How is an insolvent discharged?
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
05 May 2012
A person is declared insolvent if his liabilities exceed his assets. Once declared insolvent, he loses his right to contract until he obtains Certificate of discharge from the Court. How and when is certificate of discharge issued to an insolvent? Is it issued automatically after a fixed period or it is to be applied for by the insolvent?
05 May 2012
An insolvent is discharged when all his liabilities are settled by the liquidator and then he applies for the certificate of discharge to the court. He can not get discharged automatically, he has to apply to court for the certificate.
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Querist : Anonymous
Querist :
Anonymous
(Querist)
07 May 2012
Dear Mr. Kabra,
A person becomes insolvent only when his assets are less than his liabilities. So considering your answer, the liquidator will not be able to settle all the liabilities of the insolvent. He will only be able to settle them ratably. What about the unpaid part of liabilities? Do you mean that ratable settlement is full & final settlement, and immediately after this the insolvent can apply for certificate of discharge?
A person becomes insolvent only when his assets are less than his liabilities. So considering your answer, the liquidator will not be able to settle all the liabilities of the insolvent. He will only be able to settle them ratably. What about the unpaid part of liabilities? Do you mean that ratable settlement is full & final settlement, and immediately after this the insolvent can apply for certificate of discharge?
07 May 2012
Yes Exactly. An insolvent is one who cannot pay his liabilities in full. But when the case is taken to the court and official liquidator is appointed, as per the available assets, the liquidator makes final settlement and that is binding on all the creditors. Once the final settlement is done, he does not owe anything to anybody. After this, the discharge is given.
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