of bankruptcy

declaring bankruptcy, appoint one (1) or more

trustee.

persons as the bankruptcy trustee to exercise the

functions assigned to the bankruptcy trustee under

this Part

Provided that, where more than one (1)

person is appointed as the bankruptcy trustee, the

persons so appointed shall be appointed to act

jointly as the bankruptcy trustee and they shall be

jointly responsible for the exercise of the

functions assigned to the bankruptcy trustee under

this Part.

(2) The bankruptcy trustee shall be deemed

to be an officer of the court, and as such shall be

subject to the orders of the same.

(3) In the event of the death, interdiction,

incapacitation or resignation of the bankruptcy

trustee or any one (1) or more of the persons so

appointed, the court shall, at the instance of any

interested person or on its own motion, release the

said person or persons of their appointment. The

court shall appoint one (1) or more other persons

as the substitute bankruptcy trustee, and

immediately upon the appointment being made,

the provisions of articles 486, 489 and 490 shall

apply mutatis mutandis to the substitute

bankruptcy trustee.

(4) Any interested party may, within

twenty (20) days from the publication of the notice

referred to in article 490, apply to the court for the

substitution of the bankruptcy trustee on the basis

that the latter is not fit and proper, whether due to

the subsistence of a conflict of interest or for any

other valid reason.

489. The bankruptcy trustee appointed by

Authorisation

of bankruptcy

the court shall be a person duly authorised to act

trustee.

as such, in terms of article 4 of the Insolvency

Act No. XXV

Practitioners Act, 2022, and whom the court

of 2022.

deems fit to faithfully discharge the duties of his

office.

490. (1) The bankruptcy trustee shall,

Publication of

abstract of

within fourteen (14) days from the judgment

judgment in

Gazette.

declaring bankruptcy, notify the competent

authority and the registrar of the said judgment,

and cause a notice containing an abstract of the

judgment to be published in the Gazette and in one

(1) or more newspapers, which notice shall clearly

indicate the name, surname and business address

of the person or persons appointed as the

bankruptcy trustee.

(2) An abstract of the judgment declaring

the bankruptcy shall also be enrolled in the Public

Registry within fourteen (14) days from the

judgment.

491. (1) The court may, at any stage of

Removal of

bankruptcy

the proceedings, of its own motion or upon the

trustees.

demand of one (1) or more creditors or of the

bankrupt, remove the bankruptcy trustee.

(2) No appeal shall lie against the

pronouncement of the court made in terms of sub-

article (1).

(3) Upon the removal of the bankruptcy

trustee by the court, the court shall appoint a

substitute bankruptcy trustee and the provisions of

article 488 shall apply mutatis mutandis.

492. Where the bankrupt is a natural person,

Property

which may be

the bankrupt shall be entitled to retain the use,

retained by the

bankrupt.

possession and ownership of any property that, as

the bankrupt may reasonably demonstrate to the

satisfaction of the bankruptcy trustee, comprises

(a) the bankrupt’s main residence;

(b) any vehicle, tools, or equipment

of the bankrupt, insofar as the bankrupt may

reasonably demonstrate these to be

necessary for the performance, by him, of an

activity permissible in terms of article

498(3);

(c) any apparel and other movable

effects necessary for the personal use of the

bankrupt or that of any person related to him

by consanguinity or affinity to the third

degree inclusively;

(d) any

medical

supplies

or

equipment of the bankrupt, insofar as the

bankrupt may reasonably demonstrate these

to be necessary for his own physical or

mental well-being or that of any person

related to him by consanguinity or affinity to

the third degree inclusively; and

(e) any right of nomination that the

bankrupt may have to any vacant

ecclesiastical benefice.

493. (1) In order to secure possession of

Seizure of

property.

the property of the bankrupt, including his books,

records and other papers, the bankruptcy trustee,

shall apply to the Civil Court (Commercial

Section), for the issue of a warrant of seizure

against any person who may have possession of

the property, including the bankrupt.

(2) In the case of bankruptcy of a legal

person, the warrant of seizure shall be executed

not only at the principal offices or premises of the

bankrupt, but also at the residence or premises of

each of the persons jointly and severally liable for

the debts of the legal person.

494. The books, records and other papers of

Books open to

inspection by

the bankrupt shall be kept at such place as the

the interested

parties.

court may direct, and shall be open to inspection

by all interested parties on a written request made

to the bankruptcy trustee, provided that the

bankruptcy trustee is satisfied that the person

making the request is an interested party.

495. (1) The bankruptcy estate shall

Bankruptcy

estate.

include all sums due to the bankrupt, including

any amounts derived by the bankrupt from the

conduct of any activities in terms of articles 496,

497 and 498

Provided that the provisions of this

article shall cease to have effect until they are

superseded by a debt agreement or bankruptcy

order made in terms of this Part, and shall, in no

event, apply for a period longer than three (3)

years from the date of the judgment declaring

bankruptcy.

(2) Where the bankrupt carries out

activities in terms of article 498(3), the bankrupt

shall be entitled to receive from the bankruptcy

trustee, out of any sum due to the bankrupt by way

of remuneration for the said activities, an amount

to be determined by the bankruptcy trustee, which

amount shall not be less than the national

minimum wage established for persons of

eighteen (18) years and over, calculated pro rata

throughout the duration of the appointment of the

bankruptcy trustee.

(3) Where the bankrupt is unable, for reasons

which the bankruptcy trustee finds to be

legitimate, to carry out activities in terms of article

498(3), the bankrupt shall be entitled to receive,

from the bankruptcy estate, an allowance which

shall not be less than the national minimum wage

established for persons of eighteen (18) years and

over, calculated pro rata throughout the duration

of time during which the bankruptcy trustee is

appointed.

(4) The amount referred to in sub-articles

(2) and (3) shall exceed the national minimum

wage where the bankrupt reasonably demonstrates

to the satisfaction of the bankruptcy trustee, that

the bankrupt has an overriding need for the

additional amount on account of grave and

justifiable circumstances specific to the bankrupt

or his dependants.

496. (1) The bankruptcy trustee shall,

Sale of

perishables.

without delay sell, whether by means of a licensed

auctioneer or otherwise, such assets as the

bankruptcy trustee shall deem to be perishable.

(2) Any perishables in respect of which a

right of recovery in terms of Title III has not been

exercised prior to their sale, shall be sold in terms

of sub-article (1), and any respective right of

recovery shall be extinguished and the moneys

realised shall form part of the bankruptcy estate in

terms of article 495.

497. (1) Non-perishable assets cannot be

Sale of non-

perishable

sold by the bankruptcy trustee prior to the

assets.

confirmation of the proposed terms of a debt

agreement in terms of Title V or the sale of assets

held on trust in terms of Title VI, as the case may

be, except in pursuance of a summary judgment of

the court, upon a sworn application issued against

the parties interested.

(2) In deciding upon the sworn application,

the court shall, among other things, consider

(a) whether the value of the asset

will be substantially preserved by its

immediate sale;

(b) whether the bankruptcy trustee

requires additional liquidity to continue the

trade, business, craft or profession of the

bankrupt in accordance with article 498; and

(c) whether the bankrupt is urgently

in need of moneys to satisfy his ordinary and

reasonable daily expenses.

(3) No appeal shall lie against the

pronouncement of the court made in terms of sub-

article (1).

