Laws
Rescue, Rehabilitation and Insolvency (Corporate and Personal) Act 2026
Part VI
s 120

As enactedVersion · As enacted

Contents

Rescue, Rehabilitation and Insolvency (Corporate and Personal) Act 2026

Find in this Act

1Short title and date of operation
2Interpretation

Part I

3Establishment of the Insolvency Regulatory Authority
4The powers, duties and functions of the Authority
5The Director-General of the Authority
6Fund of the Authority
7Accounts and audit
8Oﬃcial Receiver and Deputy Oﬃcial Receivers
9Powers of the Oﬃcial Receiver
10Oﬃce and name of Oﬃcial Receiver
11Instances when an Oﬃcial Receiver shall not act as a Bankruptcy Trustee
12Individuals who are qualiﬁed to be appointed and act as key oﬃce holder
13Body corporate may not be appointed or act as oﬃce holder
14Registration
15Conditions
16Renewal of registration
17Cancellation of registration
18Suspension of registration
19Register of Insolvency Practitioners
20Insurance
21Notice of speciﬁ ed events
22Notice of other events
23Inquiry into conduct and performance
24Disciplinary action
25Interpretation
26Inducement to be appoined as administrator or liquidator
27Prohibition order
28Appeals
29Acting when not permitted to do so
30Interests statement
31Statement of pre-administration costs

IIPersonal Insolvency: Principles

32Responsibility of a debtor under Personal Insolvency Procedures
33Statements of the debtor’s ﬁ nancial aﬀ airs
34Protected Property
35Contributions and entitlements under provident funds, employees trust funds, pensions and statutory gratuities
36Protection of a reasonable income
37Included and Excluded Debts

IIIDebt Protection Moratorium Order

38Debt Protection Application
39Criteria for making Debt Protection Moratorium Order
40Eﬀ ect of a Debt Protection Moratorium Order
41Duration of a Debt Protection Moratorium Order
42Obligations of debtors during a Debt Protection Moratorium
43Creditor Objection to Debt Protection Moratorium

IVDebt Restructuring Arrangements

44Debt Restructuring Arrangements
45Debt Restructuring Arrangements: General Conditions
46Debt Restructuring Arrangements: Eligibility Criteria
47Debt Restructuring Arrangements: Mandatory Provisions
48Debt Restructuring Arrangements: Secured Creditors and Property Rights
49Debt Restructuring Arrangements: Appointments of personal insolvency proposer
50Debt Restructuring Arrangements: Preparation of Debtor Proposal
51Debt Restructuring Arrangement: Negotiation Meeting
52Creditor Approval of Debt Restructuring Arrangements
53Submission of approved Debt Restructuring Arrangements to Oﬃ cial Receiver
54Court Conﬁ rmation of Debt Restructuring Arrangements
55Eﬀ ect of Court Conﬁ rmation of Debt Restructuring Arrangements
56Obligations of Debtor under Debt Restructuring Arrangement
57Challenge of Debt Restructuring Arrangement
58Variation of Debt Restructuring Arrangement
59Termination of Debt Restructuring Arrangement
60Completion of Debt Restructuring Arrangement
61Duties of Personal Insolvency Administator under Debt Restructuring Arrangement
62Personal Insolvency Proposers
63Personal Insolvency Administrators
64Debt Restructuring Arrangement: Court Directions

VDebt Rehabilitation Orders

65Debt Rehabilitation Order
66Eligibility for a Debt Restructuring Order
67Application for a Debt Rehabilitation Order
68Criteria for making Debt Rehabilitation Order
69Oﬃ cial Receiver’s recommen-dation: Debt Rehabilitation Order
70Court Determination of Debt Rehabilitation Order application
71Eﬀ ect of Debt Rehabilitation Order
72Duration of Debt Rehabilitation Order
73Discharge of debts
74Oﬃ cial Receiver to supervise Debt Rehabilitation Order
75Creditor objection to Debt Rehabilitation Order
76Termination of Debt Rehabilitaion Order
77Conversion into a Bankruptcy Order
78Oﬃ cial Receiver may apply for Preservation Order
79Revocation of Debt Rehabilitaion Order discharge
80Authorised intermediaries

