Preliminary and General
1.—This Act may be cited as the Bankruptcy Act, 1988.
2.—This Act shall come into operation on such day not later than 1 January, 1989 as the Minister by order appoints.
Power pursuant to section exercised (1.01.1989) by Bankruptcy Act 1988 (Commencement) Order 1988 (S.I. No. 348 of 1988).
2. The 1st day of January, 1989, is hereby appointed as the day on which the Bankruptcy Act, 1988, shall come into operation.
3.—In this Act, unless the context otherwise requires,—
“adjudication” means adjudication in bankruptcy;
“after-acquired property” has the meaning assigned to it by section 44 (5);
“arrangement” means an arrangement in pursuance of an order for protection under Part IV;
“arranging debtor” means a debtor who has been granted an order for protection under Part IV;
“assignees” means the Official Assignee and the creditors’ assignee, if any;
F1[‘Bankruptcy Inspector’ means a person standing appointed for the time being—
(i) to the position of Bankruptcy Inspector in the Office of the Official Assignee in Bankruptcy on the day before the coming into operation of section 29 of the Courts and Civil Law (Miscellaneous Provisions) Act 2013, or
(ii) to the position of Bankruptcy Inspector pursuant to section 12 of the Personal Insolvency Act 2012;]
“bankruptcy summons” has the meaning assigned to it by section 8 (1);
“conveyance”, in relation to land, includes assignment and transfer;
“the Court” means the High Court;
“creditors’ assignee” means a person chosen and appointed as such under section 18 (1);
F2[‘Debt Settlement Arrangement’ has the same meaning as in the Personal Insolvency Act 2012;]
F3[‘Director’ means the Director of the Insolvency Service;]
F4[‘insolvency proceedings’ means insolvency proceedings opened in a member state under Article 3 of the Insolvency Regulation where the debtor or each debtor is an individual or deceased;
‘Insolvency Regulation’ means Council Regulation (EC) No. 1346/2000 of 29 May 20001 on insolvency proceedings;]
“land” includes any estate or interest in or charge over land;
F4[‘liquidator’ means a liquidator appointed in insolvency proceedings;]
F4[‘member state’ means a member state of the European Communities other than the State and Denmark;]
“the Minister” means the Minister for Justice;
F1[‘Official Assignee’ means a person standing appointed for the time being—
(i) to the position of Official Assignee in Bankruptcy in the Office of the Official Assignee in Bankruptcy on the day before the coming into operation of section 29 of the Courts and Civil Law (Miscellaneous Provisions) Act 2013, or
(ii) to the position of Official Assignee pursuant to section 12 of the Personal Insolvency Act 2012;]
F2[‘Personal Insolvency Arrangement’ has the same meaning as it has in the Personal Insolvency Act 2012;]
“prescribed”, except in relation to court fees, means prescribed by rules of court;
F5[‘principal private residence’ has the same meaning as it has in section 2 of the Personal Insolvency Act 2012 subject to the modification that a reference to the debtor shall be taken to be a reference to the bankrupt;]
(a) includes money, goods, things in action, land and every description of property, whether real or personal,
(b) includes obligations, easements and every description of estate, interest, and profit, present or future, vested or contingent, arising out of or incident to property,
(c) in relation to proceedings opened in the State under Article 3(1) of the Insolvency Regulation, includes property situated outside the State, and
(d) in relation to proceedings so opened under Article 3(2) of the Regulation, does not include property so situated;]
“registered”, in relation to land, means registered in the Registry of Deeds or the Land Registry, as may be appropriate;
“secured creditor” means any creditor holding any mortgage, charge or lien on the debtor’s estate or any part thereof as security for a debt due to him;
F2[‘statement of affairs’ means a statement of the debtor’s or bankrupt’s affairs in the form specified in rules of court;]
F2[‘trustee’ means a person appointed as trustee under Part V;]
“vesting arrangement” has the meaning assigned to it by section 93 (2).
F7[(2) Parts II, III, IV (in so far as it relates to vesting arrangements), V, VI and VIII and the First Schedule are subject to Chapters I (general provisions) and III (secondary insolvency proceedings) of the Insolvency Regulation.]
Substituted (3.12.2013) by Courts and Civil Law (Miscellaneous Provisions) Act 2013 (32/2013), s. 27, S.I. No. 463 of 2013.
