Section 19: Approval of composition or arrangement

19. Approval of composition or arrangement (1) The creditors may at the first meeting or any adjournment thereof, by special resolution, resolve to entertain a proposal for a composition in satisfaction of the debts due to them from the debtor, or a proposal for a scheme of arrangement of the debtor’s affairs. B4 – 9 [Issue 1] Bankruptcy Act (2) The composition or scheme shall not be binding on the creditors unless it is confirmed by a resolution passed (by a majority in number representing three fourths in value of all the creditors who have proved) at a subsequent meeting of the creditors, and is approved by the Court. (3) Any creditor who has proved his debt may assent to or dissent from such composition or scheme by a letter addressed to the Official Receiver in the prescribed form, and attested by a witness, so as to be received by the Official Receiver not later than the day preceding such subsequent meeting, and such creditor shall be taken as being present and voting at such meeting. (4) (a) The subsequent meeting shall be summoned by the Official Receiver by not less than 7 days notice, and shall not be held until after the public examination of the debtor is concluded. (b) The notice shall state generally the terms of the proposal. (5) The debtor or the Official Receiver may, after the composition or scheme is accepted by the creditors, apply to the Court to approve it, and notice of the time appointed for hearing the application shall be given to each creditor who has proved his debt. (6) The Court shall, before approving a composition or scheme, hear a report of the Official Receiver as to the terms of the composition or scheme and as to the conduct of the debtor, and any objections which may be made by or on behalf of any creditor. (7) Where the Court is of the opinion that the terms of the composition or scheme are not reasonable or are not calculated to benefit the general body of creditors, or in any case in which the Court is required under this Act where the debtor is adjudged bankrupt to refuse his discharge, the Court shall or may, if any such facts are proved as would under this Act justify the Court in refusing, qualifying or suspending the debtor’s discharge, refuse to approve the composition or scheme. (8) Where the Court approves the composition or scheme, the approval may be testified by the seal of the Court being attached to the instrument containing the terms of the composition or scheme, or by the terms being embodied in an order of the Court. (9) A composition or scheme accepted and approved in pursuance of this section shall be binding on all the creditors so far as it relates to any provable debt. (10) A certificate of the Official Receiver that a composition or scheme has been duly accepted and approved shall, in the absence of fraud, be conclusive as to its validity. (11) The provisions of a composition or scheme under this section may be enforced by the Court on application by any interested person, and any disobedience of an order of the Court made on the application shall be a contempt of Court. [Issue 1] B4 – 10 Revised Laws of Mauritius (12) (a) Where default is made in payment of any instalment due in pursuance of the composition or scheme, or where it appears to the Court on satisfactory evidence that the composition or scheme cannot in consequence of legal difficulties, or for any sufficient cause, proceed without injustice or undue delay to the creditors or to the debtor, or that the approval obedience of an order of the Court made on the application shall be a contempt of Court. [Issue 1] B4 – 10 Revised Laws of Mauritius (12) (a) Where default is made in payment of any instalment due in pursuance of the composition or scheme, or where it appears to the Court on satisfactory evidence that the composition or scheme cannot in consequence of legal difficulties, or for any sufficient cause, proceed without injustice or undue delay to the creditors or to the debtor, or that the approval of the Court was obtained by fraud, the Court may, if it thinks fit, on application by any creditor, adjudge the debtor bankrupt, and annul the composition or scheme, but without prejudice to the validity of any sale, disposition, or payment duly made, or thing duly done under or in pursuance of the composition or scheme. (b) Where the debtor is adjudged bankrupt under this subsection, any debt provable in other respects which has been contracted before the date of adjudication shall be a provable debt. (13) Where, under or in pursuance of a composition or scheme, a trustee is appointed to administer the debtor’s property or manage his business, Part V shall apply to the trustee as if he were a trustee in a bankruptcy, and as if the terms “bankruptcy”, “bankrupt” and “order of adjudication” included respectively a composition or scheme of arrangement, a compounding or arranging debtor, and an order approving the composition or scheme. (14) Part III shall, so far as the nature of the case and the terms of the composition or scheme admit, apply to it, the same interpretation being given to the words “trustee”, “bankruptcy”, “bankrupt”, and “order of adjudication”, as in subsection (13). (15) No composition or scheme shall be approved by the Court which does not provide for the payment in priority to other debts, of all debts directed to be so paid in the distribution of the property of a bankrupt. (16) The acceptance by a creditor of a composition or scheme shall not release any person who under this Act would not be released by an order of discharge if the debtor had been adjudged bankrupt.