498. (1) It shall be lawful for the

Bankruptcy

trustee may

bankruptcy trustee, with the authority of the court,

continue

business.

by a decree, to, where possible, cause the

continuation of the trade, business, craft or

profession of the bankrupt, where the bankruptcy

trustee is of the opinion that the said continuation

will afford a means of increasing his assets for the

benefit of the body of creditors

Provided that, as may be necessary for

the continuation of the trade, business, craft or

profession of the bankrupt, the bankruptcy trustee

may request the authority of the court to make use

of any property held on trust in the exercise of the

said trade, business, craft or profession.

(2) The court shall, when granting such

authority, give such directions by a decree as the

court deems most advantageous to the interests of

the body of creditors

Provided that where any creditor files

an opposition to a decree by the court in terms of

this article, the court may, on just cause being

shown, after hearing the bankruptcy trustee,

withdraw the authority.

(3) Without prejudice to the provisions of

sub-article (1), the bankrupt shall not carry out any

act of trade until rehabilitated in terms of this Part.

Any bankrupt who is a natural person may, prior to

the rehabilitation in terms of articles 524(1)(b) or

534(1)(b), as the case may be, pursue the lawful

conduct of any activity

Provided that the conduct of that

activity shall not require, give rise to, or

necessitate, the performance of any acts of trade

by the bankrupt

Provided further that the exercise of

any act of extraordinary administration in terms of

article 1322 of the Civil Code by the bankrupt

after the declaration of bankruptcy but prior to the

rehabilitation in terms of articles 524(1)(b) or

534(1)(b), as the case may be, shall, at all times,

require the express prior written consent of the

bankruptcy trustee.

499. (1) The bankruptcy trustee may

Sum of money

which

appropriate such sum or sums as the court shall

bankruptcy

trustee may

determine, to remunerate the bankruptcy trustee

hold on trust.

and to meet any expenses as the bankruptcy

trustee may reasonably incur in the performance

of his duties in terms of this Part, as a first charge

out of the bankruptcy estate in preference to any

other expense. All other moneys shall continue to

be held by the bankruptcy trustee on trust, distinct

and separate from the personal property of the

bankruptcy trustee and from other property held

by the bankruptcy trustee under any other trust.

(2) The Minister may, in consultation with

the competent authority mentioned in the

Act No. XXV

Insolvency Practitioners Act, 2022, make

of 2022.

regulations for the payment of the expenses and

remuneration of the bankruptcy trustee.

(3) The Court shall have the power to order

that of the expenses and remuneration of the

bankruptcy trustee are paid in terms of regulations

made in terms of sub-article (2).

500. (1) An action against the bankruptcy

Action against

bankruptcy

trustee may be brought by an interested party only

trustee.

on the grounds that the bankruptcy trustee has

failed to carry out his functions, whether arising in

terms of this Part or by order of the court.

(2) The bankruptcy trustee shall be

unlimitedly and personally liable for any damages

caused as a result of fraud or gross negligence on

his part.

501. (1) The bankruptcy trustee, once

Preservation of

rights.

appointed, shall take every necessary step for the

preservation of rights previously pertaining to the

bankrupt as against his debtors and shall also

cause to be registered in the Public Registry any

hypothec affecting the property of the debtors of

the bankrupt, if the bankrupt has failed to do so.

(2) It shall be the duty of the bankruptcy

trustee to sue for the payment of any debts due to

the bankrupt, for the benefit of the bankruptcy

estate.

(3) It shall not be lawful for the bankruptcy

trustee to make any compromise or refer any

dispute to arbitration without the consent in

writing of the majority in value of the creditors of

the bankrupt and the authority of the court.

502. (1) Within thirty (30) days from the

Making up of

inventory.

judgment declaring bankruptcy, the bankruptcy

trustee shall make up an inventory of the property

comprising the bankruptcy estate and file such

inventory in the registry

Provided that the inventory shall be

updated by the bankruptcy trustee with such

frequency as the bankruptcy trustee may deem

appropriate, having regard to the facts and

circumstances, and in no case later than three (3)

months from the last filing of the inventory.

(2) The period for the making up of the

original inventory may, on the request of the

bankruptcy trustee and for just cause, be extended

to not more than forty-five (45) days.

(3) Every creditor has a right, and the

bankrupt is bound, to assist in the making up of

the inventory.

503. The inventory shall contain a true list,

Contents of

inventory.

together with a description and the estimated

value, of all the property movable and immovable

comprising the bankruptcy estate held on trust by

the bankruptcy trustee, a statement of the debts

owing to or due by the bankruptcy estate, a

statement of the profits and losses of the bankrupt,

and a statement of the expenses.

504. It shall be lawful for the Civil Court

Power of the

court.

(Commercial Section), of its own motion or on the

demand of the bankruptcy trustee or of one (1) or

more of the creditors, to compel the bankrupt and

any other person to declare on oath all such

information as it may deem necessary or useful in

the interest of the body of creditors or for the

making up of the inventory, or to confirm on oath

the correctness of the inventory.".

Title III of Part III of the Code shall be substituted by the

Substitution of

Title III of Part

following new Title

III of the Code.

"Title III

OF THE RIGHTS OF RECOVERY

505. In case of bankruptcy, it shall be lawful

Recovery of

bills of

to recover all bills of exchange and other

exchange, etc.

documents of title yet unpaid which are found in

kind in the possession of the bankrupt at the time

of the bankruptcy, whenever such bills of

exchange or documents of title shall have been

endorsed by the owner for collection for his own

account.

506. (1) It shall likewise be lawful to

Recovery of

goods.

recover goods delivered to the bankrupt by way of

deposit or sold on account of the owner, so long as

the same exist in kind, wholly or in part.

(2) It shall also be lawful to recover the

not been paid in cash or otherwise, or set off in

account current between the bankrupt and the

buyer.

507. (1) Goods sold to the bankrupt or

Recovery of

goods sold to

forwarded to his account may be recovered, so

bankrupt.

long as they are in his possession or in the

possession of the bankruptcy trustee.

(2) Nevertheless, such right of recovery

may not subsist in cases where, before their

arrival, the goods have been, without fraud, sold

on invoices or bills of lading signed by the party

forwarding the goods.

(3) The party recovering the goods shall be

bound to return to the bankruptcy estate the sums

received by him on account, and all advances

made in respect of freight, commission, insurance

or other expenses, and shall pay what remains due

in respect of such charges.

508. It shall be lawful for the seller to retain

Goods not yet

delivered to

any goods sold by him to the bankrupt that are yet

bankrupt.

unpaid for by the bankrupt, and which have not

yet been delivered to the bankrupt or not yet

forwarded to him or to a third party on his behalf.

509. In the cases mentioned in articles 507

Bankruptcy

trustee’s

and 508, the bankruptcy trustee shall have the

power to

withdraw

power to take the goods on paying the seller the

goods.

bankrupt.".

Title IV of Part III of the Code shall be substituted by the Substitution of

Title IV of Part

following new Title

III of the Code.

"Title IV

OF THE PROOF OF DEBTS AGAINST THE

BANKRUPTCY ESTATE

510. (1) Within fourteen (14) days of

List of

creditors.

filing the inventory in the registry, the bankruptcy

trustee shall make a list of all the creditors, and

file such list in the registry.

