GCA Title 7, Chapter 50
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CHAPTER 50 INSOLVENCY LAW
Article 1. General Provisions. Article 2. Suspension of Payments. Article 3. Voluntary Insolvency. Article 4. Involuntary Insolvency. Article 5. Assignees. Article 6. Classification and Preference of Creditors. Article 7. Partnerships and Corporations. Article 8. Proof of Debts. Article 9. Compositions. Article 10. Discharge. Article 11. Fraudulent Preferences and Transfers. Article 12. Miscellaneous.
ARTICLE 1 GENERAL PROVISIONS
§ 50000. Insolvency Law, Defined. § 50001. Jurisdiction of Superior Court.
§ 50000. Insolvency Law, Defined.
The provisions of this Part shall be known and may he cited as The Insolvency Law and in accordance with its provisions every insolvent debtor may be permitted to suspend payments or be discharged from his debt and liabilities. SOURCE: CCP 1280. This entire part was enacted in 1953. Therefore, all references to the source herein will refer to the original enactment unless there has been a later amendment. COMMENT: To the best of the Compiler’s knowledge, as of March, 1990 no debtor has used this part since at least 1970. Rather, debtors seeking protection, or forced into it by creditors, have used the federal Bankruptcy Law, enforceable through the District Court of Guam. However, the federal Bankruptcy laws do recognize certain local exemptions, which may be found in this Chapter and elsewhere in this Title.
§ 50001. Jurisdiction of Superior Court.
The Superior Court shall have original jurisdiction in hearing and determining all causes, actions, and proceedings under this Part.
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SOURCE: CCP § 1281. Superior Court inserted in place of Island Court pursuant to P.L. 12-85 and Part in place of Title to conform to the arrangement of this Title of the Guam Code Annotated.
ARTICLE 2 SUSPENSION OF PAYMENTS
- § 50050. State of Suspension of Payments. Petition. Inventory to be Filed.
- § 50051. Order for Meeting of Creditors. Injunction to be Issued to Debtor.
- § 50052. Fees Deposited for Filing Petition; Notice to Creditors.
- § 50053. Suspension of Execution Against Debtor.
- § 50054. Creditors Represented by Lawyers.
- § 50055. Meeting of Creditors.
- § 50056. Claimants Exempt. Agreement.
- § 50057. Agreements Rejected.
- § 50058. Agreements Made Effective.
- § 50059. Objections to Meetings of Creditors.
- § 50060. Failure of Debtor to Perform.
§ 50050. State of Suspension of Payments. Petition. Inventory to be Filed.
Any debtor who, possessing sufficient property to cover all his debts, be it an individual person, an association, or corporation, foresees the impossibility of meeting them when they respectively fall due, may petition that he be declared by the court in the state of suspension of payments. The debtor shall annex to his petition a schedule and inventory as set forth in § 50101, § 50102, and § 50103 of this Part, in addition to the statement of his assets and liabilities and the proposed agreement he requests of his creditors. SOURCE: CCP § 1285.
§ 50051. Order for Meeting of Creditors. Injunction to be Issued to Debtor.
Upon receiving and filing the petition with the schedule and documents mentioned in the next preceding section, the court shall make an order calling a meeting of creditors to take place in not less than two (2) weeks
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nor more than three (3) months from the date of such order. This order shall designate the day, hour, and place of meeting of the creditors. The order shall be published by the means authorized for the publication of service and notices and for such periods as may be prescribed by the court. It shall contain an injunction forbidding the petitioning debtor from disposing of his property in any manner, except insofar as concerns the ordinary operations of commerce or of the industry in which the petitioner is engaged, and, further, from making any payments outside the necessary or legitimate expenses of his business or industry, so long as the proceedings relative to the suspension of payments are pending. For the purposes of this law said proceedings shall be considered to have been instituted from the date of the filing of the petition. SOURCE: CCP § 1286.
§ 50052. Fees Deposited for Filing Petition; Notice to Creditors.
