Debt Recovery Quick Fix Act

[A__C]

A
BILL
To
Fix the Debt Recovery Implementation Act​

The people of Democracy Craft, through their elected representatives in the Congress and the force of law ordained to that Congress by the people through the constitution, do hereby enact the following provisions into law:

1 - Short Title and Enactment
(1) This Act may be cited as the “Debt Recovery Quick Fix Act”.
(2) This Act shall be enacted immediately upon its signage.
(3) This Act was authored by former Representative MilkCrack.
(4) This Act was proposed by Representative A__C.
(5) This Act is co-sponsored by Senator huney69.

2 - Reasons
(1) The current Debt Recovery Act is unclear and not supported by the majority of government members who discussed it.

3 - Quick Fix
(1) Repeals the Debt Recovery Implementation Act.

4 - Debt Recovery
(1) Whenever a court case, has reached a verdict, and damages need to be paid to a party, the aggrieved party needs to open a DOJ Ticket. In which the paying party will be added as well.
(2) If the paying party fails to respond, within 72-hours, or is otherwise not complying the DOJ can fine, the paying party the amount required and add it to the aggrieved party balance directly. Whether or not a party is complying is determined by the DOJ secretary or a DOJ member with delegated authority.
(3) If the amount of money outstanding, is not able to be covered by fining the balance, the DOJ may file for an Asset Seizure warrant.
a. asset Seizure Warrant format:
- SGT Name:
- Type of Warrant you are applying for:
- Who you are using the warrant on:
- Reasoning for warrant:
-Asset Seizure Amount:
-Requested Asset to seize:
- Evidence:
-Link to Court Order:
- Additional Information:
(4) The DOJ will determine which assets to seize based on the amount of money outstanding. All assets seized must be put up for auction in an official government marketplace managed by the Department of Commerce. If there is money left over from the auction, it will be put back in the balance of the party of which the assets were seized.
a. Seizable assets include: the player’s inventory, donator chest, ender chest, locked containers, real estate, and anything on their vault plot.
i. Buildings on the vault plot may be auctioned off as a second-to-last resort, as either the building itself with a free paste to the auction winner, or as disassembled materials.
ii. If the player owns any shares at any companies, the person to whom the money is owed may agree to receive the shares for their current value as a last resort.
(5) Where someone is unable to pay currently but will be in the future the party needing to be paid may agree to a payment plan but is not obliged to do so. Failure to comply with the payment plan needs to be settled in court again.
(6) The DOJ may also choose to create a policy setting out administration fees they can charge to the paying party for not complying, as compensation for the use of DOJ resources to recover assets.

5 - Government Anti-Scam Insurance
(1) The DoC is to run Anti-Scam Insurance, which provides players and companies with protection against entities declared bankrupt.
(2) The Insurance will cost an initial rate of $1,500 per month, payable to the government. The DoC will initially cover 70% on claims up to $25,000 submitted by insured players and companies. All of these figures may be adjusted internally by the DoC once per 30 days, and the public must be informed of such changes through an announcement. Claims will be submitted and reviewed on a case-by-case basis by the DoC.
(3) Players are automatically insured for free for the first month after their joindate. Claims by the uninsured may be submitted for an incident that occurred within a player's first month after joindate.
(4) It is the sole responsibility of the insured players and companies to track their coverage dates and submit their monthly insurance payments on time. Failure to submit a payment by its due date will result in the immediate and automatic suspension of coverage, without the requirement of a notice or grace period from the DoC. Coverage shall remain suspended until the required payment is sufficiently provided.
(5) Any damages that are not part of any actual financial loss are not eligible. (e.g. Punitive Damages, Emotional Distress), as well as inflation costs and opportunity costs.

7 - Bankruptcy Stay
(1) All asset seizure proceedings, fines for non-compliance, and related actions under this Act are stayed upon the filing of a bankruptcy petition by or against the debtor under the Bankruptcy Act.
(2) Creditors whose recovery actions are stayed shall be entitled to file a Proof of Claim in the bankruptcy case.

8 - Trustee Standing for Asset Seizure
(1) A Trustee appointed under the Bankruptcy Act shall have standing to apply for an asset seizure warrant under the warrant procedure of this Act, on behalf of the bankruptcy estate, to recover non-exempt property of the debtor that has not been surrendered.
(2) The Department of Justice shall process such applications under the same procedures applicable to applications by other authorized parties.
(3) A Trustee's application must be supported by:
(a) Proof of appointment as Trustee in a pending bankruptcy case;
(b) Identification of the property sought to be seized;
(c) Evidence of the debtor's refusal or failure to surrender the property; and
(d) A court order or referral from the Federal Court of Redmont supervising the bankruptcy case.

 

[Westray]

Presidential Assent

This bill has been granted assent and is hereby signed into law.

 

[Mhadsher]

A
BILL
To
Protect Players without Burdening the Government

The people of Democracy Craft, through their elected representatives in the Congress and the force of law ordained to that Congress by the people through the constitution, do hereby enact the following provisions into law:​

1 - Short Title and Enactment
(1) This Act may be cited as the “Anti-Scam Insurance Act”.
(2) This Act shall be enacted immediately upon its signage.
(3) This Act was authored by Representative Mhadsher101.
(4) This Act is co-sponsored by Representative A___C.
(5) This Act is supported by DEC Secretary Trentrick_Lamar.

2 - Reasons
(1) Currently if a player is unable to pay their dues, the government is obligated to step in and cover a percentage of the dues, however there is no upper limit to the amount the government must cover. The government also does not receive the money back.
(2) The government may be in a situation where they are forced to cover an extremely high amount of money
(3) Tax-exempt companies should be eligible for anti-scam insurance as well.

3 - Amendment to Debt Recovery Quick Fix Act
(1) Government Anti-Scam Insurance will be amended as such:
From:
(1) Where a party that still needs to pay is declared bankrupt, the party needing to be paid, may be eligible for some amount of compensation given by the government. The DEC will be responsible for processing and facilitating such requests on the forums
(2) Government Anti-Scam Insurance, is not eligible to be used by Financial institutions with tax-exempt status.
a. If the damages ordered were as a result of a default judgement, or an out of court settlement, the Attorney General's Office needs to investigate whether the damages are "just". If the damages are not able to be determined "just" the Attorney General's Office may adjust the damages to what they expect a reasonable verdict would be.
b. Any damages that are not part of any actual financial loss are not eligible. (e.g. Punitive Damages, Emotional Distress, etc.). As well as inflation costs and opportunity costs.
c. The DEC will decide which percentage of the cost they will refund. Which may not be less than 10% and no more than 75%. If the DEC wants to, have the percentage differ between different requests they will need to create a policy outlining which types of requests get how much percent .