Inserted (3.12.2013) by Personal Insolvency Act 2012 (44/2012), s. 142, S.I. No. 462 of 2013.
Inserted (3.12.2013) by Courts and Civil Law (Miscellaneous Provisions) Act 2013 (32/2013), s. 27, S.I. No. 463 of 2013.
Inserted (2.07.2002) by European Communities (Personal Insolvency) Regulations 2002 (S.I. No. 334 of 2002), reg. 3(a)(i).
Inserted (29.01.2016) by Bankruptcy (Amendment) Act 2015 (60/2015), s. 2, S.I. No. 34 of 2016.
Substituted (2.07.2002) by European Communities (Personal Insolvency) Regulations 2002 (S.I. No. 334 of 2002), reg. 3(a)(ii).
Inserted (2.07.2002) by European Communities (Personal Insolvency) Regulations 2002 (S.I. No. 334 of 2002), reg. 3(a)(iii).
1OJ L160 of 30.6.2000
Administration of Property
Effect of Adjudication on Bankrupt’s Property
Vesting of property in Official Assignee.
(1857, ss. 267, 268, 273)
44.—(1) Where a person is adjudicated bankrupt, then, subject to the provisions of this Act, all property belonging to that person shall on the date of adjudication vest in the Official Assignee for the benefit of the creditors of the bankrupt.
(2) Subject to the provisions of this Act, the title of the Official Assignee to any property which vests in him by virtue of subsection (1) shall not commence at any date earlier than the date of adjudication.
(3) The property to which subsection (1) applies includes—
(a) all powers vested in the bankrupt which he might legally exercise in relation to any property immediately before the date of adjudication;
(b) all property which was the subject of any conveyance or transfer which sections 57, 58 and 59 declare void as against the Official Assignee, subject to the rights of any persons which are preserved by those sections.
(4) The property to which subsection (1) applies does not include—
(a) property held by the bankrupt in trust for any other person, or
(b) any sum which vests in the Official Assignee under F26[section 52(1) of the Property Services (Regulation) Act 2011], or section 30 (i) of the Central Bank Act, 1971.
(5) Without prejudice to any existing principle or rule of law or equity, established practice or procedure in relation to damages or compensation recovered or recoverable by a bankrupt for personal injury or loss suffered by him, property which is acquired by or devolves on a bankrupt before the discharge or annulment of the adjudication order (in this Act called “after-acquired property”) shall vest in the Official Assignee if and when he claims it.
Substituted (6.07.2012) by Property Services (Regulation) Act 2011 (40/2011), s. 101 and sch. 8, S.I. No. 198 of 2012.
Pensions in Bankruptcy.
44A.— (1) Subject to subsection (2), where a person is adjudicated bankrupt, and he or she is, or may become entitled to, payments under a relevant pension arrangement, assets relating to the arrangement (other than payments already received by the bankrupt, or that the bankrupt was entitled to receive, under the arrangement) shall not vest in the Official Assignee for the benefit of the creditors of the bankrupt.
(2) Where a bankrupt has an interest in or entitlement under a relevant pension arrangement which would, if the bankrupt performed an act or exercised an option, cause that debtor to receive from or at the request of the person administering that relevant pension arrangement—
(a) an income, or
(b) an amount of money other than income,
in accordance with the relevant provisions of the Taxes Consolidation Act 1997, that bankrupt shall be considered as being in receipt of such income, and such amount of money shall vest in the Official Assignee or the trustee in bankruptcy.
(3) Subsection (2) applies where—
(a) the bankrupt is entitled at the date of being adjudicated a bankrupt to perform the act or exercise the option referred to in subsection (2),
(b) was entitled at any time before the date of the adjudication, to perform the act or exercise the option referred to in subsection (2), but had not performed the act or exercised the option, or
(c) will become entitled within 5 years of the date of the adjudication to perform the act or exercise the option referred to in subsection (2).
(4) Where subsection (2) applies, the Official Assignee or the trustee in bankruptcy may where he or she considers that it would be beneficial to the creditors of the bankrupt to do so, perform an act or exercise an option referred to in subsection (2) in place of the bankrupt.
