ABSTRACT
In this chapter, references to ‘B Act 1988’ are references to the Bankruptcy Act 1988 (as amended) and references to ‘CA 1963’ are references to the Companies Act 1963 (as amended).
11.1.1 Definition of bankruptcy The classic definition of bankruptcy is considered to be the quotation from an English case in 1874 (Re Reiman 20 Fed Cas 490):
Bankruptcy law applies only to debtors who are individuals. The main objects of bankruptcy legislation are: (a) to secure equality of distribution and to prevent any one creditor obtaining an unfair
advantage over the others; (b) to protect bankrupts from vindictive creditors by freeing them from the balance of
their debts where they are unable to pay them in full, and to help rehabilitate them; (c) to protect creditors, not alone from debtors who prior to bankruptcy prefer one or
more creditors to others but from the acts of fraudulent bankrupts; (d) to punish fraudulent debtors. The method of achieving these objectives is by the transfer of all assets to a trustee/ assignee for the purpose of realisation and then the distribution of the proceeds of sale rateably among the creditors. Because the concept of limited liability is a much newer concept, there are quite a number of rules relating to liquidations which have their foundation in bankruptcy law.
