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Section 73 Proposal – Insolvency Guardian

Sometimes a bankrupt will be able to make a proposal to satisfy their creditors’ debts during their bankruptcy this proposal is known as a Section 73. The assets in the estate may have been realised, but the bankrupt or a third party may be able to make a further contribution to the estate to increase the funds available to creditors.

Both the creditors and the bankrupt should benefit from the Section 73 Proposal. The creditors would expect to be offered a higher return than they would have received in the bankruptcy, and acceptance of the proposal annuls or releases the bankrupt from the bankruptcy.

The bankrupt would not be able to make such a proposal without the section 73 provisions, as the Part X provisions giving the opportunity to propose a Personal Insolvency Agreements are not available once the debtor is bankrupted. Section 73 and its associated sections provide a chance for bankrupts to make these proposals to creditors.

The procedure for making this proposal is easy. The bankrupt sends written details of the proposal to the trustee with a request to call a meeting of creditors to consider the proposal. The trustee will conduct an investigation into the benefits of the proposal to creditors, issue a report that makes a recommendation to creditors, and call a meeting for creditors to vote on the proposal.
If the proposal is accepted, the bankruptcy will be annulled and the new agreement will be in force. If the proposal is not accepted, the bankruptcy will continue.

To know more on a Section 73 Proposal talk with the Insolvency Guardian today.

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