(2) Within fourteen (14) days of the filing

Meeting of

creditors.

of the list of creditors in the registry, the registrar

shall, by order of the court, summon a meeting of

the creditors by means of a notice published in the

Gazette and in one (1) or more newspapers, which

meeting shall be held not later than thirty (30)

days from such order, in the presence of the court

on the day and at the place fixed in the notice

Provided that a copy of the notice shall

be served upon the listed creditors at their

residential or business address, by means of

registered post.

(3) The bankruptcy trustee shall, at such

Organisation

of debts.

meeting, present a written debt register, by virtue

of which the bankruptcy trustee shall examine the

bankrupt’s debts and organise the debts separately

into commercial debts and personal debts, having

regard to the quality and nature of such debts, and

the manner in which they arose or were incurred

Provided that, in the event that the debt

register comprises a debt that has not been

incurred exclusively in the pursuit of a trade,

business, craft or profession, the bankruptcy

trustee shall designate the said debt as being a

commercial debt only to the extent that the debt

has been incurred in a manner that would cause

the debt to be treated as a commercial debt in

accordance with article 477, having regard, in

particular, to

(a) the manner in which any asset,

good, or service that has been acquired by

virtue of the debt under examination has

been utilised or consumed;

(b) the importance of any asset,

good, or service that has been acquired by

virtue of the debt under examination, to the

trade, business, craft or profession of the

bankrupt and the manner in which said asset,

good, or service has been integrated into the

bankrupt’s commercial practices and relied

upon for the purposes thereof; and

(c) the extent to which any asset,

good, or service that has been acquired by

virtue of the debt under examination, has

been enjoyed for purposes extraneous to the

trade, business, craft or profession of the

bankrupt.

Therefore, and for the purposes of this

Part, any debt that has not been incurred

exclusively in the pursuit of a trade, business, craft

or profession shall, to the extent that the said debt

has been designated as being a commercial debt in

terms of this article, be treated as a commercial

debt, and otherwise as a personal debt.

(4) The debt register shall comprise, as a

Contents of

debt register.

minimum

(a) the value of each debt;

(b) the name and address of the

creditor to whom each debt pertains;

(c) the date on which each debt

arose;

(d) the

bankruptcy

trustee’s

classification of each debt as a commercial

or personal debt, provided that, where the

debt has not been incurred exclusively in the

pursuit of a trade, business, craft or

profession, the bankruptcy trustee shall set

out the extent to which the debt has been

designated as being a commercial debt in

terms of sub-article (3), and shall provide

any relevant documentation or information

substantiating the manner in which the debt

has been designated;

(e) the cause and nature of any

preference or security, if any, attaching to

each debt; and

(f)

the manner in which all of the

bankrupt’s debts shall rank according to law.

511. (1) Every creditor of the bankrupt

Application of

creditor.

shall, at any time prior to such meeting, submit a

request to the bankruptcy trustee for the admission

of his debt, and shall produce and specify the

documents in support of the same, on the basis of

which the bankruptcy trustee shall decide whether

to admit or refuse the claim, and the contents of

the inventory and debt register shall be determined

accordingly.

(2) Any interested party may, within

twenty (20) days of such meeting, make

submissions against the veracity of the contents of

the inventory and debt register. The court shall

only make the determination contemplated in

article 514 after having heard the debtor, the

bankruptcy trustee, or the creditors, as the case

may be.

(3) A procès verbal shall be drawn up

containing the pleas set up by the debtor, the

bankruptcy trustee and the creditors.

512. Any person, although his debt has not

Person

interested can

been proved and admitted, may, on summarily

assist in the

examination of

showing that he is interested, assist in the

claims.

examination of the claims of the other creditors

and set up pleas in regard thereto, and shall,

following a request made to the bankruptcy

trustee, be provided, at his expense, a copy of the

inventory and debt register.

513. (1) Where any person wilfully

False claim.

makes any false claim or falsely claims a larger

sum than that actually due to him, he may be sued

before the Civil Court (Commercial Section), and

shall, on conviction, be liable for the payment of

twice the amount falsely claimed, for the benefit

of the estate of the bankrupt.

(2) Such an action may be brought by the

bankrupt, by any creditor of the bankrupt, or by

the bankruptcy trustee, and shall lapse after a

period of five (5) years from the date of such

claim.

514. (1) Following

the

submissions

Examination

of

referred to in article 511(2), the court shall

submissions.

proceed to the examination of the submissions.

The court shall confirm or vary the contents of the

debt register, as may be relevant within thirty (30)

days of the submissions of an interested party in

terms of article 511(2).

(2) The bankruptcy trustee shall, within

fourteen (14) days, supplement the contents of the

inventory referred to in article 502(1), by the

publication of the debt register drawn up in

accordance with the requirements of article 510,

and the debt register shall be maintained and

updated with such frequency as the inventory in

accordance with the requirements of article

502(1).

(3) Notwithstanding the expiration of the

period referred to in article 511(2), any interested

person may, by application to the court, request

leave to present an application to the bankruptcy

trustee for the admission of a debt not previously

brought to his attention. Where the court accedes

to the request, the bankruptcy trustee shall update

the debt register and the procedures in articles

511(1) and (2), and 514(1), shall, mutatis

mutandis, apply.

515. (1) Any decree made in terms of

Appeal.

article 514(1) shall be subject to appeal, by

application filed in the registry of the Court of

Appeal within twenty (20) days from the date of

the decree, and any such appeal shall have no

suspensive effects on proceedings in terms of this

Part

Provided that where more than one (1)

appeal against the decree is filed, the Court of

Appeal shall hear all appeals simultaneously

Provided further that in hearing the

appeal, the Court of Appeal may decide to admit

any new document or testimony as evidence of a

debt being claimed. Where, however, the Court of

Appeal finds that the claim itself, or any new

document or testimony related to it, could have

been filed at the time of the submissions made in

terms of article 511(2), the Court of Appeal may

order the appellant to bear the costs of the appeal,

in whole or in part.

(2) An appeal against the decree shall not

lie on the grounds that a debt, not incurred

exclusively in the pursuit of a trade, business, craft

or profession, has been incorrectly apportioned in

terms of the proviso to article 510(3), except

where the respective creditor is able to

demonstrate that the apportionment has been

performed in a manner that is manifestly incorrect,

grossly negligent, or fraudulent.

516. (1) The debt register shall separately

List of

creditors

identify and contain the names of any known

failing to

appear.

creditors who failed to appear, in person or by

proxy, at the meeting referred to in article 510(2),

and the said creditors who failed to appear shall

not be taken into account

Provided that any listed creditor who

would have ranked below the debt pertaining to

known creditors who failed to appear, shall only

receive payment of his debt, in terms of this Part,

on condition that he provides sufficient security to

the satisfaction of the bankruptcy trustee that will

ensure the making, by him, of a pro rata

contribution in favour of any creditor who has

failed to appear in the event of their appearing

within one (1) year from the day on which the

security was given.

(2) Any creditor that has failed to appear at

the meeting referred to in article 510(2) shall have

the right to request the court to order his inclusion

in the debt register and to order the taking of such

other action as may be necessary so as to give

effect to their inclusion.".

Title V of Part III of the Code shall be substituted by the Substitution of

Title V of Part

III of the Code.

following new Title

"Title V - OF BANKRUPTCY WITH DEBT AGREEMENT

517. (1) After the publication of the debt

Call of

meeting.

register in accordance with article 514(2), the

registrar shall call a meeting of the creditors

whose claims have been admitted, that shall be

held within thirty (30) days of the publication.