Part VI

81Debtor's application for a Bankruptcy Order
82Debtor to be resident in Sri Lanka
83Criteria for a Bankruptcy order on debtor application
84Making of Bankruptcy Order on debtor application
85Petition for Bankruptcy Order
86Bankruptcy Petition: Debtor Condition
87Bankruptcy Petition: court powers of withdrawal, stay and dismissal
88Grounds of Creditor Petition
89Bankruptcy Notice and inability to pay
90Court Decision on Petition for Bankruptcy Order
91Interim Receiver
92Commencement of Bankruptcy
93Stay of proceedings and remedies
94Statement of the debtor's ﬁ nancial aﬀ airs
95Meeting of creditors in exceptional cases
96Public Examination of bankrupt in exceptional cases
97Oﬃ cial Receiver becomes Bankruptcy Trustee
98Appointment of Trustees
99Removal of Trustee and vacation of oﬃ ce
100Release of Trustee
101General functions and oﬀ ﬁ cial title of Bankruptcy Trustee
102Powers of Bankruptcy Trustee
103Creditor’s committee in cases where the Oﬃ cial Receiver is not the Bankruptcy Trustee
104Court review of action of Bankruptcy Trustee
105Bankruptcy Trustee remuneration, expenses and costs
106Application for a Debt Rehabilitation Order
107Audit of Bankruptcy Trustee accounts
108Duty of Bankruptcy Trustee in relation to money
109Debts provable in Bankruptcy
110Mutual credit and set-oﬀ
111Priority of debts in Bankruptcy
112General responsibilities of bankrupt debtor
113Obligations of debtor as to discovery and realisation of property
114Financial information
115Description of Bankruptcy Estate
116Vesting of property in Bankruptcy Trustee
117After-Acquired property
118Possesion of Property by Bankruptcy Trustee
119Seizure of property of bankrupt
120Disclaimer of onerous property
121Power to allow debtor to manage property
122Goods on hire purchase
123Protection of Oﬃ cial Receiver and Trustee from liability in certain cases
124Second Bankruptcy
125Debt Repayment Order
126Debt Repayment Agreement
127Insolvent deceased person's estates
128Voidable preferences, voidable encumbrances, and alienations of property with intent to hinder, delay or defeat a creditor
129Transactions at an undervalue
130Protection of good faith transactions without notice
131Validity of certain payments to bankrupt debtor and assignee
132General assignments of book debts
133Validity of certain payments to bankrupt debtor and assignee
134No beneﬁ t of exceution or other process unless completed before Bankruptcy
135Duties of ﬁ scal in Bankruptcy
136Distributions in Bankruptcy
137Duration of Bankruptcy
138Discharge
139Discharge: High Value Bankruptcy
140Application to contest discharge
141Interim suspension of discharge
142Application to Contest Discharge: Bankruptcy report
143Court Determination of Application to contest a discharge
144Revocation of Bankruptcy Discharge
145Annulment of Bankruptcy Order
146Application for Debt Restructuring Arrangement during Bankruptcy
147Powers of Oﬃ cial Receiver as regards the debtor's conduct in Bankruptcy
148General Duties of the Oﬃ cial Receiver as to the Bankruptcy
149Bankruptcy Applications and Bankruptcy petitions in cases of Partnerships
150Court to dismiss petition
151Property of partners to be vested in same Trustee
152Actions by Bankruptcy Trustee and bankrupt debtor’s partners
153Actions on joint contract
154Proceedings in partnership name

VIIPersonal Insolvency Register

155Authority to Maintain Personal Insolvency Register
156Purpose of Personal Insolvency Register
157Information to be recorded in the Personal Insolvency Register
158Removal of information from Personal Insolvency Register
159Access to Personal Insolvency Register
160Authority and Oﬃ cial Receiver not liable for act or all omission
161Personal Insolvencey Register and Credit Information Bureau

