Section 26

Where a debtor is adjudged bankrupt, the creditors may, if they think fit, at any time after the adjudication, by special resolution, resolve to entertain a proposal for a composition in satisfaction of the debts due to them under the bankruptcy, or for a scheme of arrangement of the bankrupt’s affairs, and thereupon the same proceedings shall be taken and the same consequences shall ensue as in the case of a composition or scheme entertained at the first meeting of creditors.

If the court approves the composition or scheme, it may make an order annulling the bankruptcy and vesting the property of the bankrupt in him or in such other person as the court appoints, on such terms and subject to such conditions, if any, as the court declares.

If default is made in payment of any instalment due in pursuance of the composition or scheme, or if it appears to the court that the composition or scheme cannot proceed without injustice or undue delay, or that the approval of the court was obtained by fraud, the court may, if it thinks fit, on application by any person interested, adjudge the debtor bankrupt and annul the composition or scheme, but without prejudice to the validity of any sale, disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme.

Where a debtor is adjudged bankrupt under subsection (3) all debts provable in other respects, which have been contracted before the date of the adjudication, shall be provable in the bankruptcy.