(2) The bankrupt shall also be summoned

to such meeting. He cannot attend by proxy except

with the approval and for reasons approved by the

court. The court shall examine the instruments of

proxy of those who appear on behalf of absent

creditors.

518. (1) The court shall cause the

Proceedings

during

bankruptcy trustee to give, in its presence, an

meeting.

account of the state of the bankruptcy and of

everything that has taken place since the

commencement of proceedings, including but not

being limited to

(a) any property of the bankruptcy

estate that the bankruptcy trustee has

determined to fall within the terms of article

492;

(b) the admitted debts, and the

contents of the inventory and debt register;

and

(c) whether, in the view of the

bankruptcy trustee, any evidence subsists to

indicate that the bankruptcy may be

fraudulent.

(2) The bankrupt may, in all cases, be

heard. If absent, the meeting shall continue

without him and the bankruptcy trustee shall file a

note in the registry recording this absence.

519. (1) During

the

meeting,

the

Terms of debt

agreement and

bankruptcy trustee shall propose for discussion

debtor’s

income

payment plan. and approval by the creditors, the terms of a debt

agreement, for the settlement of the claims of the

creditors, in whole or in part, out of the

bankruptcy estate, which terms have been agreed

to by the bankrupt.

(2) Where the bankrupt is a natural person,

the bankruptcy trustee may propose, within the

terms of the debt agreement referred to in sub-

article (1), an income payment plan, in terms of

which the bankrupt shall be required to continue

to contribute a defined amount of money towards

the bankruptcy estate in the hands of the

bankruptcy trustee, out of anything that devolves

on, or is derived by, the bankrupt after the

rehabilitation in terms of article 524(1)(b), for a

period not exceeding three (3) years to be

reckoned from the date of appointment of the

bankruptcy trustee, for the further settlement of

debts, in whole or in part, in accordance with the

terms of the debt agreement.

(3) The bankruptcy trustee shall, in support

of the debt agreement, provide such information

as shall be necessary to enable the creditors to

appropriately evaluate the proposed terms, and in

the case of an income payment plan being

proposed in terms of sub-article (2), such

information shall include a financial projection

covering the entire duration of the income

payment plan as proposed, illustrating

(a) the income that the bankrupt may

be reasonably expected to generate, on the

basis of the bankruptcy trustee’s best

assessment, regard being had to the

bankrupt’s

circumstances,

previous

experience, and qualifications; and

(b) the expenditure that the bankrupt

may be reasonably expected to incur, on the

basis of the bankruptcy trustee’s best

assessment, regard being had to the

bankrupt’s circumstances and dependants.

(4) The bankruptcy trustee shall, during

such meeting, organise the creditors into classes,

for the purpose of voting on the proposed terms,

as the bankruptcy trustee may deem necessary to

distinguish between the varying economic

interests thereof, and which classes shall, at

minimum, distinguish between

(a) the holders of secured debts;

(b) the holders of unsecured debts;

(c) the holders of subordinated

debts, meaning debts that, in the event of the

liquidation of the bankruptcy estate, would

remain unpaid until the full settlement of all

the non-subordinated debts of the bankrupt;

and

(d) the holders of any ownership

rights, or other similar interests, in the

bankrupt.

(5) The creditors may, at the discretion of

the bankruptcy trustee, be further divided into

additional classes, as may be necessary in order to

distinguish between creditors within the same

class but having debts pertaining to different legal

priorities.

(6) All creditors comprising part of a

specific class shall be treated equally for the

purposes of the proposed terms, except insofar as

with regard to any detrimental treatment that is

expressly agreed to by the directly affected

creditor or creditors.

(7) Any agreement extraneous to the

proposed terms, howsoever formulated, that

purports to grant an unfair advantage to a creditor,

shall be null and void.

520. The creditors shall have at least

Taking of

votes.

fourteen (14) days to consider the proposed terms

of the debt agreement, and shall reconvene on the

day and at such time fixed by the court, which

shall be in no case later than thirty (30) days

thereafter, for the taking of a vote in the presence

of the judge.

521. (1) The registrar shall draw up a

Proposed

terms shall be

procès verbal of the proceedings that have been

agreed upon

by majority of

held and of the resolutions passed at such

creditors.

meetings.

(2) Only classes of creditors shall be

entitled to vote, and the proposed terms shall be

deemed to be approved by the body of creditors

upon receiving the approval of each class of

creditors.

(3) The vote of a class of creditors shall be

exercised on the basis of a resolution of the

creditors comprising that class, which resolution

shall be supported by at least seventy-five percent

(75%) of the said creditors by reference to the

value of the debts represented thereby, for the

purpose of approval.

(4) Where such agreement does not secure

the support of each class of creditors in terms of

sub-article (2), the proposed terms shall be

approved by the court in accordance with article

523, where the court is satisfied that the proposed

terms

(a) shall not result in a dissenting

creditor within a dissenting creditors’ class

being worse off under the proposed terms

than that dissenting creditor would be if the

terms were not approved and proceedings

were instead undertaken in terms of Title VI;

(b) do not purport to allow any class

of creditors to receive economic value in

excess of the full amount of the debts

pertaining thereto;

(c) ensure that any dissenting class

of creditors is treated at least as favourably

as any other class of creditors whose debts

would, if the normal ranking of creditors

were to be applied, rank pari passu with the

debts pertaining to the dissenting class of

creditors, and more favourably than any

other class of creditors whose debts would

rank below the debts pertaining to the

dissenting class; and

(d) have received the approval of

classes of creditors representing, by

reference to the value of the debts

represented thereby, at least fifty percent

(50%) by reference to the value of the debts.

(5) The Civil Court (Commercial Section)

shall have the authority to examine and approve

any request by tutors or curators of creditors for

their approval or otherwise of the proposed terms

and their execution.

522. (1) If the proposed terms are not

Proposal of

fresh terms.

deemed to have been approved by the creditors in

accordance with article 521(3), the bankrupt, or

any of the creditors, shall have the right during the

same meeting, to, prior to the approval referred to

in article 523, request the court to permit that the

creditors submit a round of fresh terms within not

more than fourteen (14) days of the refusal of the

proposed terms, and in such case, the court shall

allow the bankrupt and bankruptcy trustee to be

heard before granting such leave.

(2) When the court has granted leave for

the proposal of fresh terms, it shall call a new

meeting in terms of article 518, that shall be held

not later than thirty (30) days from the granting of

such leave, for the approval of the fresh terms.

Any fresh terms shall be submitted to the

bankruptcy trustee at least seven (7) days prior to

such meeting, and the bankruptcy trustee shall

undertake to discuss the fresh terms with the

bankrupt prior to the meeting.

(3) The provisions of this article for the

court to grant leave for the proposal of a round of

fresh terms may only be availed of once

Provided that any creditor may propose

fresh terms during the meeting to be held in terms

of sub-article (2), and when alternative terms are

proposed for approval, all of the alternative

proposed terms shall be considered.

(4) Where multiple alternative proposed

terms are approved in accordance with article

521(3), the court shall identify the proposed terms

that enjoy the broadest support by reference to the

value of the debts represented by the creditors

voting in favour, and such terms shall prevail to

the exclusion of all others.