Part VIII

162Intent
163Penalities for Oﬀ ences under this Part
164Criminal Liability after Discharge
165Personal Insolvency Procedure Applications: False Information
166Personal Insolvency Procedures: Non-Compliance with responsibilities of debtors
167Personal Insolvency Procedures: Documents and Records
168Personal Insolvency Precedures: Disposal of Property
169Personal Insolvency Precedures: Credit and Business
170Bankruptcy oﬀ ences: Non-disclosure and False Representations
171Bankruptcy oﬀ ences: Property
172Bankruptcy oﬀ ences: Documents
173Bankruptcy oﬀ ences: Credit and Borrowing
174Bankruptcy oﬀ ences: False Claims
175Bankruptcy oﬀ ences: Leaving Sri Lanka
176Bankruptcy oﬀ ences: Non-Compliance with Responsibilities of Debtors
177Bankruptcy oﬀ ences: Failure to keep Proper records with intent to conceal

Part IX

178Role of Administrator
179When administration commences
180Administration routes
181Who may be appointed and act as administrator
182Disqualiﬁ cations from being appointed or acting as adminstrator
183Who may appoint an Administrator
184Appointment of two or more persons as Administrators
185Appointment of Administrator by a company
186Appointment of an Administrator by the board of the company
187Restriction on appointment of the administrator by the board of the company or board
188Appointment of Administrator by a liquidator or provisional liquidator
189Appointment of Administrator by a secured creditor
190Appointment of Administrator by a court
191Commencement of administration to be recorded
192Appointment of Administrator may not be revoked
193Notice of administrator's appointment and details
194Documents to refer to administration
195Documents in administration to refer to the change of name
196No enforcement of encumbrance during administration
197No recovery of property during administration
198No commencement or continuation of proceedings during administration
199No execution or other process during administration
200No beneﬁ t of execution or other process unless completed before administration
201Duties of Fiscal in administration
202Power exercised before commencement of administration
203Application in decision period for permission to enforce ﬁ xed security
204No consent or permission required for giving notice
205Eﬀ ect of administration on directors and other agents of the company
206Requirement to provide information to administrator
207Eﬀ ect of administration on employees
208Eﬀ ect of administration when dealing with property
209Eﬀ ect of administration on transfer of shares
210Essential services in administration
211Provisions applicable to the standard and expedited routes
212Initial meeting
213Outcome meeting
214Business at outcome meeting
215Combined initial and outcome meeting
216Deed review hearing
217Creditors’ Committee in Administration
218Meetings in administration of shareholders, creditors and committees
219Directors’ Statement in Administration
220When administration ends
221Content of a deed
222Release of third parties under a deed
223Requirements for a deed
224Extent to which a deed is binding
225Deed administrator
226Who may be appointed and act as deed administrator
227Appointment of two or more deed administrators
228When deed administration commences and deed administrator is appointed
229Security for appointment of deed administrator
230Revocation of appointment of deed administrator
231Court may rule on validity of a deed
232Powers of administrator
233Request by administrator for cooperation
234Administrator’s notice that receivership or appointment of appointee shall end
235Calls on shares by administrator
236Execution of documents by administrator
237Power of administrator to deal with property subject to an encumbrance
238Duty of administrator to investigate company’s aﬀ airs
239Duty of administrator to report misfeasance
240Duty of administrator to report oﬀ ence committed
241Duty of administrator to prepare accounts
242Duty of administrator to send ﬁ nal report
243Duty of deed administrator to send ﬁ nal report
244Duty of administrator in relation to money
245Duty of administrator and deed administrator in relation to accounting records
246Remuneration of administrator and deed administrator
247Approval of pre-administration Costs
248Administrator’s indemnity
249Liability of administrator under pre-existing employment contracts
250Liability of administrator on other agreements and for rent
251Relief from liability in the event of a defect
252(1) A payment made, transaction entered into or any other thing done, in good faith by or with the consent of the administrator of a compan...
253Vacancy in oﬃ ce of administrator or deed administrator
254Removal of administrator from oﬃ ce by creditors
255Replacement administrator
256Removal and replacement of deed administrator
257Order for liquidation or provisional liquidation to resume
258Release of administrator or deed administrator
259Documents to refer to deed administration
260When deed administration ends
261Application for directions by an administrator or deed administrator
262Order regarding remuneration or appointment of administrator or deed administrator
263Court’s general power in administration and deed administration
264Order to enforce administrator’s or deed administrator’s duties
265Removal of administrator or deed administrator
266Orders protecting business or property
267Protection of interests of creditors and shareholders
268Order to protect creditors in administration

