The insolvency Act of 1986 which came into force on 29 December 1986 is based upon both Insolvency Law and Practice - Report of the Review Committee(Cmnd.8558) and A Revised Framework for Insolvency Law(Cmnd.9175). The main inspiration for the reforms was The Report of the Review Committee of Insolvency Law and Practice, the chairman of which was Sir Kenneth Cork. The Review Committee made proposals for extensive and radical changes in the law and practice of bankruptcy and corporate inslovency. The Government published its response in the form of A Revised Framework for Insolvency Law(Cmnd.9175) in which the Government intended to accept some of the proposals of the Cork Committee. I selected several of the many important changes to write about. First, law is divided into two parts:individual insolvency and corporate insolvency. This means that the complicated system was made simple and usable. Second, the Acts of Bankruptcy, which consisted of seventeen different Acts-most of which were little used-were all repealed. Third, new provisions which protect the right to occupy the family home were made to consider the welfare of the bankruopt's children and spouse. Fourth, new provisions for Voluntary arrangement, which can be implemented whether or not the debtor is bankrupt, were made. Finally, the provisions of automatic discharge were stepped up. A bankrupt can generally get automatic discharge in case of summary administration after two years and in any other case after three years. This duration(2 or 3 years) is much shorter than that of the 1976 Insolvency Act. In this new law automatic discharge is permitted to give the bankrupt a fresh start. Japanese law provides for discretionary discharge, not automatic discharge. This provision was made upon the idea that discharge is only for honest bankruptcy and it is permitted as a special favor. I think that in this highly complicated society we must - at least once - relieve bankrupts generally, except in cases where the bankruptcy procedures are being used solely in bad faith. So the discharge provision should be interpreted based upon the idea the right of bankrupt to start new economic life, but should, however, not be automatic to avoid unfairness to creditors and misuse of bankruptcy procedures.
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