(5) In this section and in sections 44B and 85D a reference to a relevant pension arrangement means:
(a) a retirement benefits scheme, within the meaning of section 771 of the Taxes Consolidation Act 1997, for the time being approved by the Revenue Commissioners for the purposes of Chapter 1 of Part 30 of that Act;
(b) an annuity contract or a trust scheme or part of a trust scheme for the time being approved by the Revenue Commissioners under section 784 of the Taxes Consolidation Act 1997;
(c) a PRSA contract, within the meaning of section 787A of the Taxes Consolidation Act 1997, in respect of a PRSA product, within the meaning of that section;
(d) a qualifying overseas pension plan within the meaning of section 787M of the Taxes Consolidation Act 1997;
(e) a public service pension scheme within the meaning of section 1 of the Public Service Superannuation (Miscellaneous Provisions) Act 2004;
(f) a statutory scheme, within the meaning of section 770(1) of the Taxes Consolidation Act 1997, other than a public service pension scheme referred to in paragraph (e);
(g) such other pension arrangement as may be prescribed by the Minister, following consultation with the Ministers for Finance, Social Protection and Public Expenditure and Reform. ]
Inserted (3.12.2013) by Personal Insolvency Act 2012 (44/2012), s. 150, S.I. No. 462 of 2013.
Excessive pension contributions by bankrupt.
44B.— (1) Where, on application by the Official Assignee or the trustee in bankruptcy, the Court is satisfied that the bankrupt, or a person on his or her behalf, has within the 3 years prior to the adjudication made contributions to a relevant pension arrangement under which the bankrupt is, or may become entitled to, payments and which contributions—
(a) were excessive in view of the bankrupt’s financial circumstances when those contributions were made, and
(b) had the effect of—
(i) materially contributing to the bankrupt’s inability to pay his or her debts, or
(ii) substantially reducing the sum available for distribution to the creditors,
the Court may make such order in relation to the relevant pension arrangement as it considers appropriate for the purpose of ensuring that the contributions which the Court considers to be excessive or any part of such contributions can be vested in the Official Assignee or the trustee in bankruptcy to be made available for distribution to the creditors.
(2) In considering an application under subsection (1) and in determining whether or not the contributions made by the bankrupt to a relevant pension arrangement were excessive the Court may have regard to all the financial circumstances of the bankrupt and in particular:
(a) whether the bankrupt made payments to his or her creditors in respect of debts due to those creditors on a timely basis at or about the time when the bankrupt made the contribution concerned;
(b) whether the bankrupt was obliged to make contributions of the amount or percentage of income as the payments actually made under his or her terms and conditions of employment and if so obliged, whether the bankrupt or a person who as respects the bankrupt is a relative could have materially influenced the creation of such obligation;
(c) the amount of the contributions paid, including the percentage of total income of the bankrupt in each tax year concerned which such contributions represent;
(d) the amount of the contributions paid, in each of the 6 years prior to the making of the adjudication including the percentage of total income of the bankrupt which such contributions represent in each of those years;
(e) the age of the bankrupt at the relevant times;
(f) the percentage limits which applied to the bankrupt in relation to relief from income tax for the purposes of making contributions to a relevant pension arrangement in each of the 6 years prior to the adjudication; and
(g) the extent of provision made by the bankrupt in relation to any relevant pension arrangement prior to the making of the contributions concerned.
(3) In this section “relative” as respects a person, means a brother, sister, parent, spouse or civil partner of the person or a child of the person or of the spouse or civil partner. ]
Inserted (3.12.2013) by Personal Insolvency Act 2012 (44/2012), s. 150, S.I. No. 462 of 2013.
(1857, ss. 298, 299)
45.—(1) A bankrupt shall be entitled to retain, as excepted articles, such articles of clothing, household furniture, bedding, tools or equipment of his trade or occupation or other like necessaries for himself, his F29[spouse or civil partner within the meaning of the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010], children and dependent relatives residing with him, as he may select, not exceeding in value F30[€6,000] or such further amount as the Court on an application by the bankrupt may allow.
(2) Where a bankrupt, after selecting the items constituting the excepted articles, requests the Official Assignee, in writing, not to dispose of the remainder of any such articles as are referred to in subsection (1) the Official Assignee shall not dispose thereof except in accordance with an order of the Court.
(3) The Court may, on the application of the bankrupt or the Official Assignee, in relation to the remainder of such articles—
(a) postpone the removal and sale thereof;
(b) permit them to remain in the use of the bankrupt;
(c) at any time, order them to be taken by or on behalf of the Official Assignee and to be sold for the benefit of the creditors.