To:
(1) The DEC is to run Anti-Scam Insurance, which provides players and companies with protection against entities declared bankrupt.
(2) The Insurance will cost an initial rate of $1,500 per month, payable to the government. The DEC will initially cover 70% on claims up to $25,000 submitted by insured players and companies. All of these figures may be adjusted internally by the DEC once per 30 days, and the public must be informed of such changes through an announcement. Claims will be submitted and reviewed on a case-by-case basis by the DEC.
(3) Players are automatically insured for free for the first month after their joindate. Claims by the uninsured may be submitted for an incident that occurred within a player's first month after joindate.
(4) Players and companies that have missed an insurance payment will be informed by the DEC and be given a window of one week to pay. Missing two consecutive payments will result in coverage immediately suspended until payment is sufficiently provided.
(5) Any damages that are not part of any actual financial loss are not eligible. (e.g. Punitive Damages, Emotional Distress), as well as inflation costs and opportunity costs.

 

[LilDigiVert]

Presidential Assent

This bill has been granted assent and is hereby signed into law.

 

[A__C]

House Vote: 9-1-0
Senate Vote: 4-0-0

A
BILL
To
Amend the Debt Recovery Quick Fix Act​

The people of the Commonwealth of Redmont, through their elected Representatives in the Congress and the force of law ordained to that Congress by the people through the constitution, do hereby enact the following provisions into law:

1 - Short Title and Enactment
(1) This Act may be cited as the “Minor Asset Seizure Amendment Act"
(2) This Act shall be enacted immediately upon its signage.
(3) This Act was authored by Representative A__C.
(4) This Act is co-sponsored by Representative zLost.
(5) This Act was requested by Justice Secretary ElainaThomas29.

2 - Reasons
(1) Adds more detail on what seizable assets are in the event that a player is not able to pay a fine issued by the courts.
(2) Removes mentions of the DC-Bid server because DC-Bid has since been removed.
(3) Fixes some of the terms from DEC to DoC due to the department split change.

3 - Terms
(1) Change the terms of the Debt Recovery Quick Fix Act “Section 4 - Debt Recovery” (4)
From:
(4) The DOJ will determine which assets to seize based on the amount of money outstanding. All assets, seized must be, put up for auction on the DC-Bid server. If there is money left over from the auction it will be put back in the balance of the party of which the assets were seized.

To:
(4) The DOJ will determine which assets to seize based on the amount of money outstanding. All assets seized must be put up for auction in an official government marketplace managed by the Department of Commerce. If there is money left over from the auction, it will be put back in the balance of the party of which the assets were seized.
a. Seizable assets include: the player’s inventory, donator chest, ender chest, locked containers, real estate, and anything on their vault plot.
i. Buildings on the vault plot may be auctioned off as a second-to-last resort, as either the building itself with a free paste to the auction winner, or as disassembled materials.
ii. If the player owns any shares at any companies, the person to whom the money is owed may agree to receive the shares for their current value as a last resort.

(2) Change the terms of the Debt Recovery Quick Fix Act “Section 6 - Government Anti-Scam Insurance”
From:
6 - Government Anti-Scam Insurance
(1) The DEC is to run Anti-Scam Insurance, which provides players and companies with protection against entities declared bankrupt.
(2) The Insurance will cost an initial rate of $1,500 per month, payable to the government. The DEC will initially cover 70% on claims up to $25,000 submitted by insured players and companies. All of these figures may be adjusted internally by the DEC once per 30 days, and the public must be informed of such changes through an announcement. Claims will be submitted and reviewed on a case-by-case basis by the DEC.
(3) Players are automatically insured for free for the first month after their joindate. Claims by the uninsured may be submitted for an incident that occurred within a player's first month after joindate.
(4) Players and companies that have missed an insurance payment will be informed by the DEC and be given a window of one week to pay. Missing two consecutive payments will result in coverage immediately suspended until payment is sufficiently provided.
(5) Any damages that are not part of any actual financial loss are not eligible. (e.g. Punitive Damages, Emotional Distress), as well as inflation costs and opportunity costs.

To:
6 - Government Anti-Scam Insurance
(1) The DoC is to run Anti-Scam Insurance, which provides players and companies with protection against entities declared bankrupt.
(2) The Insurance will cost an initial rate of $1,500 per month, payable to the government. The DoC will initially cover 70% on claims up to $25,000 submitted by insured players and companies. All of these figures may be adjusted internally by the DoC once per 30 days, and the public must be informed of such changes through an announcement. Claims will be submitted and reviewed on a case-by-case basis by the DoC.
(3) Players are automatically insured for free for the first month after their joindate. Claims by the uninsured may be submitted for an incident that occurred within a player's first month after joindate.
(4) Players and companies that have missed an insurance payment will be informed by the DoC and be given a window of one week to pay. Missing two consecutive payments will result in coverage immediately suspended until payment is sufficiently provided.
(5) Any damages that are not part of any actual financial loss are not eligible. (e.g. Punitive Damages, Emotional Distress), as well as inflation costs and opportunity costs.

 

[Twixted]

Presidential Assent

This bill has been granted assent and is hereby signed into law.

 

[xXTheoryXx]

CONGRESS OF THE
COMMONWEALTH OF REDMONT
​

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A BILL TO

Establish a Bankruptcy Framework for Individuals and Businesses




​

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The people of the Commonwealth of Redmont, through their elected Representatives in the Congress and the force of law ordained to that Congress by the people through the constitution, do hereby enact the following provisions into law:


​

PART I — PRELIMINARIES

1. Short Title and Enactment

(1) This Act may be cited as the 'Bankruptcy Act'.

(2) This Act shall be enacted 7 days after its signage, to allow the Department of Commerce and the Judiciary reasonable time to prepare for its enforcement.

(3) This Act has been authored by Speaker of the house of representatives xXTheoryXx.

(4) This Act has been co-sponsored by President of the Senate Talion77, Senator Incarnation__, Representative MJL_.

(5) This Act amends or repeals the following:

(a) Repeals the Bankruptcy Band-Aid Act.

(b) Amends the Criminal Code Act.

(c) Amends the Debt Recovery Quick Fix Act.

(d) Amends the Redmont Civil Code Act.

(e) Amends the Taxation Act.

(f) Coordinates with the Legal Entity Act, the Contracts Act, the Commercial Standards Act, the Property Lien Act, the Property Standards Act, the Seizure and Insurance Adjustment Act, and the Federal Reserve Act.

2. Reasons and Intent

(1) The Bankruptcy Band-Aid Act is, by its own terms, a temporary measure. The Commonwealth requires a permanent, principled bankruptcy framework.

(2) The current "three instances" structure is procedurally confusing and lacks clear separation between personal and business insolvency.

(3) The existing framework provides no genuine fresh start. Without a discharge mechanism, debtors who genuinely cannot pay remain trapped indefinitely, depressing economic activity and player retention.

(4) Workers must be afforded priority in business insolvency. Unpaid wages should rank above general unsecured creditors.

(5) Creditors must be protected from asset hiding through preference clawback rules.

(6) The bankruptcy of financial institutions must be coordinated with the existing powers of the Department of Commerce and the Federal Reserve Bank, not duplicate them.

(7) A clear bankruptcy framework reduces frivolous litigation, gives courts a structured procedure, and provides legal certainty to creditors and debtors alike.

3. Definitions

(1) For the purposes of this Act, the following definitions shall apply:

(a) Debtor. A person, whether an individual or an Incorporated Entity (as defined in the Legal Entity Act), that owes a debt to another and against whom a bankruptcy proceeding has been commenced under this Act.

