Bankruptcy Act 1997

The Bankruptcy Act 1997 provides the legal framework for handling insolvency of individuals and partnerships (companies are covered by the Companies Act 1994 winding-up provisions). The Act allows a debtor or creditor to file a bankruptcy petition in the Bankruptcy Court (a special court under the District Judgeship) when debt exceeds BDT 50,000. The court appoints an Official Receiver who takes possession of the debtor's assets, evaluates claims, and distributes proceeds according to a priority schedule (secured creditors first, then preferential creditors like employees and taxes, then unsecured creditors). The Act provides for discharge of bankrupt individuals after 3-5 years (subject to compliance). For companies, the winding-up process is governed by Sections 305-384 of the Companies Act 1994, which can be either members' voluntary winding up (solvent), creditors' voluntary winding up (insolvent), or winding up by court. A new Insolvency Act has been drafted to modernise the regime (including a Chapter 11-style reorganisation mechanism) but is pending in Parliament since 2018.