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Is there an “insolvency industry” ?


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One Response to "Is there an “insolvency industry” ?"

  1. Mohammad says:
    By “insolvency industry”, do you mean large scale misuse of Insolvency Law of a country, with a view to depriving one’s creditors, by hiding one’s assets and then obtaining Insolvency Order from Court? In this sense, it is like any “criminal industry”. If one resorts to such a practice, and if it is detected later, there stringent punishment, including jail for long years.

    When a person is unable to pay debts to creditors, he approaches an Insolvency Court to declare him as insolvent, to prevent creditors from harassing him.

    After satisfaction, Court issues an insolvency order which debars creditors from taking any action against the concerned person.

    The court order also says how the insolvent’s assets are to be disposed of and how the proceeds thereof are to be utilised for meeting the dues of creditors and in what manner. The insolvent is also given some amount for his maintenance.

    The powers to manage the assets and liabilities of the Insolvent are vested in Court Receiver.

    In the meantime the insolvent is debarred from entering into any financial transactions with any one

    After the assets have been realised and the creditors have been paid(in part or in full), the Court frees the insolvent person. Thereafter, his disability goes away, and he can function as a normal person.

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