(b) Creditor. A person to whom a debt is owed by the debtor.

(c) Petitioner. The person who files the bankruptcy petition. May be the debtor or a qualifying creditor.

(d) Insolvency. The state in which a debtor:

(i) is unable to pay debts as they fall due in the ordinary course; or

(ii) holds liabilities exceeding the Fair Market Value of their assets by more than 25%.

(e) Estate. All legal or equitable interests of the debtor in property as of the commencement of the bankruptcy case, including tangible and intangible assets, less property declared exempt under Part II. The Estate includes, without limitation:

(i) The debtor's in-game personal balance and any other cash holdings;

(ii) Deposits held by the debtor at any Financial Institution, regardless of the institution's solvency, subject to applicable deposit guarantees;

(iii) All plots owned by the debtor, whether residential, commercial, industrial, town, or otherwise;

(iv) The contents of the debtor's main inventory, ender chest, donator chest, and any locked containers under the debtor's control;

(v) Stocks, bonds, ETF holdings, and other securities owned by the debtor;

(vi) Items held in chestshops or chestshop-backing containers owned by the debtor. Cash proceeds from such chestshops do not accumulate in the chestshop itself and are instead captured under Subsection (i) (personal balance) or, where the chestshop is operated by an Incorporated Entity, under the entity's business balance;

(vii) Receivables and contractual rights of the debtor, including loans the debtor has made to others and outstanding chestshop receipts;

(viii) Causes of action belonging to the debtor, including those that may be pursued by the Trustee under Section 10; and

(ix) Any other property in which the debtor has a legal or equitable interest.

Where property is co-owned by the debtor and one or more non-debtors, only the debtor's proportional interest forms part of the Estate, as provided in Section 11.

(f) Trustee. An officer appointed by the court to administer the debtor's estate under this Act.

(g) Secured Claim. A claim backed by collateral, where the creditor has the right to enforce against that collateral.

(h) Unsecured Claim. A claim not backed by collateral.

(i) Priority Claim. An unsecured claim that is entitled to be paid ahead of other unsecured claims under Part VI.

(j) Discharge. The release of the debtor from personal liability for specified debts.

(k) Liquidation. The sale or conversion of estate property to cash for distribution to creditors.

(l) Repayment Plan. A court-approved plan under which an individual debtor pays creditors over a fixed term in exchange for a discharge of remaining debts.

(m) Reorganization Plan. A court-approved plan under which a business debtor restructures debts and continues operating.

(n) Automatic Stay. The legally mandated pause on collection activity that takes effect upon the filing of a bankruptcy petition under Section 5.

(o) Insider. A director, officer, manager, member, shareholder holding more than 10% of voting power, a spouse, or a business entity controlled by any of the foregoing. Includes the term as used in the Legal Entity Act and the Conflict of Interest Standards Act.

(p) Preference Period. The window of time prior to filing during which transfers may be clawed back under Part VII.

(q) Financial Institution. As defined in the Commercial Standards Act.

(r) Fair Market Value. The price at which an asset would change hands between a willing buyer and a willing seller, neither under compulsion to buy or sell, and both with reasonable knowledge of relevant facts, determined by reference to:

(i) Recent chestshop prices, where the asset is a fungible item;

(ii) Recent auction or transfer prices, where the asset is a plot or unique item;

(iii) The most recent stock exchange price, where the asset is a listed security;

(iv) Recorded sale data published by the Department of Commerce; or

(v) Where no reliable comparable exists, the valuation of a licensed Accountant acting at arm's length, who may be examined by the court and any party in interest.

(s) Worker. An individual entitled to compensation for personal labor or services performed for the debtor. The term includes:

(i) Employees under regular employment agreements, whether salaried, hourly, or commissioned;

(ii) Independent contractors providing personal services in an individual capacity;

(iii) Casual or temporary laborers; and

(iv) Other natural persons providing services for compensation.

The term does NOT include:

(v) Outside professional service firms or other Incorporated Entities acting in an entity capacity;

(vi) Owners, shareholders, or members claiming for distributions or returns on capital; or

(vii) Insiders of the debtor claiming compensation for directorial, executive, ownership, or managerial functions.

For the avoidance of doubt, where an insider has personally performed labor in a non-insider capacity, that insider may claim as a Worker, but only to the extent the compensation reflects Fair Market Value for the actual labor performed.

(t) Threshold of Unsecured Claims. Where this Act refers to a threshold of unsecured claims (such as one-third, majority, or two-thirds), the threshold shall be measured by dollar value of allowed claims, unless expressly stated otherwise.

PART II — GENERAL PROVISIONS

4. Jurisdiction

(1) The Federal Court of Redmont shall have exclusive jurisdiction over all bankruptcy cases filed under this Act.

(2) The court may delegate administrative functions to the Department of Commerce or to a court-appointed Trustee as provided in this Act.

(3) Cases involving Financial Institutions shall additionally engage the Department of Commerce under Part VIII.

5. The Automatic Stay

(1) Upon the filing of a bankruptcy petition, an automatic stay takes immediate effect on all of the following:

(a) Commencement or continuation of any lawsuit against the debtor for collection of a pre-petition debt;

(b) Enforcement of any judgment against the debtor or property of the estate;

(c) Any act to obtain possession of, or exercise control over, property of the estate;

(d) Asset seizure procedures under the Debt Recovery Quick Fix Act;

(e) Any act to create, perfect, or enforce a lien against property of the estate; and

(f) Direct collection efforts, including in-game and out-of-game demands for payment.

(2) The automatic stay shall not affect:

(a) Criminal proceedings against the debtor;

(b) Family or adoption proceedings;

(c) Government regulatory or licensing actions; and

(d) Setoffs of mutual pre-petition debts where authorized by court order.

(3) A creditor may petition the court for relief from the automatic stay for cause, including lack of adequate protection of their secured interest.

(4) Creditors who violate the automatic stay shall be liable for damages caused thereby.

6. The Trustee

(1) Upon acceptance of a bankruptcy petition by the court under Section 7, the court shall appoint a Trustee to administer the estate. The Trustee shall be:

(a) A licensed Accountant in good standing; or

(b) Where no Accountant is reasonably available, a designated officer of the Department of Commerce.

(2) The Trustee shall:

(a) Collect and reduce to cash the property of the estate;

(b) Investigate the financial affairs of the debtor;

(c) Examine proofs of claim and object to improper claims;

(d) Furnish information concerning the estate to parties in interest;

(e) Make distributions to creditors in accordance with Part VI;

(f) File a final accounting upon closing the case; and

(g) Report any suspected criminal conduct to the Department of Justice.

(3) The Trustee may, with court approval:

(a) Operate the debtor's business as necessary to preserve estate value;

(b) Assume or reject executory contracts and unexpired leases under Part V;

(c) Sell estate property free and clear of liens, with proceeds attaching to the lien in order of priority;

(d) Examine the debtor under oath;

(e) Avoid transfers under Part VII; and

(f) Apply for an asset seizure warrant under the Debt Recovery Quick Fix Act to recover non-exempt property of the debtor that has not been surrendered to the Trustee.