XCompromises

269Interpretation
270Compromise proposal
271Notice of proposed compromise
272Eﬀ ect of compromise
273Variation of compromise
274Powers of court in relation to compromises
275Costs of compromise

XIMicro Small Medium Enterprise (MSME) Company Debt Restructuring Arrangements

276MSME Company Debt Restructuring Arrangements
277MSME Company Debt Restructuring Arrangements: General Conditions
278MSME Company Debt Restructuring Arrangements: Eligibility Criteria
279MSME Company Debt Restructuring Arrangements: Mandatory Provisions
280MSME Company Debt Restructuring Arrangements: Secured Creditors and Property Rights
281MSME Company Debt Restructuring Arrangements: Appointment of personal insolvency proposer
282MSME Company Debt Restructuring Arrangements: Preparation of MSME Debtor Proposal
283MSME Company Debt Restructuring Arrangement: Negotiation Meeting
284Creditor Approval of MSME Company Debt Restructuring Arrangement
285Submission of an approved MSME Company Debt Restructuring Arrangement to the Oﬃ cial Receiver
286Court Conﬁ rmation of MSME Company Debt Restructuring Arrangement
287Eﬀ ect of Court Conﬁ rmation of MSME Company Debt Restructuring Arrangement
288Challenge to MSME Company Debt Restructuring Arrangement
289Variation of MSME Company Debt Restructuring Arrangement
290Termination of MSME Company Debt Restructuring Arrangement
291Completion of MSME Company Debt Restructuring Arrangement
292Duties of Personal Insolvency Administrator under MSME Company Debt Restructuring Arrangement
293Personal Insolvency Proposers: MSME Company Debt Restructuring Arrangements
294Personal Insolvency Administrators: MSME Company Debt Restructuring Arrangements
295MSME Company Debt Restructuring Arrangements: court directions

Part XII

296Role of liquidator
297When liquidation commences
298Appointment of liquidator
299Restriction on appointment of liquidator by the company or board
300Commencement of liquidation to be recorded
301Appointment of liquidator at outcome meeting
302Declaration of solvency
303Evidence of inability to pay debts
304Appointment of provisional liquidator
305Directors’ statement in liquidation
306Liquidator to convene meeting of creditors
307Replacement liquidator
308Creditors’ committee in liquidation
309Contributories’ committee in liquidation
310Meetings in liquidation of shareholders, creditors, contributories and committees
311End of liquidation
312Who may be appointed and act as liquidator
313Disqualiﬁ cations from being appointed or acting as a liquidator
314Appointment of two or more liquidators or provisional liquidators
315Notice of liquidator’s appointment and details
316Documents to refer to liquidation
317No enforcement of encumbrance during liquidation
318No commencement or continuation of proceedings during liquidation
319No execution or other process during liquidation
320No beneﬁ t of execution or other process unless it has been completed before
321Duties of Fiscal in liquidation
322Power exercised before commencement of liquidation
323Eﬀ ect of liquidation on directors and other agents of the company
324Requirement to provide information to liquidator
325Eﬀ ect of liquidation on dealing with property
326Eﬀ ect of liquidation on transfer of shares
327Essential services in liquidation
328Applicability of this Chapter in provisional liquidation
329Powers of liquidator
330Request by liquidator for cooperation
331Liquidator’s notice that receivership or appointment of appointee shall end
332Execution of documents by liquidator
333Power of liquidator to deal with property subject to an encumbrance
334Onerous Property
335Requirement to elect whether or not to disclaim
336Applicability of this Chapter in provisional liquidation
337Liquidator not required to act in certain cases
338Duty of liquidator to investigate company’s aﬀ airs
339Settlement of a list of contributories
340Variation of a list of contributories
341Adjustment of the rights of contributories
342Liability of former shareholders
343Enforcement of liability of contributories
344Preferential claims
345Duty of liquidator to report misfeasance
346Duty of liquidator to report oﬀ ence committed
347Duty of liquidator to prepare misfeasance
348Duty of liquidator to report misfeasance
349Dissolution
350Duty of liquidator in relation to money
351Duty of liquidator in relation to accounting records
352Applicability of this Chapter in provisional liquidation
353Remuneration of liquidator other than the Oﬃ cial Receiver
354Relief from liability in the event of a defect
355Provision of information and assistance by administrator or receiver to liquidator
356Vacancy in the oﬃ ce of liquidator
357Release of liquidator or provisional liquidator
358Appointment of a special manager
359Stamp duty exemption
360Application for directions by a liquidator or provisional liquidator
361Court supervision of liquidators and provisional liquidators and order regarding remuneration or appointment of liquidator
362Court’s general power in liquidation and provisional liquidation
363Order to enforce liquidator’s or provisional liquidator’s duties
364Removal of liquidator or provisional liquidator from oﬃ ce by court
365Power to stay or restrain application or proceeding
366Order to protect creditors in liquidation or provisional liquidation

