For people under bankruptcy, a misperception about bankruptcy dictates that the bankrupt individual must wait for a full three-year before totally getting automatic discharge.
Section 73 Composition or "Proposal' is known to be the least used tools in getting out of bankruptcy.
Under the Bankruptcy Act of 1966, a bankrupt individual may propose a compromise with creditors in satisfaction of their claims of bankruptcy on grounds that the bankruptcy has occurred as a result of a debtor's petition, and only after a sequestration order has been made. Usually this will involve a period of negotiating with creditors in order to reach a deal, whereby the bankrupt agrees to pay his or her debts by contributing XX cents to the dollar amount of each debt.
Upon agreeing to the composition, the creditors will then request a notice to consider the compromise together with a report from the trustee. The trustee's report usually has to contain information about the bankrupt's composition and it should be able to lay all the points that the creditors will benefit from.
A composition may involve assets already in the bankruptcy and/or may include other money or assets that would not normally be available to creditors, such as money provided by a relative.
A meeting is then convened between the trustee, the creditors and the bankrupt. The composition is put to a vote by special resolution, requiring at least 75% of the dollar value of the debt and at least 50% (in number) of the creditors. If a meeting accepts the proposal, the bankruptcy is annulled on the date on which that resolution was passed.
The bankruptcy will be annulled right after the offer is accepted.. A composition deal, once accepted, is binding on all creditors but only to the extent that it relates to the provable debts due to them by the bankrupt which would be released by their discharge from bankruptcy.
If you are currently in bankruptcy and wish your bankruptcy to be annulled, contact our lawyers at Stone Group Lawyers for further advice.