Substituted (1.01.2011) by Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 (24/2010), s. 170 and sch. part 5 item 8, S.I. No. 648 of 2010.
Substituted (3.12.2013) by Personal Insolvency Act 2012 (44/2012), s. 151, S.I. No. 462 of 2013.
Previous affecting provision: subs. (1) amended (1.01.2002) by Bankruptcy Act 1988 (Alteration of Monetary Limits) Order 2001 (S.I. No. 595 of 2001), art. 2 and sch., in effect as per art. 2; amended as per F-note above.
Certificate of vesting of property in Official Assignee.
(cf. 1857, s. 269)
46.—(1) Where, according to law, any conveyance of land is required to be registered and such land vests in the Official Assignee under this Part, a certificate under the seal of the Court shall be issued to him as evidence of the vesting and he shall cause the certificate to be registered as soon as may be as if it were a conveyance, and registration of the certificate shall have the like effect to all intents and purposes as registration of a conveyance would have had.
(2) The title of any purchaser of any such land for valuable consideration, in good faith and without notice of the adjudication, who had duly registered the conveyance before the registration of the certificate shall not be invalidated by reason of the adjudication unless the certificate is registered within two months after the date of the adjudication.
Vesting in Official Assignee of certain money and securities.
47.—Notwithstanding any provision in any other enactment—
(a) money in the Post Office Savings Bank or in a trustee savings bank to which a bankrupt is entitled, or
(b) securities issued through An Post by the Minister for Finance under his statutory borrowing powers and to which a bankrupt is entitled,
shall, on the adjudication of the bankrupt, vest in the Official Assignee in the same manner as any other property.
Limitation of Official Assignee’s powers in relation to copyright.
48.—Where the property of a bankrupt comprises the copyright in any work or any interest in such copyright and he is liable to pay to the author royalties or a share of the profits in respect thereof—
(a) the Official Assignee shall not be entitled to sell or authorise the sale of any copies of the work, or to perform or authorise the performance of the work, except on the terms of paying to the author such sums by way of royalty or share of the profits as would have been payable by the bankrupt, and
(b) he shall not be entitled to assign the right or transfer the interest or to grant any interest in the right by licence, except with the consent of the author or of the Court and upon terms which will secure to the author payments by way of royalty or share of the profits at a rate not less than that which the bankrupt was liable to pay.
Restrictive clause in agreement or lease.
49.—(1) Every covenant or provision for forfeiture of a lease on the bankruptcy of the lessee shall be void as against the Official Assignee.
(2) A clause in a hire purchase agreement which purports to terminate the agreement on the bankruptcy of the hirer shall be void as against the Official Assignee.
Execution against debtor’s property before adjudication.
(cf. 1872, s. 54)
50.—(1) Where goods F31[…] belonging to a debtor have been seized under an execution order and sold, or where money has been paid in part or full satisfaction of the execution either to the sheriff or county registrar or to the execution creditor in order to avoid seizure or sale under such execution, the sheriff, county registrar or execution creditor shall retain the proceeds of sale or the money so paid, for a period of twenty-one days.
(2) If within that period the sheriff, county registrar or execution creditor receives notice of the adjudication of the debtor, he shall surrender the property, or pay over the proceeds of sale thereof or any money paid in satisfaction of the execution, to the Official Assignee who shall be entitled to retain the property, proceeds or money, as the case may be, as against the execution creditor.
(3) An execution levied by seizure of any such property belonging to the debtor shall not be invalid by reason only of its being an act of bankruptcy and a person who purchases the property in good faith under a sale by the sheriff or county registrar shall, as against the Official Assignee, acquire a good title thereto.
(4) Where a sheriff or county registrar, without notice of the adjudication of the debtor, pays the proceeds of sale or other money retained by him pursuant to subsection (1) to the execution creditor after the expiration of twenty-one days, he shall not be liable to the Official Assignee in respect of the payment.
(5) Where property is surrendered or proceeds of sale or other money paid over to the Official Assignee, the costs of the execution shall be a first charge thereon and the Official Assignee may sell the whole or part of the property for the purpose of satisfying the charge.
Deleted (1.12.2009) by Land and Conveyancing Law Reform Act 2009 (27/2009), s. 8(1) and sch. 1, S.I. No. 356 of 2009.