523. (1) The court shall, when it is

Proposed

terms shall be

satisfied that the proposed terms have been

confirmed by

court.

approved in accordance with article 521(3), by

order, confirm that the proposed terms have been

lawfully approved by the creditors, and such

confirmation shall be sufficient to make such

terms binding.

(2) If the proposed terms are not deemed to

have been approved in accordance with article

521(3), their confirmation by the court, once it is

satisfied that the conditions referred to in article

521(4) subsist, shall be sufficient to make such

terms binding

Provided that it shall be assumed by the

court that the requirements of article 521(4)(a) are

satisfied, without any further inquiry by the court,

unless any dissenting creditor has, by application,

requested the court to assess whether the said

requirements do, in fact, subsist.

(3) The confirmation or refusal of the

proposed terms by the court, and any decision of

the court within the context of the proceedings for

the proposal and confirmation of the proposed

terms of a debt agreement, shall be subject to

appeal, by application to the Court of Appeal

within twenty (20) days from the day of the

decision of the court to confirm or refuse the

proposed terms.

(4) The

Court

of

Appeal

may,

notwithstanding that it has accepted an appeal

made in terms of sub-article (3), uphold the

decision of the court to confirm the proposed

terms at first instance, and provide such remedy as

necessary to ensure that the appellant is protected

from the effects of the proposed terms, or duly

compensated, such that the appellant

(a) shall be entitled to receive an

amount at least equivalent to that which the

appellant would have been entitled to if the

normal ranking of priorities were applied, or

in the event of the next-best-alternative

scenario, if the proposed terms had not been

confirmed; or

(b) shall be treated at least as

favourably as any other creditor within any

class of creditors whose debts would, if the

normal ranking of priorities were to be

applied, rank pari passu with the debts

pertaining to the appellant, and more

favourably than any other creditor within

any class of creditors whose debts would, if

the normal ranking of priorities were to be

applied, rank below the debts pertaining to

the appellant.

(5) An appeal made in terms of sub-article

(3) shall have no suspensive effects on the

execution of that decision, or on the execution of

any proposed terms approved within the procedure

in which that decision was made.

524. (1) On the proposed terms of the

Effects of

confirmation.

debt agreement being confirmed, the bankrupt

shall

(a) where the bankrupt is a legal

person, be automatically discharged of all

debts, and shall be struck off the relevant

register, and any debts that shall remain

unpaid following the execution of the terms

of the debt agreement shall, where so

provided in terms of law, become the

personal liabilities of such other person or

persons as so contemplated by law or by the

constitutive documents of the legal person

Provided that, insofar as required

for the purposes of this sub-article, the

bankruptcy trustee shall perform any duties

that would ordinarily be assigned to the

liquidator or such equivalent person being

responsible for the winding up of the

relevant legal person

Provided further that the

bankruptcy trustee shall notify the

competent authority of the discharge of debt,

and the competent authority shall, publish a

notice of completion of bankruptcy

proceedings within the records of the

competent authority, to which the terms of

the debt agreement shall be annexed; or

(b) where the bankrupt is a natural

person, be deemed to be ipso jure

rehabilitated to trade, and may recover the

ownership and possession of his property, in

whole or in part, under the conditions, if any,

embodied in the debt agreement

Provided that a stipulation that

the bankrupt shall have no power to do any

one (1) or various acts, whether of

administration or of alienation, without the

consent of the bankruptcy trustee, until the

complete or partial fulfilment of the

bankrupt’s obligations in terms of the

income payment plan, shall be a valid

stipulation, and shall have effect even

against third parties who have contracted in

good faith with the bankrupt alone

Provided further that upon the

fulfilment of the terms of the income

payment plan, or upon the confirmation of

the proposed terms of the debt agreement if

these do not comprise an income payment

plan, the bankrupt shall be automatically

discharged of all commercial debts that may

at any time previous to the declaration of

bankruptcy have been claimed against him,

and the payment of any commercial debt, or

part thereof, of the bankrupt that shall

remain unpaid following the full execution

of the terms of the debt agreement shall be

abated in full, to the benefit of the

bankruptcy estate.

(2) Upon the rehabilitation to trade of a

bankrupt, being a natural person, a notice of the

rehabilitation shall be published by the bankruptcy

trustee, by means of a notice in the Gazette and in

any one (1) or more newspapers.

(3) Upon the rehabilitation to trade of a

bankrupt, being a natural person, any personal

debts of the bankrupt that shall remain unpaid

following the full execution of the terms of the

debt agreement, shall, by novation, become the

personal liabilities of the rehabilitated bankrupt,

provided that the novation of such debts shall,

notwithstanding the provisions of article 1186 of

the Civil Code, be without prejudice to the

preservation of any privilege or hypothec securing

the debt

Provided that an application may be

made to the court by the rehabilitated bankrupt, by

not later than twenty (20) days from the

confirmation of the proposed terms, for any of the

aforementioned personal liabilities to remain the

liabilities of the bankruptcy trustee, who shall

continue to receive payment from the rehabilitated

bankrupt against such personal liabilities, in terms

of the provisions of an agreement reached by and

between the rehabilitated bankrupt and the

relevant creditors thereof, until the respective

personal debt has been satisfied in full, or until an

earlier resolutive condition expressly stipulated in

the agreement between the rehabilitated bankrupt

and his creditor or creditors has been reached

Provided further that the court shall

only accede to a request made in terms of the first

proviso if it is satisfied that a valid agreement has

been reached by and between the rehabilitated

bankrupt and the relevant creditors thereof, and

only after having received the assent of the

bankruptcy trustee.

(4) The provisions of a debt agreement

shall not be subject to change following the

confirmation thereof, provided that amendment to

the terms of an income payment plan comprising

part of a debt agreement may be requested, at any

time prior to the fulfilment of the terms thereof,

by

(a) the bankrupt, in the event that,

due to a material change in the

circumstances of the bankrupt or his

dependants, the obligations set out in terms

of the income payment plan exceed the

means of the bankrupt; or

(b) the creditors of the bankrupt, in

the event that, due to a material change in

the circumstances of the bankrupt, the

bankrupt may make a greater contribution

towards the payment of his debts.

(5) Any stipulation contained in the

instrument of the debt agreement, not being

contrary to law, shall be valid. The

aforementioned instrument may provide for the

selection of one (1) or more persons, for the

purpose of ensuring the execution of the terms

thereof, of assisting in the sale of property if any

such sale takes place, and of ensuring the

distribution of the proceeds amongst the several

creditors.

(6) A default in making payment according

to the terms of the debt agreement shall have no

effect on the abatement of debts discharged in

terms of the provisions of this Part.

525. If the debt agreement provides for the

Where debt

agreement

abatement of all or any part of a personal debt, the

provides for

the abatement

bankrupt shall be discharged, even as regards his

of personal

future property, from the part abated

debts.

Provided that such abatement and any

time granted to the bankrupt for the payment of

the personal debt shall not operate in favour of any

other person, being a co-debtor or surety jointly

and severally liable with the bankrupt.

526. Notwithstanding the debt agreement,

Right of action

of creditors

the right of action of the creditors for the whole

against co-

debtors.

amount of their debts against the co-debtors or

sureties jointly and severally liable with the

bankrupt shall remain unimpaired, even though

such creditors may have assented to the debt

agreement.

