Insolvency Act, 2006 (Act 708)

This section creates the office of Official Trustee, lets the President appoint the Official Trustee within six months of commencement, and requires appointees to be legal practitioners of at least ten years’ standing.

The High Court may hear appeals and applications involving the Official Trustee, make orders, and give directions under this Act.

This section establishes the Insolvent estates fund and an account within it, and says certain sums received or disbursed under the Act must be credited or debited accordingly.

The Official Trustee must keep an insolvency register, update it with listed insolvency details, allow public inspection during working hours for a prescribed fee, and provide copies on application and payment of a prescribed fee.

The Official Trustee must publish certain insolvency and bankrupt details in the Gazette within set time limits.

The Official Trustee is not liable for a breach of duty under the Act, and the Republic is also not liable for that breach except where an order under section 42(3) applies.

The Official Trustee must prepare and lay before Parliament an annual report within three months after the end of each December.

Insolvency proceedings for a debtor start with a petition to the Official Trustee, with a prescribed fee, and some petitions are barred.

Creditors may file a petition against a debtor if the debt is at least 100 million cedis and one of the listed conditions is met.

A debtor may present a petition if insolvent and the immediate liquidated debt is at least one hundred million cedis.

The petitioner must serve a creditor’s petition on the debtor two clear days before presentation, and the Official Trustee must consider the petition after seven days and make a protection order unless the debt has dropped below 100 million cedis after deductions.

While a protection order is in effect, the debtor’s property vests in the Official Trustee, the debtor remains subject to specified duties and disabilities, and civil proceedings involving the debtor need High Court leave.

The debtor must lodge a statement of affairs with the Official Trustee within 7 days after a protection order is made, unless one was already lodged.

A debtor may make and lodge a proposal for an arrangement with creditors within seven days after a protection order is made, unless the Official Trustee allows more time.

Creditors may lodge proofs of debts with the Official Trustee while a protection order is in effect, and the debtor must report materially false proofs within 14 days of receipt.

The Official Trustee must call and manage a first meeting of creditors within set time limits, give notices and documents to creditors, and the meeting cannot approve an arrangement unless the voting threshold is met.

The Official Trustee must apply to the High Court within 14 days after the first creditors’ meeting closes.

At the hearing, the debtor and a creditor who has lodged a proof of debts may appear and be heard, and the Official Trustee must file a report with the High Court.

The High Court must make an insolvency order if no arrangement with creditors is confirmed or the protection order is not rescinded; the Official Trustee must realise and distribute the debtor’s assets; and civil proceedings against or by the debtor cannot continue without the Court’s leave while the order is in force.

The court must confirm a creditors’ arrangement if specified fairness, priority, and payment conditions are met; otherwise it may adjourn for a modified proposal, supervise implementation, annul the arrangement in certain cases, and make a protection order after annulment.

The High Court must rescind a protection order if the new evidence and circumstances show it should not have been made, or if payment in full has been achieved. The Court may also adjourn the hearing and authorize the Official Trustee to realize and distribute assets in some cases.

The Court must order a debtor to be publicly examined when bankruptcy grounds appear to exist or may exist, and the debtor must answer questions on oath.

If the section 22 public examination has been held and the listed grounds are proven, the High Court must adjudge the debtor bankrupt, and the order must set a discharge date at least two years later.

A bankrupt must not run or manage a business, operate bank or other financial accounts, obtain credit over ten million cedis, or enter hire-purchase agreements unless the Official Trustee gives prior written consent and directions. The bankrupt must also keep financial records and file an income and expenditure account with the Official Trustee at least every four months.

The debtor must cooperate with the Official Trustee, attend creditors’ meetings, report name or address changes within 7 days, and must not destroy or hide financial records.

A debtor must notify the Official Trustee when the debtor becomes entitled to after-acquired property.

A bankrupt or undischarged debtor must tell the lender about that status before trying to obtain credit over ten million cedis.

If insolvency proceedings may be impeded, the High Court may issue a warrant to arrest the debtor, seize property, or both.

The High Court may order certain correspondence to be readdressed to the Official Trustee, and the Official Trustee must send the remaining articles to the debtor within seven days.

This section says when a debtor’s discharge date is set under an insolvency order, including special rules for bankrupt and non-bankrupt debtors.

A third party may propose paying money for an earlier bankruptcy discharge, but the Official Trustee, creditors, and Court must follow the section’s steps before any earlier discharge order is made.

If the Official Trustee thinks a bankrupt’s discharge date should change, the Trustee must call creditors together, report the reasons, and may then ask the High Court to decide.

A bankrupt or other debtor is discharged when the appointed discharge date arrives, and the Official Trustee must issue a certificate of discharge within seven days.

A discharge releases a bankrupt or other debtor from provable debts and future duties and liabilities under specified sections, but it does not end the insolvency proceedings.

This section says when insolvency proceedings end, depending on whether an insolvency order is made.

When a discharged bankrupt or other debtor meets the listed conditions, the Official Trustee must apply to the High Court to end the insolvency proceedings, and must notify the debtor and admitted creditors.

When a protection order is made, property vested in the debtor passes to the Official Trustee; property held by the debtor within the prior six months is presumed to belong to the debtor; and vested property is generally protected from enforcement proceedings, except for security enforcement.

The Official Trustee must vest the debtor’s after-acquired property, except exempt property, and may seek court orders or notices to recover non-exempt property.

The Official Trustee must notify a preferred creditor to restore the benefit received, and certain recipients or the sheriff may also have to return property or its value; a complying person may then seek proof-of-debt adjustments.