Priority of judgment mortgage.
(1857, s. 331)
51.—F32[(1) A judgment creditor who registers a judgment mortgage under section 116 of the Land and Conveyancing Law Reform Act 2009 shall not, by reason of such registration, be entitled to any priority or preference over simple contract creditors in the event of the person against whom such judgment mortgage is registered being adjudicated bankrupt, unless the judgment mortgage is registered at least three months before the date of the adjudication.]
Substituted (1.12.2009) by Land and Conveyancing Law Reform Act 2009 (27/2009), s. 8(1) and sch. 1, S.I. No. 356 of 2009.
Repealed (1.06.2015) by Companies Act 2014 (38/2014), s. 4(1) and sch. 2 part 1, S.I. No. 169 of 2015).
Modifications (not altering text):
References to the date of adjudication construed (1.06.2015) by Companies Act 2014 (38/2014), s. 613(3), S.I. No. 169 of 2015.
Application of bankruptcy rules in winding up of insolvent companies
(3) Subsection (1) of section 51 of the Bankruptcy Act 1988 shall apply in the winding up of an insolvent company and, accordingly, the reference in that subsection to the date of adjudication shall be read as—
(a) subject to paragraph (b), a reference to, as the case may be—
(i) the presentation of a petition for the winding up of the company by the court, or
(ii) the passing of a resolution for voluntary winding up,
(b) where, before the presentation of a petition for the winding up of the company by the court, a resolution has been passed by the company for voluntary winding up, a reference to the passing of the resolution.
Order to put purchaser in possession.
(1872, s. 75)
52.—Where land belonging to a bankrupt or arranging debtor has been sold under the provisions of this Act or by or under the direction of the Court, the Court may, on the application of the purchaser, issue an order directing the appropriate sheriff or county registrar to put the purchaser into possession of all the land not in the occupation of lessees, under-lessees or tenants, subject to whose interests the sale has been made and who have attorned to the purchaser within a time to be limited in the order, and the order shall be executed in like manner as an order for the delivery of possession.
Permission to mortgagee to bid at sale.
(1857, s. 316)
53.—The mortgagee of any property of a bankrupt or arranging debtor may, with the leave of the Court, bid and purchase at the sale of the property.
Discharge of persons delivering property, etc., to Official Assignee.
(cf. 1857, s.281)
(a) from whom the Official Assignee recovers any property of a bankrupt, or
(b) who, without legal proceedings, in good faith delivers up to the Official Assignee possession of any such property, or
(c) who pays any debt owed to a bankrupt and claimed by the Official Assignee,
shall, notwithstanding that the adjudication is subsequently annulled or discharged, be released from all claims by the bankrupt in respect of such property or debt.
Title to property sold not to be invalidated.
(1857, s. 323)
55.—The title to any property sold in bankruptcy shall not be invalidated by the bankrupt or any person claiming under him by reason only of any defect in any proceedings under this Act.
Disclaimer of onerous property.
(1872, ss. 97 and 98; 33/1963, s. 290)
F34[56. (1) Subject to subsection (5), where any of the property (other than after- acquired property) of a bankrupt consists of—
(a) any unprofitable contract, or
(b) any other property which—
(i) is unsaleable,
(ii) is not readily saleable for any reason whatsoever (including because the property is subject to any mortgage, charge, lien or other security), or
(iii) gives rise to a liability to pay money or perform any other onerous act,
the Official Assignee, notwithstanding that he has endeavoured to sell or has taken possession of the property or exercised any act of ownership in relation thereto, may, with the leave of the Court and subject to the provisions of this section, by writing signed by him, at any time disclaim the property.]
(3) The disclaimer shall operate to determine, as from the date of disclaimer, the rights, interests and liabilities of the bankrupt and his property in or in respect of the property disclaimed, and shall also discharge the Official Assignee from all personal liability in respect of the property disclaimed as from the date when the property vested in him, but shall not, except so far as is necessary for the purpose of releasing the bankrupt and his property and the Official Assignee from liability, affect the rights or liabilities of any other person.
(4) The Court, before or on granting leave to disclaim, may require the Official Assignee to give such notices to persons interested and impose such terms as a condition of granting leave, and make such other order in the matter as the Court thinks just.