A copy of said order shall immediately be published by the clerk of the court, in the manner designated therein, for the number of times and in the form prescribed by the court, and the clerk shall cause a copy of said order to be delivered personally or to be sent forthwith by registered mail, postage prepaid, to all creditors named in the schedule. There shall be deposited with the clerk of the court the sum of ten dollars (0.10) for each copy, to be delivered personally or mailed to the creditors. The last-named sum is hereby constituted the legal fee for the personal delivery or mailing required by this section. SOURCE: CCP § 1287.
§ 50053. Suspension of Execution Against Debtor.
If any execution be pending against the debtor it shall not be consolidated with this proceeding, but the course thereof shall be suspended before sale of property is made thereunder, provided the debtor makes a request therefor to the court before which the proceeding for suspension of payments is pending, unless the execution be against property especially mortgaged which is hereby exempted from the provisions of this section. The suspension ordered by virtue of this section shall lapse when three (3) months shall have passed without the proposed agreement being accepted
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by the creditor or as soon as it is denied. No creditor other than those mentioned in § 50056 shall sue or institute proceedings to collect his claim from the debtor from the moment that suspension of payments is applied for and while the proceedings are pending. SOURCE: CCP § 1288.
§ 50054. Creditors Represented by Lawyers.
Creditors may be represented at the meeting by one or more lawyers, or by any person duly authorized by power of attorney, which document shall be presented and be attached to the record. Persons appearing for more than one creditor shall have only one personal vote, but the claims presented by them shall be taken into consideration for the purpose of arriving at the majority of the amount represented SOURCE: CCP § 1289.
§ 50055. Meeting of Creditors.
Only creditors included in the schedule filed by the debtor shall be cited to appear and take part in the meeting mentioned in § 50051, and they shall be notified upon delivery or transmission to them of a copy of the order calling the meeting, to appear at the meeting with the written evidences of their respective claims, without which they shall not be admitted. The presence of the creditors representing at least three-fifths (3/5) of the liabilities shall be necessary for holding a meeting. The meeting shall be held on the day and at the hour and place designated, the judge of the Superior Court acting as president, and the clerk of the court as secretary thereof, subject to the following rules: (a) The clerk shall prepare for insertion in the minutes of the meeting a statement of the persons present and their claims; the judge shall examine the written evidences of the claims and the powers of attorney, if any. If the persons present who have complied with the foregoing rules represent at least three-fifths (3/5) of the liabilities, the judge shall declare the meeting open for business. (b) The petition of the debtor, the schedule of debts and of property, the statement of assets and liabilities, and the proposed agreement filed therewith shall be read forthwith by the clerk, and the discussion shall he opened.
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(c) The debtor may modify his proposition or propositions in view of the results of the debate, or insist upon the ones already made, and the judge without further discussion shall clearly and succinctly place these several propositions before the meeting for a vote thereupon. (d) The vote shall be taken by a call of names and shall be inserted in the minutes; a majority vote shall rule. (e) To form a majority it is necessary: (1) That two-thirds (2/3) of the creditors voting unite upon the same proposition; (2) That the claims represented by said majority vote amount to at least three-fifths (3/5) of the total liabilities of the debtor mentioned in the petition. (f) After the result of the voting has been announced, all protests made against the majority vote shall be admitted and stated in the record, and the meeting shall be closed. (g) The minutes of the meeting, containing a succinct statement of all proceedings had therein, shall he drawn up, and there shall be inserted therein, the proposition or propositions voted upon, which, after having been read and approved, shall be signed by the judge together with all persons taking part in the voting. If any such persons shall be unable to write, any person present shall sign, at their request, and the clerk shall certify to all of the above. SOURCE: CCP § 1290.
§ 50056. Claimants Exempt.
