Clause 95

Where a bankruptcy order has been made, the creditors who have proved their debts may, if they think fit, at a general meeting of creditors, by special resolution, resolve to accept 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.

The composition or scheme shall not be binding on the creditors unless it is approved by the court.

Any creditor who has proved his debt may assent to or dissent from the composition or scheme by a letter addressed to the Official Assignee in the prescribed form, and attested by a witness, and sent or posted so as to be received by the Official Assignee not later than the day preceding the meeting, and a creditor so assenting or dissenting shall be taken as being present and voting at that meeting.

The meeting shall be summoned by the Official Assignee by not less than 7 days’ notice.

The notice shall state generally the terms of the proposal and shall be accompanied by a report of the Official Assignee thereon.

The bankrupt or the Official Assignee may, after the composition or scheme is accepted by the creditors, apply to the court to approve it, and notice of the time appointed for the hearing of the application shall be given as prescribed.

The court shall, before approving a composition or scheme, consider the report of the Official Assignee as to the terms of the composition or scheme and as to the conduct of the bankrupt, and shall hear any objection which may be made by or on behalf of any creditor.

If the court is of the opinion that the terms of the composition or scheme are not reasonable or are not calculated to benefit the general body of creditors, the court may, in its discretion, refuse to approve the composition or scheme.

If the court approves the composition or scheme, the approval may be testified by the seal of the court being attached to the instrument containing the terms of the composition or scheme, or by the terms being embodied in an order of the court.

A composition or scheme accepted and approved pursuant to this section shall be binding on all the creditors so far as relates to any debts due to them from the bankrupt and provable in bankruptcy.

A certificate of the Official Assignee that a composition or scheme has been duly accepted and approved shall, in the absence of fraud, be conclusive as to its validity.

The provisions of a composition or scheme under this section may be enforced by the court on an application by any person interested, and any contravention of or failure to comply with of an order of the court made on such an application shall be deemed to be a contempt of court.

If the court approves the composition or scheme, it may annul the bankruptcy order and vest the property of the bankrupt in him or in such other person as the court appoints on such terms and subject to such conditions as the court may impose.

If default is made in payment of any instalment due under the composition or scheme, or if the court is satisfied that the composition or scheme cannot, in consequence of legal difficulties or for any sufficient cause, proceed without injustice or undue delay to the creditors or to the bankrupt, or that the approval of the court was obtained by fraud, the court may, if it thinks fit, on an application by the Official Assignee or any creditor, 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.