Bill: Proposed Bankruptcy Act

[Robidemon2]

Author: Robi Safran-D'Azalea, MP
Type: Act of Parliament

A
BILL
TO
CREATE A BANKRUPTCY FRAMEWORK​

Preamble: the laws of Azalea Isles currently lack a court process for living citizens and active businesses to declare bankruptcy, a procedure for the Ministry of Justice to seize assets to satisfy unpaid debts.

1. Short Title & Enactment

(a) This bill shall be referred to as the "Bankruptcy and Debt Relief Act".​

(b) This bill was authored by Robi Safran-D'Azalea.​

(c) This Act comes into force immediately upon passage.​

2. Definitions

(a) "Debtor" shall be defined as any person or legal entity that owes a verified debt to a Creditor.​

(b) "Creditor" shall be defined as any person, legal entity, or government entity to whom a debt is owed.​

(c) "Government Debt" shall be defined as any unpaid balance owed to the government, including unpaid taxes under the Taxation Act, Upkeep or administrative fines​

(d) "Insolvent" shall be defined as the state in which a Debtor's total verified liabilities exceed the fair market value of their total liquid and non-liquid assets, or in which a Debtor has failed to pay a due debt for more than 14 days after written demand.​

(e) "Exempt Property" shall be defined as property that cannot be seized in bankruptcy or execution, strictly limited to:​

(i) $500 in personal liquid balance;​

(ii) Basic personal tools and food items protected under the Essential Tools for Citizens Act; and​

(iii) One (1) primary residential rental unit​

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3. Bankruptcy Procedure

(a) Filing a Petition: Any Insolvent Debtor may file a Petition for Bankruptcy with the MEA. The petition must include:​

(i) A complete schedule of all liquid balances, bank accounts, company shares, plots, vehicles, and chests owned or controlled by the Debtor; and​

(ii) A complete list of all known Creditors and the amount owed to each.​

(b) Asset Preservation Order: Within 48 hours of a petition being filed, the MEA shall petition an Asset Preservation Order from the court, which:​

(i) Freezes the Debtor's non-exempt bank accounts, company shares, and plots from being sold, gifted, or transferred​

(ii) Temporarily stays private civil collection lawsuits against the Debtor​

(c) Liquidation and Priority of Payout: If the MEA verifies that the Debtor is genuinely Insolvent, the MEA shall petition the court to declare the Debtor bankrupt and request a Writ of Execution to seize and liquidate all non-exempt assets of the Debtor in the following strict order of priority:​

(i) First Priority: All Government Debts;​

(ii) Second Priority: Depositors, if the Debtor is a Financial Institution;​

(iii) Third Priority: Secured Creditors holding a written contract naming specific collateral;​

(iv) Fourth Priority: Unsecured Creditors, paid pro rata according to the size of their verified principal claim​

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(d) Discharge of Remaining Debt: Once all non-exempt assets have been seized and distributed under Section 3(c):​

(i) The District Court shall enter an Order of Discharge, extinguishing the Debtor's remaining debts.​

(ii) A person or legal entity that receives a bankruptcy discharge may not file for bankruptcy again for 3 months.​

4. Asset Seizure and Writs of Execution

(a) Creditor Petition for Execution: Where a Debtor fails to pay a court-ordered judgment within 7 days, or defaults on a written debt contract for more than 14 days, the Creditor may file for a Writ of Execution in the District Court.​

(b) Execution by the MOJ: Upon a Judge granting a Writ of Execution (either in a bankruptcy proceeding under Section 3 or a debt enforcement proceeding under this Section), the MOJ is empowered to seize the Debtor's non-exempt assets up to the exact value of the debt owed:​

(i) Liquid Balances and Bank Accounts: The MOJ, working with the MEA and any relevant Financial Institution, may garnish and transfer funds directly from the Debtor's balance and bank accounts.​

(ii) Real Estate and Plots: The MOJ may request MUD to transfer ownership of any plot owned by the Debtor. Seized plots shall be auctioned publicly by MUD or MEA over a 48 hour period.​

(iii) Company Shares and Chests: The MOJ may seize shares in limited companies and non-exempt items stored on the Debtor's plots for public auction.​

(c) Surplus Return: If the auction of a seized non-liquid asset yields more than the total debt owed, the surplus proceeds shall be returned to the Debtor within 7 days of the sale.​

5. Prosecution of Government Debts Over $5,000

(a) Whenever any person or legal entity accumulates a total Government Debt exceeding $5,000 that remains unpaid for more than 7 days, the MOJ is empowered to prosecute the Debtor in the District Court to recover the government's money.​

(b) Upon verifying that the Debtor owes more than $5,000 to the government, the presiding Judge shall grant a Writ of Execution authorizing the MOJ to seize and liquidate the Debtor's non-exempt balances, bank accounts, company shares, and plots until the Government Debt is paid in full.​

(c) Willful refusal to comply with a State Garnishment Order or an Asset Preservation Order constitutes Violation of a Court Order under Section 7(c) of the New Criminal Code Act.​

6. Amendments to the New Criminal Code Act

(a) Section 9 of the New Criminal Code Act (Financial and Economic Crimes) shall be amended to add the following offenses:​

(g) Bankruptcy Fraud​

(i) Offense Type: Felony​

(ii) Penalty: up to 25 minutes jail time; $2,500 minimum fine; $10,000 maximum fine; full restitution and immediate nullification of any bankruptcy discharge​

(iii) A person or legal entity commits an offense if they:​

(1) knowingly conceal, transfer, gift, or undervalue any balance, bank account, plot, share, or property within 14 days prior to or during a bankruptcy or debt execution proceeding with the intent to shield it from seizure or defraud a creditor or the court; or​

(2) knowingly submit a false asset schedule, false claim, or fabricated debt in a bankruptcy proceeding.​

(h) Criminal Evasion of Government Debt​

(i) Offense Type: Felony​

(ii) Penalty: up to 20 minutes jail time; $1,000 fine; seizure of concealed assets​

(iii) A person or legal entity commits an offense if they:​

(1) while owing a Government Debt of more than $5,000, intentionally transfer balances, plots, or assets to another person or shell company to prevent the Ministry of Justice from recovering the debt.​

Enactment: This Act comes into force immediately upon passage.