527. (1) The bankruptcy trustee shall,

The

bankruptcy

within fourteen (14) days subsequent to the

trustee shall

render

approval of the debt agreement, or, where

accounts.

relevant, from the date of the completion of the

last of those terms of the debt agreement which

require the intervention of the bankruptcy trustee,

render his final account, and may be compelled to

render such account at the instance of the bankrupt

or of any other interested party.

(2) The bankruptcy trustee shall, within a

period of fourteen (14) days from the date of

delivery of his final account, deliver to the

bankrupt or to the person appointed under the debt

agreement, all the bankrupt’s property, books,

records and other papers or effects, in accordance

with the terms of the debt agreement.

(3) Without prejudice to the requirements

of sub-article (1), the bankruptcy trustee shall,

every six (6) months, that shall be reckoned from

the date of confirmation of the debt agreement,

until the date of the submission of final accounts

referred to in sub-article (1), present an interim

report to the court of all activities conducted by

the bankruptcy trustee, during the relevant period.

The court shall, upon receipt of the report, assess

the extent to which the bankruptcy trustee’s

functions are being conducted in a manner

consistent with the object and purpose of his

appointment, and the court shall, where necessary,

give such orders as required to ensure the swift

and effective execution of the terms of the debt

agreement.".

Title VI of Part III of the Code shall be substituted by the

Substitution of

Title VI of Part

following new Title

III of the Code.

"Title VI - OF BANKRUPTCY WITHOUT DEBT

AGREEMENT

528. If the bankrupt at any time

If debt

agreement is

communicates his intention to proceed with a

not approved.

bankruptcy without a debt agreement, or does not

provide his consent to the proposed terms of a debt

agreement in terms of the provisions of Title V, or

in the event that the proposed terms are not

confirmed by the creditors and leave has not been

granted for the proposal of fresh terms in

accordance with article 522, or if the proposed

terms have not been confirmed by the court in

accordance with article 523, the court shall

(a) if the bankrupt is a legal person,

instruct the bankruptcy trustee to appear

before the court, on such date, and at such a

time as shall be specified in the relevant

notice, being a date which shall not be later

than thirty (30) days from the meeting held

in terms of article 518, to present the

proposed terms of the bankruptcy order,

which shall include

(i) the admitted debts and the

contents of the inventory and debt

register;

(ii) a request to proceed to the

sale of assets comprising the

bankruptcy estate, under the authority

of the court; and

(iii) a request for such

additional authorisations as the

bankruptcy trustee may consider to be

necessary or required for the fulfilment

of the proposed terms of the bankruptcy

order;

(b) if the bankrupt is a natural

person, instruct the bankruptcy trustee to

appear before the court, on such date, and at

such a time, as shall be specified in the

relevant notice, being a date which shall not

be later than thirty (30) days from the

meeting held in terms of article 518, to

present the proposed terms of the bankruptcy

order, which shall include

(i) the admitted debts and the

contents of the inventory and debt

register;

(ii) the assets, retained by the

bankrupt, that the bankruptcy trustee

has deemed to be protected in terms of

article 492, provided that the

bankruptcy trustee shall, where he

deems that such assets have an

excessive value in consideration of the

circumstances of the bankrupt, or in

any circumstances where he is so

petitioned by creditors representing in

excess of ten per cent (10%) of the

admitted debts, propose that such assets

be seized and realised in terms of

article 528(b)(iii), and that a

determined portion of the resultant

proceeds be reimbursed to the

bankrupt, as the bankruptcy trustee may

deem necessary for the bankrupt to

secure the use of assets that would

represent a suitable replacement;

(iii) the assets, forming part of

the bankruptcy estate, that shall be sold,

under the authority of the court, for the

settlement of the debts pertaining to the

creditors, in whole or in part;

(iv) the conditions, if any,

pursuant to which the bankrupt may

recover ownership of those assets,

forming part of the bankruptcy estate,

which are not proposed for sale in terms

of article 528(b)(iii), provided that such

assets shall automatically fall to be sold

in terms of article 528(b)(iii) if the

prescribed conditions are not met;

(v) the established amount

that the bankrupt shall contribute

towards the bankruptcy estate in the

hands of the bankruptcy trustee, in

terms of an income payment plan, if

any, forming part of the bankruptcy

order, out of anything that devolves on,

or is derived by, the bankrupt after the

rehabilitation in terms of article

534(1)(b), for a period not exceeding

three (3) years that shall be reckoned

from the date of the original

appointment of the first bankruptcy

trustee, for the further settlement of

debts, in whole or in part, which

amount shall be formulated in

accordance with the bankruptcy

trustee’s projection of the bankrupt’s

income and expenditure in terms of

article 519(3); and

(vi) any other obligations that

shall be imposed on the bankrupt for

the duration of the income payment

plan.

529. (1) The provisions of a bankruptcy

Minimum

requirements

order, in terms of article 528(b), shall ensure that

of the

bankruptcy

the bankrupt is permitted to retain moneys

order.

equivalent to the combined value of

(a) the national minimum wage

established for persons of eighteen (18)

years and over, calculated pro rata for the

duration of the income payment plan; and

(b) an additional amount in excess of

the national minimum wage where the

bankrupt reasonably demonstrates, to the

satisfaction of the court, that the bankrupt

has an overriding need for the additional

amount on account of grave and justifiable

circumstances specific to the bankrupt or his

dependants.

(2) Any funds resulting from the sale of

those assets comprising the bankruptcy estate and

listed in terms of article 528(b)(iii) shall be

utilised for the settlement of the debts of the

bankrupt, whether personal or commercial in

nature, in the order in which these shall rank in

terms of law.

(3) Any contributions to the bankruptcy

estate made by virtue of an income payment plan

in terms of article 528(b)(v) shall be utilised

exclusively for the settlement of the commercial

debts of the bankrupt, in the order in which these

shall rank according to law

Provided that any contributions to the

bankruptcy estate made in terms of an income

payment plan by virtue of article 528(b)(v) that are

made subsequent to the full settlement of the

commercial debts of the bankrupt shall be utilised

for the further settlement of the personal debts of

the bankrupt.

530. During the hearing referred to in article

Presentation of

evidence

528, the bankruptcy trustee shall also present a

regarding

fraud.

statement reflecting his evaluation of whether the

bankruptcy may be fraudulent, and in the event

that the statement maintains the possibility of the

subsistence of fraud, the bankruptcy trustee shall

submit all evidence in support of his statement.

531. The bankrupt and the creditors shall, at

Right to be

heard.

such hearing, or at a later date that shall be

determined by the court, be given the opportunity

to be heard.

532. (1) Within fourteen (14) days of the

Confirmation

and variation.

hearing held in terms of article 528, or article 531

if applicable, the court shall, by order, proceed to

confirm, subject to any variations as it may deem

appropriate, the proposed terms of the bankruptcy

order proposed in accordance with article 528, and

such confirmation shall be sufficient to make the

proposed terms binding.

(2) Upon the confirmation by the court in

terms of sub-article (1), the court shall accede to

the request of the bankruptcy trustee to proceed,

within such period as shall be stipulated by the

court, to the sale, under the authority of the court,

of those assets comprising the bankruptcy estate

and listed in terms of articles 528(a)(i) or

528(b)(iii).

(3) The terms of the bankruptcy order, and

any decision of the court within the context of the

proceedings for the making of a bankruptcy order,

shall be subject to appeal, by application to the

Court of Appeal within twenty (20) days from the

day of the decision of the court to confirm or

refuse the proposed terms of the bankruptcy order.

