CONFIDENTIAL LW/JAN 2013/LAWS34

UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION
COURSE
COURSE CODE
EXAMINATION
TIME
INSOLVENCY I
LAW534
JANUARY 2013
3 HOURS
INSTRUCTIONS TO CANDIDATES
1. This question paper consists of three (3) parts : PART A (5 Questions)
PART B (2 Questions)
PART C (1 Question)
2. Answer ALL questions in the Answer Booklet. Start each answer on a new page.
3. Candidates are allowed to bring in the following materials (unannotated):
i) Bankruptcy Act 1967
ii) Bankruptcy Rules 1969
iii) Bankruptcy (Fees) Rules 1969
iv) Bankruptcy (Cost) Rules 1969
4. Do not bring any material into the examination room unless permission is given by the
invigilator.
5. Please check to make sure that this examination pack consists of:
i) the Question Paper
ii) an Answer Booklet - provided by the Faculty
DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO
This examination paper consists of 4 printed pages
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CONFIDENTIAL 2 LW/JAN 2013/LAW534
PART A
QUESTION 1
An act of bankruptcy is a pre-condition to the presentation of bankruptcy petition. With
reference to the Bankruptcy Act 1967, state and explain three conditions that would
constitute an act of bankruptcy.
(6 marks)
QUESTION 2
Differentiate between a Receiving Order and an Adjudication Order.
(6 marks)
QUESTION 3
What do you understand by the composition or the scheme of arrangement in bankruptcy?
(6 marks)
QUESTION 4
Explain the theory of relation back on the Director General of Insolvency's title and the
significance of this theory on the act of bankruptcy.
(6 marks)
QUESTION 5
Discuss how a bankrupt can obtain a discharge of his bankruptcy.
(6 marks)
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CONFIDENTIAL 3
LW/JAN 2013/LAW534
PARTB
QUESTION 1
Harvey was indebted to Ceti Bank. Ceti Bank had a final judgment in respect of the debt.
Harvey failed to comply with the said judgment as well as the subsequent bankruptcy notice
demanding payment of the outstanding sum. Ceti Bank caused a creditor's petition to be
filed. Harvey opposed the petition and filed an affidavit deposing that the bankruptcy notice
was bad in law on the ground that the interest specified therein was wrongly calculated. Ceti
Bank raised a preliminary objection that the Affidavit was not a proper notice to oppose the
petition and that it contravened Rule 117 of the Bankruptcy Rules 1969.
Advise Harvey on the following:
a) Whether Rule 117 of the Bankruptcy Rules 1969 is a mandatory provision and non
compliance of the Rule is fatal?
b) Whether Harvey's affidavit can be treated as a valid notice to oppose the said
petition?
(20 marks)
QUESTION 2
Mikey was adjudicated a bankrupt on 1.4.2011. Prior to that on 1.6.2010, Mikey entered into
an agreement to sell his two acres of land in Puncak Alam, Selangor, to Catherine who is his
daughter-in-law, for a sum of RM70.000. The Director General of Insolvency has filed an
application in court claiming that the sale and purchase agreement was void as against the
Director General of Insolvency under Section 52(1) of the Bankruptcy Act 1967 on the
grounds that the purported dealing was not genuine or bona fide for valuable consideration
but a voluntary settlement in disguise with the intent on the part of the bankrupt to defraud
his creditors.
With reference to the relevant provision and decided cases, advise Mikey as to the effect of
the sale and purchase agreement.
(20 marks)
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CONFIDENTIAL 4 LW/JAN 2013/LAW534
PARTC
QUESTION 1
On 25.10.2010 Donna obtained judgment in default against Zack in the Sessions Court for
the sum of RM120,000 with interest at 8% per annum from date of judgment to date of
realization and cost at RM1.500. Zack subsequently applied to set aside the default
judgment. While awaiting for the hearing of the application, Zack paid through his solicitors
the judgment sum by way of monthly installments of RM10,000 commencing from 1.11.2010.
Zack's payment was accepted by Donna through her solicitors. Donna issued receipts for
three installment payments made by Zack. Thereafter Zack could not pay the subsequent
installments. Donna then issued a bankruptcy notice against Zack on 2. 2. 2011.
The bankruptcy notice demanded payments as follows:
"The sum of RM120,000.00 together with interest thereon at the rate of 9% per
annum on from date of judgment to date of realization and cost at RM1,600.00 to be
paid within 3 days of date of service of Bankruptcy Notice."
The bankruptcy notice was served personally on Zack's wife, Salimah on 2.7.2011. Zack
claimed that he also has a counterclaim amounting to RM200,000 against Donna.
On 9.2.2012 Donna filed and served a creditor's petition together with an affidavit of truth of
petition on Zack. Donna's creditor's petition was dated 9.2.2012. The affidavit of truth of
petition was affirmed on 7.2.2012.
Advise Zack on;
a) the grounds upon which the bankruptcy notice may be challenged
(15 marks)
b) the procedures on setting aside the bankruptcy notice
(5 marks)
c) the grounds upon which the creditor's petition may be challenged
(5 marks)
d) the procedures on setting aside the creditor's petition
(5 marks)
END OF QUESTION PAPER
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