Any property belonging to the bankrupt at the date of bankruptcy automatically vests in the Trustee in Bankruptcy (Section 58 of the Bankruptcy Act).
A Trustee in Bankruptcy must take control of the bankrupt’s property including any books and records of the bankrupt (Section 129 of the Bankruptcy Act).On application by the Trustee in Bankruptcy the court may enforce the Trustee’s rights to take possession of property.
Any person holding books and records of a bankrupt is not entitled to withhold possession of the books and records from the Trustee in Bankruptcy.
A Trustee in Bankruptcy is not to take possession of protected property (Section 116 of the Bankruptcy Act), which includes:
All debts and liabilities owing by a bankrupt at the date of bankruptcy (excluding non-provable debts) are provable in the bankrupt estate (Section 82 of the Bankruptcy Act). The exception to this rule is non-provable debts. Non-provable debts are debts are defined as debts such as:
A provable debt needs to be submitted to the Trustee in Bankruptcy in the prescribed form (being a Proof of Debt in accordance with Section 84 of the Bankruptcy Act).
Distribution of funds
A Trustee in Bankruptcy must distribute any surplus funds to creditors strictly in accordance with Sections 109 and 140 of the Bankruptcy Act. Prior to any distribution of funds to creditors a Trustee in Bankruptcy is entitled to be remunerated in accordance with Sections 161B or 162 of the Bankruptcy Act.
A Trustee in Bankruptcy has fiduciary obligations to creditors and the bankrupt, however Section 19 of the Bankruptcy Act sets out statutory duties of a Trustee in Bankruptcy. These duties can be summarized as follows:
Section 173 of the Bankruptcy Act states that a Trustee in Bankruptcy must maintain proper books and records to exhibit a full and correct account of the administration of the estate and the Trustee shall allow any creditor to inspect the records at any reasonable time.
Section 177 of the Bankruptcy Act states that a Trustee should also have regard for any lawful direction as resolved by creditors at a meeting of creditors.
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