(4) The

Court

of

Appeal

may,

notwithstanding that it has accepted an appeal

made in terms of sub-article (3), uphold the

decision of the court to confirm the proposed

terms at first instance, and provide such remedy as

necessary to ensure that the appellant is protected

from the effects of the proposed terms, or duly

compensated, such that the appellant

(a) shall be entitled to receive an

amount at least equivalent to that which the

appellant would have been entitled to if the

normal ranking of priorities were applied, or

in the event of the next-best-alternative

scenario, if the proposed terms had not been

confirmed; and

(b) shall be treated at least as

favourably as any other creditor within any

class of creditors whose debts would, if the

normal ranking of priorities were to be

applied, rank pari passu with the debts

pertaining to the appellant, and more

favourably than any other creditor within

any class of creditors whose debts would, if

the normal ranking of priorities were to be

applied, rank below the debts pertaining to

the appellant.

(5) An appeal made in terms of sub-article

(3) shall have no suspensive effects on the

execution of that decision, or on the execution of

any proposed terms approved within the procedure

in which that decision was made.

533. (1) Upon being instructed to proceed

Redemption of

pledges.

to the sale of assets comprising the bankruptcy

estate, the bankruptcy trustee shall be authorized

to redeem pledges, for the benefit of the

bankruptcy estate, upon payment of the respective

debts.

(2) If the pledge is not redeemed by the

bankruptcy trustee, and is sold by the creditor for a

collected by the bankruptcy trustee; if the price

realized is less than the debt, the creditor who had

the pledge may prove and compete for the

difference.

534. (1) Upon the instruction by the

Liability for

unpaid debts

court, to the bankruptcy trustee to proceed to the

and

rehabilitation.

sale of assets comprising the bankruptcy estate,

the bankrupt shall, provided that there is no

determination by the court of the bankruptcy being

fraudulent

(a) where the bankrupt is a legal

Where the

bankrupt is a

person, be automatically discharged of all

legal person.

debts, and shall be struck off the relevant

register, and any debts that shall remain

unpaid following the sale of assets shall,

where so provided in terms of law, become

the personal liabilities of such other person

or persons as so contemplated by law or by

the constitutive documents of the legal

person

Provided that, insofar as required

for the purposes of this sub-article, the

bankruptcy trustee shall perform any duties

that would ordinarily be assigned to the

liquidator or such equivalent person being

responsible for the winding up of the

relevant legal person

Provided further that the

bankruptcy trustee shall notify the competent

authority of the discharge of debt, and the

competent authority shall publish a notice of

completion of bankruptcy proceedings

within the records of the competent

authority, to which the terms of the

bankruptcy order shall be annexed; or

(b) where the bankrupt is a natural

Where the

bankrupt is a

person, be deemed to be ipso jure

natural person.

rehabilitated to trade, and may recover the

ownership and possession of his property, in

whole or in part, under the conditions, if any,

embodied in the bankruptcy order

Provided that a stipulation that

the bankrupt shall have no power to do any

one (1) or various acts, whether of

administration or of alienation, without the

consent of the bankruptcy trustee, until the

complete or partial fulfilment of the

bankrupt’s obligations in terms of the

income payment plan, shall be a valid

stipulation, and shall have effect even

against third parties who have contracted in

good faith with the bankrupt alone

Provided further that upon the

fulfilment of the terms of the income

payment plan, or upon the confirmation of

the proposed terms of the bankruptcy order if

these do not comprise an income payment

plan, the bankrupt shall be automatically

discharged of all commercial debts that may

at any time previous to the declaration of

bankruptcy have been claimed against him,

and the payment of any commercial debt, or

part thereof, of the bankrupt that shall

remain unpaid following the full execution

of the terms of the bankruptcy order shall be

abated in full, to the benefit of the

bankruptcy estate.

(2) Upon the rehabilitation to trade of a

bankrupt, being a natural person, a notice of the

rehabilitation shall be published by the bankruptcy

trustee, in the Gazette and in any one (1) or more

newspapers.

(3) Upon the rehabilitation to trade of a

bankrupt, being a natural person, any personal

debts of the bankrupt that shall remain unpaid

following the full execution of the terms of the

bankruptcy order, shall, by novation, become the

personal liabilities of the rehabilitated bankrupt,

provided that the novation of such debts shall,

notwithstanding the provisions of article 1186 of

the Civil Code, be without prejudice to the

preservation of any privilege or hypothec securing

the debt

Provided that an application may be

made to the court by the rehabilitated bankrupt, by

not later than twenty (20) days from the making of

a bankruptcy order, for any of the aforementioned

personal debts to remain the liabilities of the

bankruptcy trustee, who shall continue to receive

payment from the rehabilitated bankrupt against

such personal debts, in terms of an agreement

reached by and between the rehabilitated bankrupt

and the relevant creditors thereof, until the

respective personal debt has been satisfied in full,

or until an earlier resolutive condition expressly

stipulated in the agreement between the

rehabilitated bankrupt and his creditor or creditors

has been reached

Provided further that the court shall

only accede to a request made in terms of the first

proviso, if it is satisfied that a valid agreement has

been reached by and between the rehabilitated

bankrupt and the relevant creditors thereof, and

only after having received the assent of the

bankruptcy trustee.

(4) The provisions of a bankruptcy order

shall not be subject to change following the

confirmation thereof, provided that amendment to

the terms of an income payment plan comprising

part of a bankruptcy order may be requested at any

time prior to the fulfilment of the terms thereof,

by

(a) the bankrupt, in the event that,

due to a material change in the

circumstances of the bankrupt or his

dependants, the obligations set out in terms

of the income payment plan exceed the

means of the bankrupt; or

(b) the creditors of the bankrupt, in

the event that, due to a material change in the

circumstances of the bankrupt, the bankrupt

is able to make a greater contribution

towards the payment of commercial debts

that would otherwise be discharged.

(5) Any stipulation contained in the

bankruptcy order, not being contrary to law, shall

be valid. The aforementioned instrument may

provide for the selection of one (1) or more

persons, for the purpose of ensuring the execution

of the terms thereof, of assisting in the sale of

property if any such sale takes place, and of

securing the distribution of the proceeds amongst

the several creditors.

(6) A default in making payment according

to the terms of the bankruptcy order shall have no

effect on the abatement of debts discharged in

terms of the provisions of this Part.

535. If the bankruptcy order provides for the

Where

bankruptcy

abatement of all or any part of a personal debt, the

order provides

for the

bankrupt shall be discharged, even as regards his

abatement of

future property, from the part abated

part of debt.

Provided that such abatement and any

time granted to the bankrupt for the payment of

the personal debt shall not operate in favour of any

other person, being a co-debtor or surety jointly

and severally liable with the bankrupt.

536. Notwithstanding the bankruptcy order,

Right of action

of creditors

the right of action of the creditors for the whole

against co-

debtors.

amount of their debts against the co-debtors or

sureties jointly and severally liable with the

bankrupt shall remain unimpaired.

537. (1) The bankruptcy trustee shall,

The

bankruptcy

within fourteen (14) days subsequent to the

trustee shall

render

approval of the bankruptcy order, or, where

accounts.

relevant, from the date of the completion of any of

the terms of the bankruptcy order which require

the intervention of the bankruptcy trustee, render

his final account, and may be compelled to render

such account at the instance of the bankrupt or of

any other interested party.