(4) The Trustee owes a duty of impartiality to the estate as a whole. They do not represent any individual creditor or the debtor.

(5) The Trustee shall be compensated from the estate in an amount approved by the court, being not less than $2,500 and not exceeding 5% of the gross proceeds distributed, whichever is greater.

(6) Filing Fee and Trustee Minimum Fund.

(a) Every bankruptcy petition shall be accompanied by a graduated filing fee, payable to the Department of Commerce, calculated as follows:

(i) $0 for individual debtors with total unsecured debts under $50,000;

(ii) $250 for individual debtors with total unsecured debts between $50,000 and $200,000;

(iii) $500 for individual debtors with total unsecured debts above $200,000, and for all Incorporated Entity debtors.

(b) The Department of Commerce shall maintain a Trustee Minimum Fund from these collected fees.

(c) Where the estate is insufficient to satisfy the $2,500 minimum compensation under Subsection (5), the difference shall be drawn from the following sources in order:

(i) The Trustee Minimum Fund;

(ii) Pro-rata contribution from creditors in proportion to their allowed claims; and

(iii) The Department of Commerce from its administrative budget, only as a last resort and only where the foregoing sources are exhausted.

(d) The filing fee may be waived by the court for individual debtors who demonstrate genuine inability to pay.

(7) Standard of Care. The Trustee shall perform their duties under this Act with reasonable care, skill, and diligence. The Trustee shall not be liable for:

(a) an error of judgment made in good faith, where the Trustee exercised reasonable care in reaching the decision;

(b) any act or omission taken with the prior approval of the court; or

(c) a loss to the estate arising from circumstances beyond the Trustee's reasonable control.

(8) Removal of the Trustee for Cause.

(a) The debtor, any creditor, or any other party in interest may petition the court to remove and replace the Trustee for cause. Cause includes:

(i) negligence or incompetence in the administration of the estate;

(ii) undue delay that prejudices the estate or parties in interest;

(iii) failure to perform the duties required under this Section;

(iv) loss of impartiality, or a conflict of interest; or

(v) conduct constituting Trustee Misconduct under Part IX.

(b) The court shall hold a hearing within 14 days of the petition and decide on a preponderance of the evidence.

(c) Where the court removes the Trustee, it shall appoint a successor Trustee under Subsection (1). Acts properly taken by the removed Trustee before removal remain valid.

(d) A removal petition is a matter affecting the case as a whole, and the court's determination binds all parties in interest. Frivolous or repeated removal petitions are subject to dismissal, costs, and Frivolous Court Case charges.

(9) Liability, Surcharge, and Recovery.

(a) A Trustee who breaches the standard of care under Subsection (7) is personally liable for the resulting loss.

(b) Where the breach caused loss to the estate as a whole, the recovery shall be restored to the estate and distributed under Part VI. Such a claim belongs to the estate and may be pursued by a successor Trustee, or by a party in interest with leave of the court on the estate's behalf.

(c) Where the breach caused a particular and direct loss to an individual debtor or creditor, distinct from harm to the estate generally, that party may pursue the claim directly and recover directly.

(d) The court may, in addition or in the alternative, reduce or deny the Trustee's compensation under Subsection (5), and order the Trustee to restore to the estate any loss caused by the breach.

(e) No party may recover twice for the same loss.

7. Filing the Petition

(1) A bankruptcy petition may be filed by:

(a) The debtor (a voluntary petition); or

(b) Three or more creditors holding aggregate unsecured claims of at least $5,000, where the debtor is generally not paying debts as they come due (an involuntary petition).

(2) A voluntary petition shall include:

(a) A schedule of all assets, valued at Fair Market Value;

(b) A schedule of all liabilities, identifying secured and unsecured creditors and amounts;

(c) A statement of financial affairs covering the prior 4 months, including all material transfers, payments to insiders, and pending legal actions. For transfers to insiders, or to entities controlled by the debtor or an insider, including special purpose entities, trusts, and other controlled entities, the statement shall cover the prior 1 year; and

(d) The chapter of this Act under which relief is sought.

(3) An involuntary petition shall include:

(a) Documentation of each petitioning creditor's claim against the debtor;

(b) Evidence that the debtor is generally not paying debts as they come due; and

(c) The chapter of this Act under which relief is sought.

(4) Within 14 days after an involuntary petition is accepted by the court under Subsection (5), the debtor shall file the schedules and statement of financial affairs required under Subsection (2)(a) through (c). Failure to comply shall:

(a) Permit the court to draw adverse inferences against the debtor;

(b) Justify summary procedures for asset identification and seizure under Section 6(3) and the Debt Recovery Quick Fix Act; and

(c) Constitute grounds for dismissal with sanctions, or for the court to treat the case as if the debtor were subject to a Long Deport under Section 43.

(5) Court Determination of Filing.

(a) Voluntary Petitions. The court shall accept a voluntary petition unless it appears on the face of the petition that the debtor is not insolvent or the petition is Frivolous as defined in Subsection (8).

(b) Involuntary Petitions. The court shall hold a hearing within 14 days of filing to determine whether grounds exist for the case to proceed. At the hearing:

(i) The petitioning creditors bear the burden of proving the debtor is generally not paying debts as they come due, by a preponderance of the evidence;

(ii) The debtor may appear and contest the petition; and

(iii) The court shall dismiss the petition where grounds are not proven, and may impose costs and Frivolous Court Case charges on the petitioning creditors.

(6) Upon acceptance of the petition by the court, the Department of Commerce shall publish notice of the bankruptcy in #government-announcements (or successor channel), naming the debtor and the date by which proofs of claim must be filed.

(7) Creditors shall have 14 days from the notice date to file a Proof of Claim with the Trustee.

(8) A bankruptcy petition is "Frivolous" if any of the following apply:

(a) The petitioner filed without reasonable belief in the debtor's insolvency;

(b) The petition was filed primarily to delay, harass, or extract leverage rather than to seek bankruptcy relief;

(c) The petitioning creditor lacks a valid claim or standing against the debtor;

(d) The petitioner has filed multiple petitions against the same debtor within 6 months without substantive change in circumstances; or

(e) The petitioner is unable or unwilling to comply with the procedural requirements of this Act in good faith.

For a voluntary petition, the term "petitioner" in this Subsection refers to the debtor, and prong (c) does not apply.

(9) Frivolous bankruptcy petitions shall be subject to dismissal, costs, and Frivolous Court Case charges.

8. Exempt Property

(1) The following property of an individual debtor shall be exempt from the estate and may not be sold or applied to creditor claims:

(a) The debtor's primary residence, being a single plot or dwelling unit the debtor uses as their principal home. The primary residence must be a plot of a residential type, being a residential plot (R), a residential housing plot (RH), an apartment, or a town residential plot. The primary residence exemption does not extend to commercial (C), Skyscraper (S), industrial (I), or ranch plots, regardless of whether the debtor in fact resides there;

(b) Personal effects in the debtor's main inventory and one ender chest up to a combined Fair Market Value of $5,000;

(c) Tools of trade reasonably necessary to maintain the debtor's licensed profession, up to a Fair Market Value of $2,500;

(d) Up to $1,000 in cash held by the debtor; and

(e) Property otherwise protected by law.

