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Special Rules Concerning Bankruptcy And Schemes Of Arrangement With Respect To Business Organisations


Art. 1154. – Application of general provisions.

    Save as is otherwise provided in the preceding Titles, the provisions of  this Title shall apply to business organisations.

Art. 1155. – Business organisations which may be adjudged bankrupt.

1.    All commercial business organisations, other than a joint venture may be adjudged bankrupt or he granted a scheme of arrangement.
2.    A business organization in liquida1ion may be adjudged bankrupt.
3.    The provisions of this Article shall apply to business organisations which have been declared null and void but which exist in fact.

Art. 1156. – Notice of suspension of payments.

Notice of suspension of payments by a business organization under Art. 972 shall be  made by the firm’s legal representatives and, in a firm in liquidation, by the liquidator.

Art. 1157. – Court having jurisdiction.

1.    The Ethiopian court in whose area of jurisdiction the head office of the business organisation is situate shall have jurisdiction in bankruptcy proceedings.
2.    Without prejudice to the provisions of international conventions, such court shall have jurisdiction notwithstanding that head office is abroad and a foreign court has exercised bankruptcy jurisdiction.

Art. 1158. – Bankruptcy of business organisation comprising partners jointly, severally and fully liable.

1.    Each partner in a general partnership and general partners in a limited partnership shall make the notice under Art. 1156 within twenty days after the company having suspended payments.
2.    The bankruptcy of a firm comprising partners jointly, severally and fully liable shall cause the bankruptcy of such partners.

Art. 1159. – Institution of liability proceedings.

    Proceedings under Art. 365 and 366 of this Code shall be instituted by the trustee with the permission of the commissioner, the creditors’     committee having been heard.

Art. 1160. – Adjudication of bankruptcy in common.

1.    Where a share company or private limited company is declared bankrupt, the adjudication may declare bankrupt any person who has carried out commercial operations on his own behalf and disposed of company funds as though they were his awn and concealed his activities under the cover of such company.
2.    The provisions of sub-art. (1) shall apply to limited partners who have carried out acts of management in a limited partnership.

Art. 1161. – Retired partner with joint and several liability.

1.    On request, a partner jointly and severally liable may be declared bankrupt within one year following his name being struck off the commercial register where payments were suspended by the partnership prior to the striking off.
2.    Where the partner was not registered, he may be declared bankrupt at any time after his retirement.

Art. 1162. – Claim for payment of contributions.

The trustee may order the members or partners of any business organisation to complete the payment of their contributions, without regard to the time fixed by the articles of association.

Art. 1163. – Bankruptcy proceedings in respect of partners jointly and severally liable.

1.    The court shall in one judgment declare both the firm and partners jointly and severally liable bankrupt and shall normally appoint one commissioner and trustee. The assets of the firm and of the partners shall be dealt with separately and the bankruptcy proceedings of the two, kept separate.
2.    Debts proved in the firm’s bankruptcy by the creditors of the firm shall be deemed to be proved in each of the partner’s bankruptcy.
3.    The firm’s creditors may participate in all distributions until they are fully paid, without prejudice to claims as between the various bankrupt estates regarding over payment of contributions.
4.    Personal creditors of the partners may only claim in the estate of their debtors.
5.    Any creditor may contest priority with other creditors.

Art. 1164. – Proposal for composition.

1.    A proposal for a composition by a bankrupt firm shall be signed by the legal representatives of such firm.
2.    In the case of a general or limited partnership, the proposals for and the terms of the composition shall be approved by partners representing an absolute majority of the capital.
3.    In the case of a share company or private limited company, proposals for a composition shall be approved by an extraordinary-general meeting, unless such approval has been delegated to the directors.

Art. 1165. – Composition in respect of firm with partners jointly and severally liable.

1.    Where a firm comprising partners jointly, severally and fully liable requests a composition, the creditors may approve such composition in favour of one or more partners.
2.    In such cases, all the firm’s assets shall remain subject to a compulsory winding-up. The personal property of partners with whom the composition has been approval shall be excluded there from and the composition shall only contain and undertaking to pay a dividend on those securities which are outside the firm’s assets.
3.    Where a composition with one partner is approval, he shall be discharged from joint and several liability.