Part XIII

367Interpretation
368Instrument may confer power to appoint receiver
369When receivership commences
370Who may be appointed and act as receiver
371Disqualiﬁ cations from being appointed or acting as receiver
372Appointment of receiver under an instrument
373Court may appoint a receiver
374Notice of receiver’s appointment and details
375Documents to refer to appointment of receiver
376Powers of receiver
377Execution of documents by receiver
378Precedence among receivers
379Requirement to provide information to receiver
380Consent of grantee to sale of property
381Powers of receiver on liquidation
382General duties of receivers
383Duty of receiver in selling property
384No defence or indemnity
385Order of priority where ﬁ xed security receiver appointed
386Order of priority where ﬂ oating charge receiver appointed
387Duty of receiver in relation to money
388Duty of receiver in relation to accounting records
389Remuneration of receiver
390First report by receiver
391Further reports by receiver
392Extension of time for preparing reports
393Persons entitled to inspect and receive reports
394Duty of receiver to report oﬀ ence committed
395Receiver’s indemnity
396Liability of receiver under pre-existing employment contracts
397Liability of receiver on other agreements and for rent
398Relief from liability in the event of a defect
399Vacancy in oﬃ ce of receiver
400End of receivership
401Duty of receiver to notify end of receivership
402Application for directions by a receiver
403Order regarding remuneration or appointment of receiver
404Court may restrict or limit receivership
405Order to enforce receiver’s duties
406Removal of receiver from oﬃ ce by court
407Orders protecting property in receivership

XIVCross - Border Insolvency

408Overseas companies

Part XV

409Inability to pay debts
410Court may set aside demand
411Wrongful trading
412Voidable preference
413Voidable encumbrance
414Alienation of property with intent to hinder, delay or defeat a creditor
415Procedure for setting aside a voidable preference, voidable encumbrance or alienation with intent
416Court orders on setting aside a voidable preference, voidable encumbrance or alienation with intent
417Restrictions on setting aside a voidable preference, voidable encumbrance or alienation with intent
418Transaction at an undervalue
419Misfeasance
420Deﬁ nitions
421Phoenix company
422Personal liability
423Exception for person named in a successor company notice
424Exception for temporary period
425Exception regarding non-dormant company
426Proofs of debt and proving debts
427Set-oﬀ between a bankrupt debtor and another party
428Set-oﬀ between a company and another party
429Distributions
430Sending of documents to creditors and opted-out creditors

Part XVI

431Insolvency holding account and insolvency surplus account
432Application of unclaimed and surplus proceeds
433Creditor resolutions
434Contributory resolutions
435Protection in respect of seizure or disposal of property
436Validity of acts
437Extension of time period
438Documents required by a speciﬁed oﬃce holder
439Requests and notices
440Misfeasance of a director or other oﬃcer before administration or liquidation
441Fraudulent trading
442Oﬀence relating to administration or liquidation
443Conduct prohibited
444Liability where proper accounts not kept
445False or misleading statement
446Applicability of the Employees Provident Fund Act, the Employees Trust Fund Act and the Payment of Gratuity Act to administrators and liquidators
447Jurisdiction
448Trial of oﬀences and imposition of ﬁnes
449Procedure
450Interim relief
451Costs
452Enforcement of court orders
453General provisions as to oﬀences
454Orders
455Regulations
456Rules, standards, practice directions, codes of conduct and guidelines