Persons having claims for personal labor, maintenance, expenses of last illness and funeral, of the wife or children of the debtor, incurred in the sixty (60) days immediately preceding the filing of the petition, and the persons having legal or contractual mortgages, may refrain from attending the meeting and from voting therein. Such persons shall not be bound by any agreement determined upon at such meeting, but if they should join in the voting they shall be bound in the same manner as are the other creditors. SOURCE: CCP § 1291.
§ 50057. Agreements Rejected.
The proposed agreement shall be deemed rejected if the number of creditors required for holding a meeting does not voluntarily attend thereat,
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or if the two majorities mentioned in § 50055(e) are not in favor thereof, even if the negative vote itself does not receive such majority. SOURCE: CCP § 1292.
§ 50058. Agreements Made Effective.
If the decision of the meeting be negative as regards the proposed agreement or if no decision is had in default of such number or of such majorities, the proceedings shall be terminated without recourse and the parties concerned shall be at liberty to enforce the rights which may correspond to them. If the decision is favorable to the debtor, it may be objected to within ten (10) days following the date of the meeting by any creditor who attended the meeting, and who dissented from and protested against the vote of the majority. The opposition or objection to the decision of the majority favorable to the debtor shall be proceeded with as in any other incidental motion, the debtor and the creditors who shall appear declaring their purpose to sustain the decision of the meeting being the defendants. The court shall hear and pass upon such objection as soon as possible and in a summary manner, and in its order, which shall be final, it shall declare whether or not the decision of the meeting is valid. In case that the decision of the meeting is held to be null, the court shall declare the proceeding terminated and the parties concerned at liberty to exercise the rights which may correspond to them; and in case the decision of the meeting is declared valid, or when no opposition or objection to said decision has been presented, the court shall order that the agreement be carried out and the persons concerned shall be bound by the decision of the meeting. The court may issue all orders which may be proper to enforce the agreement on motion of any of the parties litigant. The order directing the agreement to be made effective shall be binding upon all creditors included in the schedule of the debtor who may have been properly summoned, but not upon creditors mentioned in § 50056 who failed to attend the meeting or refrained from voting therein, and their rights shall not be affected by the agreement unless they may have expressly or impliedly consented thereto. SOURCE: CCP § 1293.
§ 50059. Objections to Meetings of Creditors.
The causes for which objection may be made to the decision of the meeting shall be:
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(a) Defects in the call for the meeting, in the holding thereof, and in the deliberations had thereat which prejudice the rights of the creditors; (b) Fraudulent connivance between one or more creditors and the debtor to vote in favor of the proposed agreement; (c) Fraudulent conveyance of claims for the purpose of obtaining a majority. SOURCE: CCP § 1294.
§ 50060. Failure of Debtor to Perform Agreement.
If the debtor fails wholly or in part to perform the agreement decided upon at the meeting of the creditors, all the rights which the creditors had against the debtor before the agreement shall revest in them. In such case the debtor may be made subject to the bankruptcy and insolvency proceedings in the manner established by the following Chapters of this Title. SOURCE: CCP § 1295.
ARTICLE 3 VOLUNTARY INSOLVENCY
§ 50100. Petition for Voluntary Insolvency. § 50101. Schedule, What to Include. § 50102. Inventory, What to Include. § 50103. Affidavit of Petitioner. § 50104. Order of Court; Appointment of a Receiver. § 50105. Publication of Court Order.
§ 50100. Petition for Voluntary Insolvency.
An insolvent debtor, owing debts exceeding in amount thesum of One Thousand Dollars ($1,000.00), may apply to be discharged from his debts and liabilities by petition to the Superior Court, Guam. In his petition he shall set forth his place of residence, the period of his residence therein immediately prior to filing said petition, his inability to pay all his debts in full, his willingness to surrender all his property, estate, and effects not exempt from execution for the benefit of his creditors, and an application to be adjudged an insolvent. He shall annex to his petition a schedule and
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inventory in the form hereinafter provided. The filing of such petition shall be an act of insolvency. SOURCE: CCP § 1300.
§ 50101. Schedule, What to Include.
Said schedule must contain a full and true statement of all his debts