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Contents

Part V · Debt Rehabilitation Orders

77. Conversion into a Bankruptcy Order

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

(1)

The Official Receiver may, while the Debt

Rehabilitation Order remains in effect, apply to the court to request the conversion of the Debt Rehabilitation Order into a Bankruptcy Order.

(2)

An application to convert an order under subsection (1) shall —

Rescue, Rehabilitation and Insolvency

(a)

be made at least forty-five days before the date at which discharge would otherwise occur under section 72, but for this application;

(b)

be made by the lodging by the Official Receiver of a request for conversion with the court, on written notice to the debtor and all known creditors; and

(c)

be based on the grounds referred to in subsection (3).

(3)

The Official Receiver may apply to the court to convert an order on the grounds that —

(a)

the debtor, due to a change of financial circumstances, no longer satisfies the eligibility criteria under section 66;

(b)

there is a material inaccuracy in the Debt

Rehabilitation Order application, or in any material provided by the debtor in support of the application; or

(c)

the debtor has not complied, to the satisfaction of the Official Receiver, with the duties of debtor's set out in sections 32 and 71.

(4)

On receiving an application to convert the order, the court shall fix a date for a hearing of this application, within fourteen days after the receipt of the application.

(5)

The court shall provide written notices to the debtor, creditors and Official Receiver of the hearing of the application to convert the order.

(6)

On receiving an application to convert the order, the court may require the Official Receiver —

Rescue, Rehabilitation and Insolvency

(a)

to provide information to the court which may assist the court in making a determination; or

(b)

to conduct an investigation into any matter that appears to the court to be relevant to the making of a determination.

(7)

On receiving an application to convert the order, the court may extend the duration of the order for the limited purposes of properly considering the matter, provided that—

(a)

such extension shall not exceed a period of ninety days beyond the initial duration of the order; and

(b)

the court has taken due regard to —

(i)

make appropriate investigation of an objection where a creditor or creditors may otherwise suffer unfair prejudice;

(ii)

any unfairness to the debtor which might result from the extension of the order period;

and

(iii)

the extent to which an extension will further the goals of the Debt Rehabilitation Order procedure, including those specified in section 65.

(8)

On the hearing of an application to convert the order, the court shall dismiss the application to convert the order if it finds that the grounds referred to in subsection (3) have not been established.

(9)

On the hearing of an application to convert the Order, if the court finds that the grounds referred to in subsection (3) have been established, the court may —

Rescue, Rehabilitation and Insolvency

(a)

convert the Debt Rehabilitation Order into a

Bankruptcy Order; or

(b)

if the court considers that the debtor ought to be given the opportunity to make arrangements for making payments towards such debts, convert the order into a Debt Protection Moratorium

Order under Part III.

(10)

When a Debt Rehabilitation Order is converted into a Bankruptcy Order under subsection (9), the waiting period for discharge from Bankruptcy under section 137, shall be deemed to have begun on the date of the making of the Debt

Rehabilitation Order under section 70.

(11)

Where a court makes an order under paragraph (b)

of subsection 9, the provisions of sections 40, 41, 42 and 43

shall apply.

Part VI

Part VII

Personal Insolvency Register

Part VIII

Part IX

Part X

Compromises

Part XI

Micro Small Medium Enterprise (MSME) Company Debt Restructuring Arrangements

Part XII

Part XIII

Part XIV

Cross - Border Insolvency

Part XV

Part XVI

Part XVII

Schedules