(2) A debtor may waive any exemption in writing, but waiver of a residential plot exemption shall require court approval and a finding that waiver is in the debtor's best interest.

(3) Exempt property is not available for distribution to creditors except where it secures a Secured Claim, in which case the secured creditor's lien remains in force notwithstanding the exemption.

(4) Incorporated Entities have no exempt property under this Section.

(5) Anti-Conversion of Non-Exempt Property. Where the debtor acquired the primary residence claimed as exempt under Subsection (1)(a) within 4 months before the petition date, and funded the acquisition in whole or in part with property that would otherwise have been non-exempt, the residence exemption shall not apply to the extent of the value so converted. The portion of the residence's Fair Market Value attributable to the converted non-exempt property shall be included in the estate. This Subsection does not apply where the debtor demonstrates that the acquisition was made in good faith and not in contemplation of bankruptcy.

9. Appeals

(1) Final orders of the Federal Court of Redmont in bankruptcy cases are appealable to the Supreme Court of Redmont within 14 days of entry. Final orders include:

(a) Discharge orders;

(b) Confirmation or denial of confirmation of a Repayment Plan or Reorganization Plan;

(c) Dismissal or conversion of a case;

(d) Final distribution orders; and

(e) Final rulings on avoidance or clawback actions under Part VII.

(2) Interlocutory orders are appealable only with the Supreme Court's permission. Interlocutory orders include:

(a) Relief from the automatic stay;

(b) Trustee compensation orders;

(c) Orders authorizing the assumption or rejection of contracts;

(d) Sale orders; and

(e) Procedural rulings during the pendency of the case.

(3) An appeal does not automatically stay the underlying order. The appellant may petition the Supreme Court for a stay pending appeal, which may be conditioned on the posting of security.

(4) The standard of review on appeal shall be:

(a) Questions of law: reviewed de novo by the Supreme Court;

(b) Findings of fact by the trial court: reviewed only for clear error.

(5) The Supreme Court may affirm, reverse, or modify the order on appeal, or remand the case for further proceedings.

(6) Frivolous appeals shall be subject to dismissal, costs, and Frivolous Court Case charges.

10. Trustee Causes of Action

(1) The Trustee shall have standing to pursue any cause of action that the debtor itself could have pursued immediately before the petition date, including:

(a) Claims for breach of fiduciary duty owed to the debtor under the Legal Entity Act;

(b) Claims for corporate waste, mismanagement, or self-dealing;

(c) Claims for negligence by directors, officers, managers, or agents; and

(d) Any other contractual or tort claim of the debtor.

(2) Notwithstanding Subsection (1) and the standing restrictions of the Legal Entity Act, the Trustee's standing under this Section overrides those standing restrictions for the duration of the bankruptcy case.

(3) The Trustee shall not pursue claims for breach of fiduciary duty against employees of the debtor who are not insiders, unless:

(a) The employee actively conspired with an insider to breach a fiduciary duty; or

(b) The employee personally and directly misappropriated estate property.

(4) Recoveries from claims under this Section become property of the estate and are distributed according to Part VI.

11. Co-Owned Property

(1) Where a plot or other asset is owned by the debtor together with one or more persons who are not debtors in the case, only the debtor's proportional interest in that property forms part of the Estate. The interest of a non-debtor co-owner does not form part of the Estate and is not available to creditors.

(2) Determination of Shares.

(a) The respective ownership shares shall be determined by a written co-ownership agreement, where one exists.

(b) Absent a written co-ownership agreement, the co-owners are presumed to hold equal shares. This presumption may be rebutted by documented evidence of the proportional contribution each co-owner made to the acquisition of the property.

(c) The Trustee or any co-owner may petition the court to determine the respective shares, and the court's determination is binding.

(3) Co-Owner's Right of First Refusal. Before the Trustee disposes of co-owned property, the non-debtor co-owner shall be offered the option to purchase the debtor's interest at Fair Market Value. Where the co-owner exercises this option, the purchase price is paid into the Estate and the co-owned property does not enter liquidation.

(4) Sale of the Whole. Where the non-debtor co-owner declines the option under Subsection (3), the Trustee may, with court approval, sell the entire property, including the interest of the non-debtor co-owner, where the debtor's fractional interest cannot reasonably be sold separately. In that case:

(a) The non-debtor co-owner shall be paid their proportional share of the net sale proceeds first, before any portion of the proceeds enters the distribution under Part VI; and

(b) Only the proceeds attributable to the debtor's proportional interest form part of the Estate and are distributed under Part VI.

(5) Anti-Abuse. Where a co-ownership arrangement was created, or the debtor's proportional share was reduced, within 4 months before the petition date in favour of a non-insider, or within 6 months before the petition date in favour of an insider, the co-ownership shall be scrutinised by the Trustee, and the co-owner claiming the interest bears the burden of proving that the arrangement is genuine, at arm's length, and was not made to place property beyond the reach of creditors. Where that burden is not met, the arrangement may be avoided under Part VII and the property administered as wholly owned by the debtor.

PART III — PERSONAL BANKRUPTCY: LIQUIDATION

12. Eligibility

(1) An individual debtor may file under this Part if:

(a) The debtor is insolvent as defined in Section 3; and

(b) The debtor passes the means test in Subsection 2 of this Section.

(2) Means Test

(a) The debtor's average weekly income over the prior month shall be calculated, excluding government welfare and starting balance.

(b) The debtor qualifies for liquidation under this Part if either: (i) the average is below $10,000 per week; or (ii) the debtor's total unsecured debts exceed 25 times the debtor's average monthly income, being the average weekly income calculated under Subsection (a) multiplied by four.

(c) If the debtor does not qualify under Subsection (b), the debtor is presumed capable of repayment and must instead file under Part IV (Repayment Plan), unless the debtor demonstrates that special circumstances render repayment impossible, or unless the debtor's unsecured debts exceed the eligibility ceiling under Section 15(1)(b), in which case the debtor may proceed under this Part.

13. The Liquidation Process

(1) Upon the Trustee's appointment, the Trustee shall:

(a) Take possession of all non-exempt estate property;

(b) Liquidate the estate property in an orderly manner, preferring sales through the Department of Construction and Transportation auction system or registered exchanges;

(c) Distribute proceeds to creditors in accordance with Part VI.

(2) The debtor shall:

(a) Cooperate fully with the Trustee;

(b) Surrender all non-exempt property;

(c) Attend a meeting of creditors scheduled by the Trustee;

(d) Provide all financial records reasonably requested by the Trustee.

(3) Failure of the debtor to cooperate is grounds for dismissal of the case without discharge.

14. Discharge in Liquidation

(1) Upon completion of liquidation and distribution, the court shall enter a Discharge Order releasing the debtor from personal liability for all pre-petition unsecured debts, except those listed as Non-Dischargeable in Section 30.

(2) Discharge does not affect:

(a) The in rem rights of secured creditors against their collateral;

(b) Non-Dischargeable debts; or

(c) Liability of co-debtors or guarantors.

