Administration and settlement of a bankrupt's affairs

Question

Explain administration and settlement of a bankrupt's affairs?

Answer 1

A trustee in bankruptcy takes possession of the bankrupt's assets, although some assets (up to prescribed limits) are exempted for personal bankrupts (e.g., personal clothing, household furniture, motor vehicle). The trustee also takes possession of all books and documents relating to the bankrupt’s affairs. A stay of legal proceedings occurs, which means that creditors are not allowed to sue for payment of pre-bankruptcy debts, and all legal proceedings presently against the debtor are suspended.

Although the principal duties of a trustee are to recover all property that should form part of the debtor's estate and to apply that property in satisfaction of creditors' claims, the trustee has wide-ranging powers that also permit her to carry on the debtor’s business and to borrow money, etc., as long as she has the agreement of the inspector(s) appointed by the creditors to supervise her.