(5) The Official Assignee shall not be entitled to disclaim any property under this section in any case where an application in writing has been made to him by any persons interested in the property requiring him to decide whether he will or will not disclaim, and the Official Assignee has not, within a period of twenty-eight days after the receipt of the application or such further period as may be allowed by the Court, given notice to the applicant that he intends to apply to the Court for leave to disclaim; and, in the case of a contract, if the Official Assignee, after such application as aforesaid, does not within the said period or extended period disclaim the contract, he shall be deemed to have adopted it.
(6) The Court may, on the application of any person who is, as against the Official Assignee, entitled to the benefit or subject to the burden of a contract made with the bankrupt, make an order rescinding the contract on such terms as to payment by or to either party of damages for the non-performance of the contract, or otherwise as the Court thinks just, and any damages payable under the order to any such person shall be deemed to be a debt proved and admitted in the bankruptcy.
(7) Subject to subsection (8), the Court may, on an application by any person who either claims any interest in any disclaimed property or is under any liability not discharged by this Act in respect of any disclaimed property and on hearing any such persons as it thinks fit, make an order for the vesting of the property in or the delivery of the property to any person entitled thereto, or to whom it may seem just that the property should be delivered by way of compensation for such liability as aforesaid, or a trustee for him, and on such terms as the Court may think just, and on any such vesting order being made, the property comprised therein shall vest accordingly in the person therein named in that behalf without any conveyance or assignment for the purpose.
(8) Where the property disclaimed is of a leasehold nature, the Court shall not make a vesting order in favour of any person claiming under the bankrupt, whether as under-lessee or as mortgagee by demise, except upon the terms of making that person—
(a) subject to the same liabilities and obligations as those to which the bankrupt was subject under the lease in respect of the property at the date of the adjudication; or
(b) if the Court thinks fit, subject only to the same liabilities and obligations as if the lease had been assigned to that person at that date;
and in either event (if the case so requires), as if the lease had comprised only the property comprised in the vesting order, and any mortgagee or under-lessee declining to accept a vesting order upon such terms shall be excluded from all interest in and security upon the property and, if there is no person claiming under the bankrupt who is willing to accept an order upon such terms, the Court shall have power to vest the estate and interest of the bankrupt in the property in any person liable either personally or in a representative character, and either alone or jointly with the bankrupt, to perform the lessee’s covenants in the lease, freed and discharged from all estates, encumbrances and interests created therein by the bankrupt.
(9) Any person damaged by the operation of a disclaimer under this section shall be deemed to be a creditor of the bankrupt to the amount of the damages, and may accordingly prove the amount as a debt in the bankruptcy.
Substituted (29.01.2016) by Bankruptcy (Amendment) Act 2015 (60/2015), s. 8(a), S.I. No. 34 of 2016.
Deleted (29.01.2016) by Bankruptcy (Amendment) Act 2015 (60/2015), s. 8(b), S.I. No. 34 of 2016.
Effect of adjudication on creditors’ remedies.
(cf. 1857, s. 262; 1872, s. 68 in pt.)
136.—(1) On the making of an order of adjudication, a creditor to whom the bankrupt is indebted for any debt provable in bankruptcy shall not have any remedy against the property or person of the bankrupt in respect of the debt apart from his rights under this Act, and he shall not commence any proceedings in respect of such debt unless with the leave of the Court and on such terms as the Court may impose.
(2) This section shall not affect the power of a secured creditor to realise or otherwise deal with his security in the same manner as he would have been entitled to realise or deal with it if this section had not been enacted.
Power to stay or restrain proceedings against bankrupt.
(New: cf. 33/1963, s. 217)
137.—(1) The Official Assignee may—
(a) where any proceedings against the bankrupt are pending in the High Court or on appeal in the Supreme Court, apply to the court in which the proceedings are pending for a stay of proceedings therein, and
(b) where any other proceedings are pending against the bankrupt, apply to the High Court to restrain further proceedings therein,
and the court to which the application is made may grant the application on such terms and for such period as it thinks fit.
(cf. 1857, s. 262 in pt.)
(2) Where any proceedings against a bankrupt are stayed or restrained in pursuance of subsection (1), the following provisions shall have effect:
(a) the creditor shall not be liable for any costs incurred by the bankrupt or the Official Assignee in such proceedings;
(b) if the proceedings have been instituted against the bankrupt jointly with any other person, the proceedings against that other person shall not thereby be affected.