(3) A debtor may receive a discharge under this Part or Part IV no more than once every 2 months.

PART IV — PERSONAL BANKRUPTCY: REPAYMENT PLAN

15. Eligibility

(1) An individual debtor may file under this Part if:

(a) The debtor has regular income; and

(b) The debtor's unsecured debts do not exceed $500,000.

(2) An individual who does not pass the means test in Part III shall be required to file under this Part if filing personally.

16. The Plan

(1) Within 14 days of filing, the debtor shall propose a Repayment Plan that:

(a) Provides for submission of the debtor's projected disposable income, after exempt property and reasonable living expenses, to the Trustee for distribution to creditors;

(b) Continues for a period of no less than 14 days and no more than 2 months;

(c) Pays all Priority Claims in full over the plan period;

(d) Treats creditors within the same class equally; and

(e) Provides unsecured creditors with at least as much as they would receive in liquidation under Part III.

(2) The plan must be confirmed by the court following notice to creditors. Creditors holding more than one-third of unsecured claims by dollar value, individually or collectively, may object to the plan, in which case the court must find the plan fair and feasible before confirmation.

(3) Upon confirmation, the debtor's property remains in their possession, subject to the plan and the automatic stay.

(4) If the debtor fails to propose a Repayment Plan within the time required by Subsection (1), the court may dismiss the case without discharge, or convert the case to liquidation under Part III.

17. Discharge, Default, and Modification Under the Plan

(1) Upon completion of all payments under a confirmed plan, the court shall enter a Discharge Order releasing the debtor from personal liability for remaining pre-petition unsecured debts, except for Non-Dischargeable debts.

(2) Material Default. A debtor is in material default of a confirmed plan where the debtor:

(a) falls into arrears on plan payments by an amount equal to or exceeding the payments due over any 7-day period; or

(b) otherwise fails to perform a material obligation of the plan.

(3) Notice and Cure. On a material default, the Trustee shall promptly notify the debtor. The debtor has 7 days from the notice to cure the default in full, or to file a proposed modification under Subsection (4). The Trustee or any creditor may apply to the court for relief under Subsection (5) only after the cure period has expired without a cure or a filed modification.

(4) Modification. At any time before completion of the plan, the debtor may propose a modified Repayment Plan. A modified plan must satisfy the requirements of Section 16(1) and is subject to confirmation under Section 16(2). A modified plan may extend the plan period but not beyond the 2-month maximum in Section 16(1)(b). The debtor may not propose more than two modified plans in a single case.

(5) Where a material default is not cured under Subsection (3) and the plan is not modified under Subsection (4), the court may, on application:

(a) Dismiss the case (no discharge);

(b) Convert the case to liquidation under Part III; or

(c) Grant a hardship discharge where failure is due to circumstances beyond the debtor's control.

(6) Conversion Mechanics. Where a case is converted from this Part to liquidation under Part III:

(a) The estate in the converted case consists of the property of the estate as of the original petition date, together with any non-exempt property acquired by the debtor between the petition date and the date of conversion that remains in the debtor's possession;

(b) Payments already distributed to creditors under the confirmed plan are credited against their respective claims and reduce those claims accordingly;

(c) The exemptions under Section 8 continue to apply, determined as of the original petition date; and

(d) Acts properly taken under the confirmed plan before conversion remain valid.

(7) A debtor may receive a discharge under this Part or Part III no more than once every 2 months.

PART V — BUSINESS BANKRUPTCY

18. Application

(1) This Part applies to Incorporated Entities as defined in the Legal Entity Act, including sole proprietorships, LLCs, corporations, and non-profits.

(2) Sole proprietorships shall be treated as personal bankruptcies of the proprietor under Part III or Part IV, with the sole proprietorship's assets and liabilities consolidated into the proprietor's estate, consistent with the sole-proprietorship treatment under the Legal Entity Act.

(3) All other Incorporated Entities shall proceed under this Part.

19. Election: Reorganization or Liquidation

(1) At the time of filing, an Incorporated Entity must elect:

(a) Reorganization, where the business continues operating while restructuring debts under court supervision, subject to the Feasibility Test in Subsection (2); or

(b) Liquidation, where the business is wound up and its assets distributed.

(2) Feasibility Test for Reorganization. An Incorporated Entity may elect Reorganization only where:

(a) The entity demonstrates a viable post-restructuring business model;

(b) The entity has reasonable prospects of continued operations after the plan period;

(c) The entity's projected revenues over the plan period can reasonably be expected to satisfy administrative costs, Class 2 and Class 3 priority claims, and provide unsecured creditors with at least liquidation value;

(d) The entity has not previously failed to complete a Reorganization Plan under this Act within the prior 6 months; and

(e) Where the entity's operations are substantially dependent on the personal labor, skill, or unique knowledge of one or more specific individuals, and one or more of those individuals contributed to the insolvency through misconduct or gross mismanagement, Reorganization shall be presumptively unavailable. The entity may rebut the presumption by demonstrating that those individuals will continue to operate the entity in good faith under conditions established by the Trustee.

(3) Where the entity fails the Feasibility Test, the entity shall proceed under Liquidation.

(4) The court shall conduct the Feasibility Test at the time of filing, or at a hearing convened within 14 days of filing.

(5) Creditors holding more than one-third of unsecured claims by dollar value, individually or collectively, may contest the entity's election of Reorganization. If they demonstrate failure of the Feasibility Test, the court shall order Liquidation.

20. Reorganization

(1) Upon filing for reorganization, the directors and officers shall continue to manage the business as Debtor in Possession, subject to the supervision of the Trustee and the court.

(2) The debtor shall propose a Reorganization Plan within 1 month, which shall:

(a) Designate classes of claims;

(b) Specify treatment of each class;

(c) Provide adequate means for execution;

(d) Pay all Priority Claims in full;

(e) Provide unsecured creditors with at least as much as they would receive in liquidation; and

(f) Where applicable, provide for the issuance of new equity or restructuring of existing equity.

(3) Approval requires:

(a) Acceptance by a majority in number and two-thirds in dollar amount of each impaired class of claims; OR

(b) Court-ordered confirmation despite class rejection ("cramdown"), where:

(i) The plan does not unfairly discriminate;

(ii) Each rejecting class receives at least liquidation value; and

(iii) The plan is fair and equitable.

(4) Upon confirmation, the debtor is bound by the plan terms. Failure to perform is grounds for conversion to liquidation under Section 21.

(5) Workers retained during reorganization continue to be paid wages and benefits as administrative expenses, with priority over pre-petition claims.

(6) Debtor in Possession Duties. While serving as Debtor in Possession, the directors and officers shall:

(a) Operate the business in good faith and consistent with the fiduciary duties under the Legal Entity Act;

(b) Cooperate fully with the Trustee;

(c) Not engage in any transaction outside the ordinary course of business without court approval;

(d) Provide all books, records, and access requested by the Trustee;

(e) Refrain from compensating themselves above pre-petition rates without court approval; and

(f) Comply with all reporting obligations to the court and the Department of Commerce.

Violation of this Subsection is cause for trustee appointment under Subsection (8).