The Official Trustee must notify a recipient to restore excess benefit from certain undervalued dispositions or obligations, and the recipient must restore it within the notice period.

The Official Trustee may require a lender to make a similar repayment to the Official Trustee if certain past payments by the debtor appear to have been made.

The Official Trustee must open and credit each debtor’s official account in specified cases, and the High Court may order a just credit if assets were lost because of the Official Trustee’s default.

The Official Trustee must protect assets after a protection order, cannot dispose of or encumber property before an insolvency order without consent or the High Count’s authority, may offer rewards for finding concealed property, and the reward cannot exceed one-twentieth of the recovered value.

The Official Trustee must realise non-cash assets as soon as practicable after an insolvency order, aiming to get full value for creditors.

The Official Trustee must take practicable steps to verify each admitted proof after an insolvency order, and may notify a secured creditor that unreached security may be treated as surrendered if not realised within at least six months.

This section says an admitted proof can be amended to correct the value or inclusion of a debtor security, or to reflect a creditor withdrawing a debt claim.

The Official Trustee must classify each debt that ranks for dividend into the correct priority class when an insolvency order is made.

The Official Trustee must regularly report to creditors, consult them on materially important matters, and try to follow their views on asset realisation and distribution. The Trustee may also call a creditors’ meeting, and must do so if creditors with more than one-fifth of the votes give written notice.

The Official Trustee may require a debtor, creditor, or other person to attend the High Court for examination, and the Court may examine that person, order delivery of assets, and make other appropriate orders.

The Official Trustee must transfer certain debtor property within 14 days after a confirmed arrangement or a rescinded protection order, and may keep enough assets to cover fees and outgoings due in the insolvency proceedings.

The Official Trustee may disclaim vested property within one year if it is not beneficial to creditors, and interested persons can ask the Trustee to elect on disclaimer in writing.

The Official Trustee may take money from the debtor’s vested property to cover prescribed administration fees, and must pay fees and other outgoings from the debtor’s official account when they fall due.

The Official Trustee must return certain selected personal effects to the debtor within 14 days after the debtor’s property vests in the Official Trustee, if the items are worth no more than five million cedis.

The Official Trustee may distribute dividends to creditors, but must follow priority rules, limit payments, and handle later corrections or unpaid final dividends as set out here.

The Official Trustee must pay any remaining balance or unconverted property in the debtor’s official account to the debtor, unless the debtor cannot be found.

Limits when a person may be paid from a debtor-related estate and restricts compelled performance of pre-protection-order contracts during insolvency proceedings unless written assurance is given.

This section applies to certain creditor arrangements made by an insolvent debtor only if no insolvency proceedings are already in progress and the debts involved are at least one hundred million cedis and represent all or substantially all of the debtor’s debts.

The Official Trustee must keep an arrangements register, update it when arrangements end or are completed, and allow inspection and copies on payment of the prescribed fee.

Some arrangements become voidable unless the required documents are lodged with the Official Trustee within 14 days after the arrangement becomes binding on the debtor.

The High Court may set aside certain arrangements if there has been default or if continuing would be impracticable or unjust.

A duly registered arrangement under sections 57 to 61 is not treated as a suspension of payments for certain protection-order proceedings against the debtor.

This section says the Act generally applies to debtors under 21 in the same way as to adults, and the High Court may appoint a guardian for a debtor under 21 or of unsound mind if asked by the Official Trustee or an interested person.

This section explains how debts and estates are handled when multiple debtors are dealt with together in insolvency.

If a debtor-trustee’s interest vests in the Official Trustee, the Official Trustee must keep acting as trustee until the debtor’s beneficial interest is realised, and must within 21 days arrange a replacement trustee or retire if there are at least two trustees left.

Creditors may apply to the Official Trustee for a participation order, but only if the debt meets the stated minimum amount and demand-and-wait conditions.

If a deceased debtor’s estate cannot pay the debts, the deceased’s representative or a creditor may apply to the Official Trustee for an administration order, and the creditor must serve a copy on the representative.

An administration order vests the relevant estate property in the Official Trustee, limits enforcement against that property, and requires the deceased’s representative to file the will and an asset/creditor statement within 7 days unless the Official Trustee allows more time.

A creditor may file a proof of debts with the Official Trustee within three months after an administration order is made.

The Official Trustee must call a first meeting of creditors and notify the listed creditors, and must give creditors a copy of the representative’s statement and any observations.

The deceased’s representative must follow Official Trustee directions, attend creditors’ meetings, report name or address changes promptly, and not destroy or hide the deceased’s financial records during administration.

When an administration order applies, the Official Trustee must use the deceased’s official account to pay funeral, testamentary, and administration expenses first, and must pay out any remaining balance within 14 days. Funeral expenses over one million cedis rank as Class D debt.

The Official Trustee must apply to the High Court to end the administration once the estate distribution is complete and the accounts have been prepared and passed by the Auditor-General.

If a debtor dies during insolvency proceedings, the proceedings may lapse or continue depending on when the death occurs.

Doing an act that breaches a duty under this Act as a debtor or deceased debtor’s representative is an offence, punishable on summary conviction by a fine, imprisonment, or community service.

A register, notice, or certificate made under the Act is prima facie evidence of the matters stated in it.

The Minister responsible for Justice may make Rules by legislative instrument, except Rules of Court, for procedural matters under the Act and for changing specified monetary limits.

This section defines words and phrases used in the Act.

This section repeals the Insolvency Act, 1962, and the schedule sets rules for creditors’ meetings, including quorum, adjournment, and cancellation.