(1) If a person’s debts
and other liabilities to be borne by him or her exceed his or her
assets, bankruptcy proceedings may be initiated for payment or
recovery of debts or settlement of liabilities from such assets.
(2) Notwithstanding anything contained in sub-section (1),
no bankruptcy proceedings may be initiated in the following
circumstances:
(a) If a person who has regular income or is certain to
earn income in the future proves that his or her
income can pay or set off debts or other liabilities in
a certain period or the creditor is satisfied in such
matter,
(b) If a person likely to be a bankrupt asks for a period
of up to five years specifying the period of time to
repay the debts of creditors and sources thereof
from the date of origin of conditions necessitating
the commencement of bankruptcy proceedings in
order to enjoin or cause to be enjoined from
initiating that proceedings,
(c) If the creditor does not agree to initiate, or cause to
be initiated, bankruptcy proceedings.
Explanation:
(1) For the purposes of this Chapter, the term
'assets' means the concerned person's property
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standing for the time being or to be earned or
likely to be earned up to the time prior to the
completion of bankruptcy proceedings pursuant
to this Chapter.
(2) For the purposes of clause (c), the term
'creditor' means, where there are more than one
creditor, creditors or a group of creditors who
hold fifty percent or more debts out of the total
debts of the person likely to become bankrupt.
(3) If a debt or claim of a creditor is settled from the assets
of a person under this Chapter, such a person shall be deemed to
become a bankrupt.
(4) The court shall send the record of the person being
bankrupt pursuant to sub-section (3) to the bankruptcy
administration office established for that purpose.
(5) The bankruptcy administration office shall update the
records referred to in sub-section (4).
(6) Any person declared bankrupt pursuant to sub-section
(3) shall not be required to repay debt or fulfill the obligation other
than the debt or obligation he or she has to pay or fulfill and settle
under this Chapter.
(7) Notwithstanding anything contained in sub-section (6),
the following obligation shall be fulfilled from the trade, business
or transaction he or she starts after his or her declaration of being
bankrupt:
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(a) Tax, fee or charge to be paid to the Government of
Nepal,
(b) Amount of penalty or fine to be paid according to
the order of a court,
(c) Amount to be paid for the embezzlement of
property of the person under his or her
guardianship or curatorship,
(d) Amount to be paid for the goods stolen,
(e) Amount to be paid for the embezzlement of
property of a trust.
(8) Notwithstanding anything contained elsewhere in this
Section, if any person becomes bankrupt, he or she may carry on
any trade, business or transaction other than any act or activity he
or she is prohibited from doing or taking in that capacity according
to law.