(7) Shareholder and Member Objection Rights. Shareholders and members of an Incorporated Entity in reorganization may object to a proposed Reorganization Plan on the grounds that:

(a) The plan unfairly preserves management's position;

(b) The plan dilutes investor recovery beyond what reorganization economics require; or

(c) The plan fails to address management misconduct that contributed to the insolvency.

(8) Appointment of Reorganization Trustee for Cause. Notwithstanding the Debtor in Possession provision in Subsection (1), the court may at any time during reorganization appoint the Trustee (or a separate Reorganization Trustee) to assume management of the entity, displacing the existing directors and officers, where cause is shown. Cause includes:

(a) Fraud, dishonesty, or material misrepresentation by management;

(b) Gross mismanagement, including taking on excessive risk that contributed to the insolvency;

(c) A material breach of fiduciary duty by management;

(d) Demonstrated inability to operate the entity competently during reorganization; or

(e) Failure by the debtor entity, prior to filing, to maintain financial reporting required by the Commercial Standards Act, Taxation Act, Legal Entity Act, or other applicable laws.

The Trustee, the Department of Commerce, any creditor, or any shareholder holding more than 10% of equity may petition the court for trustee appointment under this Subsection. The court shall hold a hearing within 14 days and decide based on a preponderance of the evidence.

(9) Discharge Upon Completion. Upon the debtor's completion of all payments and obligations under a confirmed Reorganization Plan, the court shall enter a Discharge Order releasing the Incorporated Entity from personal liability for all pre-petition unsecured debts not provided for in the plan, except for Non-Dischargeable debts under Section 30. Discharge under this Subsection does not affect the in rem rights of secured creditors against their collateral, or the liability of co-debtors or guarantors. Where the debtor fails to complete the plan, no discharge shall be entered, and the case is subject to conversion to liquidation under Subsection (4) of this Section.

21. Liquidation of an Incorporated Entity

(1) Upon acceptance of a petition for liquidation, or upon conversion from reorganization, the Trustee shall:

(a) Place the Incorporated Entity in receivership under the receivership provisions of the Legal Entity Act;

(b) Take control of the entity as receiver;

(c) Wind up the entity in accordance with the winding-up provisions of the Legal Entity Act, modified by the priority rules of Part VI of this Act; and

(d) Upon completion, file a Certificate of Dissolution per the Legal Entity Act.

(2) Distributions shall follow the priority order in Part VI of this Act, which supersedes the default equal distribution rule in the Legal Entity Act for the purposes of bankruptcy.

(3) Any residual value after all claims are satisfied shall be distributed to shareholders or members in accordance with the formation instrument.

22. Executory Contracts

(1) The Trustee may, with court approval, assume or reject any executory contract or unexpired lease of the debtor.

(2) Rejection constitutes a breach of contract immediately before filing, giving rise to an unsecured claim for damages.

(3) Assumption requires cure of any pre-existing default and adequate assurance of future performance.

(4) Subsection 1 of this Section overrides any provision of the Contracts Act that would otherwise bar such action.

23. Personally-Held Operational Assets

(1) Where the entity's operations depend on an asset personally held by a director, officer, manager, member, or other insider, the entity must demonstrate at the Feasibility Test under Section 19(2) that the asset will continue to be available to the entity, whether by ownership transfer, licensing, or other arrangement.

(2) Where the insider declines to make the asset available, and the asset cannot reasonably be replaced or substituted, the Feasibility Test under Section 19(2)(a) and (e) shall be deemed not satisfied and the entity shall proceed under Liquidation.

(3) For the avoidance of doubt, the Commonwealth does not compel the transfer of assets external to its in-game jurisdiction, including but not limited to Discord bots, websites, domain names, and intellectual property. Insider non-cooperation results in failure of the Feasibility Test rather than compulsion, and the entity is directed to Liquidation as the appropriate path.

(4) An insider's refusal to cooperate with making operationally necessary personal assets available may, in addition, be considered by the court as evidence of breach of fiduciary duty under the Legal Entity Act and may support claims under Section 10 of this Act.

PART VI — PRIORITY OF CLAIMS

24. Treatment of Secured Claims

(1) Secured claims are paid from their specific collateral outside the priority waterfall, subject to the Worker Carve-Out in Subsection 2 of this Section.

(2) Worker Carve-Out

(a) Before any secured creditor is paid from their collateral, a Worker Carve-Out shall be applied.

(b) The Worker Carve-Out shall be up to $5,000 per worker for unpaid wages, salary, or contractual employee compensation earned within 14 days prior to the petition date.

(c) Where multiple secured creditors exist, the Worker Carve-Out shall be drawn pro rata across all collateral proceeds.

(d) Amounts paid to a worker under the Worker Carve-Out shall reduce that worker's Class 3 priority claim in Section 25 on a dollar-for-dollar basis.

(3) Treatment of collateral:

(a) The Trustee shall identify all collateral and the secured claims it backs;

(b) Collateral shall be sold or surrendered to the secured creditor at Fair Market Value;

(c) After the Worker Carve-Out is satisfied, sale proceeds are applied first to the secured creditor's claim, up to the amount of that claim;

(d) Any surplus is added to the general estate;

(e) Any deficiency (claim amount exceeding collateral value after the Worker Carve-Out) becomes a general unsecured claim and joins the waterfall under Class 5.

25. Distribution Order

(1) After secured creditors have been paid from their collateral under Section 24, the remaining estate property shall be distributed in the following strict order. Each class must be paid in full before the next class receives anything:

(a) Class 1: Administrative expenses of the bankruptcy estate, including Trustee fees, court costs, reasonable professional fees, legal fees of the estate, and damages awarded against the estate during the proceedings;

(b) Class 2: Customer deposits, up to the deposit guarantee limit under the Taxation Act, as that limit may be set from time to time;

(c) Class 3: Remaining unpaid wages, salary, and contractual employee compensation earned within 1 month prior to the petition date, up to $25,000 per worker for workers with at least 14 days of documented employment with the debtor, or up to $5,000 per worker for workers with less than 14 days of documented employment, in each case less any amount already received through the Worker Carve-Out. This is the Worker Priority;

(d) Class 4: Government claims, including unpaid taxes accrued in the 2 months prior to filing;

(e) Class 5: General unsecured claims, including any secured deficiency;

(f) Class 6: Subordinated claims, including penalties and post-petition interest;

(g) Class 7: Equity holders (shareholders or members).

(2) Within each class, claims shall be paid pro rata if estate property is insufficient to satisfy the class in full.

(3) The Worker Carve-Out in Section 24 and the Worker Priority in Class 3 together reflect the Commonwealth's commitment that workers shall not bear the brunt of business failure.

26. Subordination of Insider Claims

(1) Claims held by insiders of the debtor shall be subordinated to all non-insider claims of the same class, except for wages owed to insiders for services actually rendered.

(2) The Trustee may seek further subordination of any claim under principles of equity where the claimant engaged in inequitable conduct.