Part XVII

457Application
458Amendment of section 46 of the Companies Act
459Amendment of section 71 of the Companies Act
460Amendment of section 88 of the Companies Act
461Amendment of section 92 of the Companies Act
462Amendment of section 97 of the Companies Act
463Amendment of section 213 of the Companies Act
464Amendment of section 214 of the Companies Act
465Amendment of section 220 of the Companies Act
466Amendment of section 228 of the Companies Act
467Amendment of section 246 of the Companies Act
468Amendment of section 255 of the Companies Act
469Amendment of section 394 of the Companies Act
470Amendment of section 431 of the Companies Act
471Amendment of section 433 of the Companies Act
472Amendment of section 529 of the Companies Act
473Amendment of First Schedule to the Companies Act
474Amendment of Sixth Schedule to the Companies Act
475Amendment of Third Schedule to the Mediation Boards Act…
476Amendment of section 175 of the Inland Revenue Act…
477Repeals
478Transitional Provisions and Savings
479Transitional provisions: Insolvency Practitioners
480Sinhala text to prevail in case of inconsistency

Schedules

FIRST SCHEDULE [sections 3 and 5] Provisions relating to appointed members of the Authority 1. The term of oﬃce of an appointed member of...
SECOND SCHEDULE [section 2] Excluded Entities For the purposes of paragraph (b) of the deﬁnition of “company” in subsection (1) of section...
THIRD SCHEDULE [section 2] Connected Parties 1. The term “connected party” in subsection (1) of section 2 relating to a person who is conne...
FOURTH SCHEDULE [sections 2 and 275(d)] Preferential Claims in Liquidation - Priority of payment 1. The liquidator shall ﬁrst pay, in the o...
FIFTH SCHEDULE [sections 52, 95, 212, 214, 215, 217, 218, 255, 271, 272, 284, 306, 308, 309, 310, 433 and 434] Procedures for Meetings of C...
SIXTH SCHEDULE [section 127] Management In Bankruptcy of Estate of Person Dying Insolvent 1. Management in bankruptcy of estate of person d...
SEVENTH SCHEDULE [section 232] Powers of Administrator 1. Every administrator appointed under Part IX shall have the power to – (a) take po...
EIGHTH SCHEDULE [sections 333 and 426] Secured Creditors’ Options 1. A secured creditor holding a ﬁxed security over property of a company...
NINTH SCHEDULE [section 329] Powers of Liquidator 1. Every liquidator appointed under Part XII shall have the power to – (a) take possessio...
TENTH SCHEDULE [section 376] Powers of Receiver 1. Every receiver appointed under Part XIII shall, subject to any restriction or limitation...

Rescue, Rehabilitation and Insolvency (Corporate and Personal) Act 2026 · As enacted · Part VI

120. Disclaimer of onerous property

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

Official translationFrom Department of Government Printing, unchanged

The Bankruptcy Trustee may disclaim onerous property in accordance with sections 334 and 335.

Read on from s 121

Part VII

Personal Insolvency Register

Read on from Part VII

Part VIII

Read on from Part VIII

Part IX

Read on from Part IX

Part X

Compromises

Read on from Part X

Part XI

Micro Small Medium Enterprise (MSME) Company Debt Restructuring Arrangements

Read on from Part XI

Part XII

Read on from Part XII

Part XIII

Read on from Part XIII

Part XIV

Cross - Border Insolvency

Read on from Part XIV

Part XV

Read on from Part XV

Part XVI

Read on from Part XVI

Part XVII

Read on from Part XVII

Schedules

Details

Rescue, Rehabilitation and Insolvency (Corporate and Personal) Act 2026 · s 120

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Department of Government Printing · Rescue, Rehabilitation and Insolvency (Corporate and Personal) Act 2026, As enacted. We last updated this text on 9 Oct 2026.

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