(2) The bankruptcy trustee shall, within a

period of fourteen (14) days from the date of

delivery of his final account, deliver to the

bankrupt or to the person appointed under the

bankruptcy order, all the bankrupt’s property,

books, records and other papers or effects, in

accordance with the terms of the bankruptcy order.

(3) Without prejudice to the requirements

of sub-article (1), the bankruptcy trustee shall,

every six (6) months, that shall be reckoned from

the date of confirmation of the bankruptcy order

until the date of the submission of final accounts

referred to in sub-article (1), present an interim

report to the court of all activities conducted by

the bankruptcy trustee, during the relevant period.

The court shall, upon receipt of the report, assess

the extent to which the bankruptcy trustee’s

functions are being conducted in a manner

consistent with the object and purpose of his

appointment, and the court shall, where necessary,

give such orders as required to ensure the swift

and effective execution of the terms of the

bankruptcy order.".

Title VII of Part III of the Code shall be substituted by the

Substitution of

Title VII of Part

following new Title

III of the Code.

"Title VII - OF BANKRUPTCY IN GENERAL

538. In all cases of bankruptcy

General

provisions.

(1)(a) Upon the authorisation of the court for

Appointment

of curator to

the bankruptcy trustee to proceed to the sale of

give his

consent in lieu

assets comprising the bankruptcy estate in terms

of a creditor.

of article 497, or in pursuance to a debt agreement,

or a bankruptcy order, and if the bankruptcy

trustee has identified the need to obtain the

consent of a creditor prior to the transfer of any

asset or assets, and, or, where the creditor is

required to appear on any pertinent public deed so

as to consent to the cancellation of, or a reduction

in, any cause of preference and the registration of

the same, enjoyed by the creditor over the said

asset or assets, the bankruptcy trustee may, if he is

of the opinion that the consent of the said creditor

is, or may be withheld, make an application to the

court for the appointment of a curator.

(b) A curator appointed in terms of this

article, may under the authority of the court,

consent to the transfer of assets and, or, appear on

any pertinent public deed to consent for and on

behalf of the creditor, referred to in paragraph (a),

who may withhold his consent to the cancellation

of, or reduction in, any cause of preference, and

the registration of the same, enjoyed by the said

creditor, on condition that the curator receives that

portion of the proceeds of the sale of assets which,

in terms of law and subject to the debt agreement

or bankruptcy order, which pertains to the said

creditor, that shall be applied in his favour in

terms of article 538(1)(c)

Provided that the court shall only proceed to

the appointment of a curator for the sale of assets

comprising the bankruptcy estate in terms of

article 497, where the bankruptcy trustee has, in

his application, expressed the opinion that the

creditor, referred to in paragraph (a), who may

withhold his consent shall receive, as a result of

the sale of assets, an amount at least equivalent to

that which the said creditor would have been

entitled to if the normal ranking of priorities were

applied, or in the event of the next-best-alternative

scenario, if the sale of assets were not to take

place.

(c) The curator shall receive, for and on

behalf of the creditor, referred to in paragraph (a),

who may withhold his consent, that portion of the

proceeds of the sale of assets referred to in article

538(1)(b) which, in terms of law and subject to the

debt agreement or bankruptcy order, pertains to

the said creditor, and shall ensure that such funds

are either distributed to the said creditor or, if this

is not reasonably practicable, deposited in court

for the benefit of the said creditor

Provided that the proceeds of a sale of assets

in terms of article 497, shall not be distributed or

deposited in terms of paragraph (c), but shall

aggregate to the bankruptcy estate in terms of

article 495.

(2) (a)

once the judgment declaring

bankruptcy is given in terms of article 488, no

interest on the sums due by the bankrupt shall

accrue from the date of the declaration of

bankruptcy made by the trader himself, or from

the date of the application by a creditor demanding

a declaration of bankruptcy, as the case may be;

and

(b) there shall be no possibility of

discharge with respect to debts arising from

(i) any fine (ammenda or

multa) due by the debtor in terms of the

Laws of Malta;

(ii) civil debts due by the

debtor by way of damages in tort;

(iii) wages due by the debtor

and constituting a privileged claim over

the assets of the debtor in terms of

article 20 of the Employment and

Industrial Relations Act;

(iv) debts due by the debtor by

way of fraudulent or wrongful trading

in terms of the relevant provisions of

the Companies Act; and

(v) debts due by the debtor in

relation to maintenance obligations in

terms of the relevant provisions of the

Civil Code.

539. (1) The benefits granted by articles

Fraudulent

bankruptcy.

524 and 534 in favour of the bankrupt shall not

apply in the case of fraudulent bankruptcy.

(2) A bankrupt shall be deemed to be a

fraudulent bankrupt in each one (1) of the

following cases

(a) if he makes an untrue statement

in respect of the debts owing to or from him,

or in respect of his bankruptcy, saving any

criminal proceedings which may be brought

against the bankrupt for having perjured

himself or sworn falsely;

(b) if he has simulated any expenses

or losses or if he fails to give a satisfactory

explanation of the manner in which his

income has been disposed of;

(c) if he has concealed or removed

any sum of money, or any debt due to him,

goods, merchandise or other movable

effects;

(d) if he has made fictitious sales,

transactions or donations;

(e) if he has simulated collusive

debts between himself and fictitious

creditors, by simulated writings or by

declaring

himself

debtor,

without

consideration or cause, in any public or

private act;

(f)

if he has concealed or destroyed

his books, documents or other papers

relating to his accounts.

540. A bankrupt may in the following cases

Cases where

trader may be

be adjudged a fraudulent bankrupt, unless he

adjudged a

fraudulent

sufficiently proves that he had no intent to

bankrupt.

defraud

(a)

if he has not kept books or if his

books do not show the true state of his assets

and liabilities;

(b) if, on being lawfully summoned

for any meeting which, by the provisions of

this Part he is bound to attend, he fails to

attend;

(c)

if he has not aided in the making

up of the inventory.".

Article 547 of the Code shall be substituted by the

following new article

"547. Commercial jurisdiction, except for the provisions

of Part III, shall be exercised by the Civil Court, First Hall, in

accordance with the provisions contained in the Code of

Organization and Civil Procedure.".

Article 549 of the Code shall be substituted by the

following new article

"549. The Civil Court, First Hall, shall also take

cognizance of actions against agents or other persons

commissioned by merchants or their subordinates in regard only

to transactions carried out in the ordinary course of the business

of their principal; and of actions by the former against the

principal.".

Regulation 5A of the Civil Courts (Establishment of

Sections) Order shall be amended by the following

(a) the marginal note thereof shall be substituted by the

following new marginal note

"Assignment of cases to the Civil Court

(Commercial Section). Cap. 13. Cap. 386. Cap. 378. Cap.

379. Cap. 510. Act No. XXIV of 2022 . "; and

(b) the words "matters regulated by the Companies Act"

thereof shall be substituted by the words "matters regulated by

the Third Part of the Commercial Code and any regulations

made thereunder, by the Companies Act, by the Pre-Insolvency

Act, 2022".

Passed by the House of Representatives at Sitting No. 70 of the 14th

December, 2022.

ANĠLU FARRUGIA

Speaker

RAYMOND SCICLUNA

Clerk of the House of Representatives

€4.59