Insolvency and Bankruptcy Code, 2016 | Section 152

Section 152 of IBC, 2016: General Powers of Bankruptcy Trustee

Section 152 of the Insolvency and Bankruptcy Code, 2016 (IBC) identifies six general powers available to a bankruptcy trustee while administering and realising a bankrupt person's estate. These powers support asset recovery, management and eventual distribution in accordance with the Code.

At a glance: The trustee may sell estate assets, issue receipts, pursue debts owed to the bankrupt, redeem pledged or hypothecated assets, transfer eligible securities and deal with property beneficially owned by the bankrupt. The powers operate within the framework of the Code and applicable law.

Section 152 - Statutory Provisions

The provision states that the bankruptcy trustee may, while discharging functions under Chapter V of Part III of the Code, exercise the following powers:

Sell property: sell any part of the estate of the bankrupt.
Issue receipts: give receipts for any money received by the trustee.
Recover debts: prove, rank, claim and draw a dividend in respect of debts due to the bankrupt that form part of the estate.
Redeem secured property: where estate property is held by another person by pledge or hypothecation, exercise the right of redemption, subject to the relevant contract, by giving notice to that person.
Transfer securities: where estate property includes securities in a company or other property transferable in a person's books, exercise the same transfer rights the bankrupt could have exercised absent bankruptcy.
Deal with beneficial interests: deal with estate property to which the bankrupt is beneficially entitled in the manner in which the bankrupt could have dealt with it.

The points above restate clauses (a) to (f) in accessible language. For authoritative wording, consult the official India Code text of the IBC.

Explanation of the Trustee's Powers

1. Sale of the bankrupt's estate - Section 152(a)

The trustee may sell property forming part of the bankruptcy estate to realise value for creditors. The estate and the sale process remain subject to the Code, applicable rules and any relevant restrictions. Section 152(a) is not a general licence to dispose of property that does not belong to the estate.

2. Receipt of money - Section 152(b)

The trustee can acknowledge money received in the course of administering the estate. Receipts provide a record of recoveries, proceeds and other payments handled in the bankruptcy process.

3. Claims and dividends on debts owed to the bankrupt - Section 152(c)

Where another person owes money to the bankrupt and that receivable forms part of the estate, the trustee may prove or lodge the claim, establish its ranking, claim payment and receive dividends or distributions. This enables the estate to recover amounts due from third parties, including in their insolvency proceedings.

4. Redemption of pledged or hypothecated property - Section 152(d)

Pledge generally refers to security involving possession of goods, while hypothecation generally involves a charge over movable property without delivery of possession. If estate property is subject to either arrangement, the trustee may exercise the bankrupt's right of redemption, subject to the relevant contract and notice to the holder. Redemption may require satisfying the secured obligation.

5. Transfer of securities and recorded interests - Section 152(e)

The trustee can exercise transfer rights over company securities and other property recorded in a person's books, to the same extent that the bankrupt could have done without bankruptcy. Applicable transfer formalities and legal restrictions still matter.

6. Beneficially owned property - Section 152(f)

A beneficial interest is an entitlement to enjoy the economic benefit of property even where formal title may be held by another person. Where that interest belongs to the bankruptcy estate, the trustee may deal with it as the bankrupt could have done, subject to applicable law.

Section 149 - Functions of bankruptcy trustee: investigation of the bankrupt's affairs, realisation of the estate and distribution of the estate.
Section 150 - Duties of the bankrupt: assistance, disclosure and notification obligations owed to the trustee.
Section 151 - Rights of bankruptcy trustee: legal capacity to hold property, contract, litigate and perform related acts in the trustee's official name.
Section 153 - Approval of creditors for certain acts: specified actions, such as carrying on the bankrupt's business or compromising certain claims, require approval of the committee of creditors.
Sections 154 and 155 - Vesting and composition of estate: address vesting of the bankrupt's estate in the trustee and what property forms part of that estate.

Read Section 152 together with these provisions rather than treating it as an unlimited, standalone power. The statutory framework for individual and partnership bankruptcy must also be distinguished from corporate liquidation powers under Part II of the Code.

Frequently Asked Questions

Can a bankruptcy trustee sell any property?

No. Section 152(a) concerns property forming part of the bankrupt's estate. Whether an asset belongs to that estate is determined under the applicable provisions of the Code.

Does every action under Section 152 require creditors' approval?

Section 152 itself lists general powers without imposing a universal committee-approval requirement. However, Section 153 separately requires creditor approval for the particular acts it covers, and other legal requirements may apply.

Can the trustee recover money owed to the bankrupt?

Yes. Under Section 152(c), the trustee may prove, rank and claim debts due to the bankrupt that form part of the estate and receive applicable dividends.

Can the trustee redeem pledged assets?

Yes, subject to the relevant contract and notice to the person holding the pledged or hypothecated property, as provided in Section 152(d).

Official Legal References

Legal information only. Check current notifications, amendments and applicable rules before relying on a provision in a specific proceeding.