Before you respond to a bankruptcy application, make sure you:
When you owe someone money, they are the creditor and you are the debtor.
As a debtor, if you received a creditor's bankruptcy application and the supporting affidavit, you can respond in any of the following ways:
You can make a voluntary arrangement to settle your debts with your creditor to try to avoid bankruptcy proceedings.
It is a negotiated debt settlement where you disclose what you own (assets) and what you owe (liabilities), and make a proposal on how you intend to settle your debts with your creditor. Refer to Part 14 of the Insolvency, Restructuring and Dissolution Act (IRDA) and the Insolvency, Restructuring and Dissolution (Voluntary Arrangements) Regulations for more information.
If you intend to propose a voluntary arrangement, you may apply to the General Division of the High Court for an interim order to stop all further legal proceedings against you.
Your application should include a proposal containing information of all your assets and liabilities and how you intend to settle the debts. The proposal must name a nominee who will be appointed to supervise the implementation of the voluntary arrangement. The nominee must be a licensed insolvency practitioner.
Refer to Rule 52 of the Insolvency, Restructuring and Dissolution (Personal Insolvency) Rules for more information on applying for an interim order.
Note: At any time when your application for an interim order is pending, the court may stay any action, execution or other legal process against you or against your property.
The court will schedule a hearing for your interim order application. You must attend the hearing on the appointed date and time. The court will usually schedule this within 2 weeks of the filing of the application.
At least 2 days before the hearing, you must give notice of the hearing to the creditor who filed the bankruptcy application against you, as well as the intended nominee for your proposal. These parties may appear or be represented at the hearing.(1)
At the hearing, the court will determine the merits of your application and decide whether to allow or dismiss it. Refer to Section 279 of the IRDA for the conditions for the court to make an interim order.
Tip: If you are unable to attend, you must make a request to change the court date, which is subject to the court's approval.
If the court makes the interim order, your creditors cannot continue or start bankruptcy applications against you for a period of 42 days after the date of the order. This also applies to other legal proceedings, such as enforcement, which can only proceed if the court gives permission.
If the court does not make the interim order, you may not proceed with a voluntary arrangement as described under Part 14 of the IRDA. You may still propose alternative arrangements (such as an instalment plan or lump sum payment) to your creditor. You may also file an appeal against the court's decision to dismiss the application.
Where an interim order has been made, the nominee will prepare a nominee's report to the court. The nominee will summon a meeting of the creditors where the proposed voluntary arrangement is considered and may be approved. Refer to the Insolvency, Restructuring and Dissolution (Voluntary Arrangements) Regulations for more information.
If the proposed voluntary arrangement is not approved at the meeting of creditors, bankruptcy proceedings may continue or be commenced against you and a bankruptcy order may be made.
If the proposed voluntary arrangement is approved and you fulfil your obligations under the voluntary arrangement, the debts which are under the voluntary arrangement are considered settled.
You can try to negotiate with the creditor to settle the bankruptcy application. This can be through a private arrangement, such as a proposal to pay your debts in instalments or in scheduled repayments.
If you have valid reasons to oppose the creditor's bankruptcy application, you may file and serve a notice specifying your objection no later than 3 days before the scheduled hearing date for the application. The notice should specify your reasons for objecting to the bankruptcy application.
File the notice of objection through eLitigation. If you are not represented by a lawyer, visit the LawNet & CrimsonLogic Service Bureau to file in person. Serve a copy of the notice on the creditor who made the bankruptcy application against you, as well as the Official Assignee. Refer to Rule 91 of the Insolvency, Restructuring and Dissolution (Personal Insolvency) Rules.
Note: Even after you file the notice, you will still need to attend the scheduled hearing for the bankruptcy application as the court may make a bankruptcy order against you in your absence.
If you do not take any steps or hear back from the creditor in respect of any proposal that was made, you must attend the bankruptcy hearing on the date and time stated on the bankruptcy application you received.
Yes. You should attend the hearing and inform the court that you tried to contact your creditor but did not receive any response. At the hearing, the creditor (or their lawyer) will inform the court if they are agreeable to your proposal.
If the creditor is agreeable, they may either apply for an adjournment to monitor your payments, or ask for leave (permission) from the court to withdraw the bankruptcy application against you.
If the creditor is not agreeable, the court may adjourn the hearing to give you more time to make another proposal, or the court may make a bankruptcy order against you.
Yes. You should attend the hearing and inform the court that you made a payment proposal to your creditor, but the proposal was rejected. The court may adjourn the hearing to give you more time to make another proposal, or may make a bankruptcy order against you.