PART VII — AVOIDANCE AND CLAWBACK

27. Preference Period

(1) The Trustee may avoid and recover any transfer of estate property where the transfer was:

(a) Made within 14 days before the petition date, to a non-insider creditor, on account of a pre-existing debt, while the debtor was insolvent, that enabled the creditor to receive more than they would in liquidation; or

(b) Made within 1 month before the petition date, to an insider, meeting the same conditions.

(2) The following are not avoidable preferences:

(a) Contemporaneous exchanges of value (e.g., ordinary cash purchases);

(b) Transfers in the ordinary course of business; and

(c) Transfers made in good faith reliance on a written contract executed more than 1 month before the petition date.

28. Fraudulent Transfers

(1) The Trustee may avoid any transfer made within the applicable lookback period before the petition date if:

(a) The transfer was made with actual intent to hinder, delay, or defraud creditors; or

(b) The debtor received less than reasonably equivalent value in exchange, and the debtor was insolvent at the time or became insolvent as a result.

(2) The applicable lookback period shall be:

(a) 4 months for transfers to non-insiders; and

(b) 6 months for transfers to insiders, or to entities controlled by the debtor or an insider, including special purpose entities, trusts, and other controlled entities.

(3) For transfers falling within Subsection (2)(b), the transferee bears the burden of production to come forward with evidence of good faith and reasonably equivalent value. The ultimate burden of persuasion remains on the Trustee, who must prove the transfer was fraudulent by clear and convincing evidence.

(4) Recovery is from the initial transferee or any subsequent transferee who did not take in good faith for value.

29. Setoffs

(1) Creditors holding pre-petition mutual claims with the debtor may set off such claims, subject to court approval, where the right to setoff existed before filing.

(2) Setoffs perfected within 1 month before filing may be examined for preference treatment.

30. Non-Dischargeable Debts

(1) The following debts are not discharged by bankruptcy:

(a) Debts arising from fraud, including Fraud and bankruptcy fraud under the Criminal Code Act;

(b) Debts arising from intentional wrongful acts causing personal injury or property damage;

(c) Court-imposed fines and penalties for criminal offenses;

(d) Debts owed for embezzlement or larceny;

(e) Debts incurred within 14 days before filing that the debtor had no reasonable means to repay;

(f) Debts not listed in the schedules where the creditor had no notice of the bankruptcy in time to file a claim;

(g) Damages awarded for willful violation of the Whistleblowers Act or similar protective statutes; and

(h) Debts arising from periods during which the debtor entity was required to maintain financial reporting under another Act and failed to do so. The discharge protections of this Act are not available where the debtor's misconduct included concealing the entity's financial state from regulators.

31. Denial of Discharge for Undisclosed Insider Transfers

(1) Notwithstanding the discharge provisions of Section 14 and Section 17, the court may deny the debtor's discharge in whole or in part where:

(a) The debtor failed to disclose a transfer to an insider, controlled entity, special purpose entity, or trust in the statement of financial affairs filed under Section 7 of this Act;

(b) The transfer was made within 1 year before the petition date, regardless of whether the transfer falls within the avoidance lookback under Section 28; and

(c) The Trustee or any creditor demonstrates by clear and convincing evidence that the omission was knowing or reckless.

(2) This Section ensures that a debtor cannot evade creditors by transferring assets to controlled or affiliated entities and waiting out the lookback period before filing.

(3) Denial of discharge under this Section does not affect the validity of the underlying bankruptcy proceedings or the rights of creditors to recover what assets remain in the estate.

PART VIII — SPECIAL RULES FOR FINANCIAL INSTITUTIONS

32. Coordination with the Department of Commerce

(1) Where the debtor is a Financial Institution, the Department of Commerce retains primary authority under the Taxation Act and the Seizure and Insurance Adjustment Act.

(2) The Department of Commerce may commandeer, seize, or sell a failing Financial Institution under its existing powers without filing a bankruptcy petition under this Act.

(3) Where the Department of Commerce elects to proceed under this Act:

(a) The Department shall serve as Trustee, or shall nominate the Trustee to the court;

(b) The deposit guarantee under the Taxation Act, as that limit may be set from time to time, shall be honored as a Class 2 priority claim;

(c) The Federal Reserve Bank may be called upon to provide liquidity support under the Federal Reserve Act.

33. Financial Stability

(1) The court may consider systemic financial risk when fashioning relief. Where the failure of a Financial Institution would threaten the stability of the Commonwealth's economy, the court shall give substantial weight to recommendations from the Department of Commerce and the Federal Reserve Bank.

PART IX — CRIMINAL CODE ACT AMENDMENTS

34. New Offences

(1) Part VII of the Criminal Code Act is hereby amended to include the following offences:

25 - Bankruptcy Fraud
Offence Type: Indictable
Penalty: Up to 2,250 Penalty Units; up to 60 minutes imprisonment; denial of discharge
A person commits an offence if the person:
(a) knowingly makes a false statement under oath, declaration, or in a schedule filed in a bankruptcy case; or
(b) knowingly conceals property from the Trustee or the court; or
(c) knowingly transfers, conceals, or destroys property in contemplation of filing or while a bankruptcy case is pending, with intent to defraud creditors; or
(d) knowingly conceals, destroys, mutilates, or falsifies any book, record, document, or financial information relating to the debtor's affairs, in contemplation of filing or while a bankruptcy case is pending; or
(e) in contemplation of filing, incurs any debt or obtains money, property, or credit with intent not to repay it and to discharge the obligation through bankruptcy; or
(f) knowingly receives, holds, or retains property of the debtor or the estate for the purpose of concealing it from the Trustee or the court.
Relevant Law: Act of Congress - Bankruptcy Act

26 - False Proof of Claim
Offence Type: Indictable
Penalty: Up to 900 Penalty Units; up to 30 minutes imprisonment
A person commits an offence if the person:
(a) knowingly files a false Proof of Claim in a bankruptcy case; or
(b) knowingly receives a distribution from a bankruptcy estate to which the person is not entitled.
Relevant Law: Act of Congress - Bankruptcy Act

27 - Trustee Misconduct
Offence Type: Indictable
Penalty: Up to 2,250 Penalty Units; up to 60 minutes imprisonment; disqualification from appointment as a Trustee under the Bankruptcy Act
A person commits an offence if the person, while serving as a Trustee under the Bankruptcy Act, or as a Debtor in Possession under Part V of that Act:
(a) knowingly embezzles, misappropriates, or fraudulently applies property of the estate; or
(b) knowingly makes a distribution from the estate contrary to the priority rules of Part VI of the Bankruptcy Act; or
(c) knowingly makes a false entry in, or false report of, the accounts of the estate; or
(d) knowingly acts to advance an interest adverse to the estate while purporting to act on its behalf.
Relevant Law: Act of Congress - Bankruptcy Act

28 - Bankruptcy Bribery
Offence Type: Indictable
Penalty: Up to 2,250 Penalty Units; up to 60 minutes imprisonment
A person commits an offence if the person:
(a) gives, offers, or promises anything of value to a Trustee, a creditor, or any party in interest, with intent to influence any act, vote, objection, or forbearance in a bankruptcy case; or
(b) being a Trustee, creditor, or party in interest, solicits, accepts, or agrees to accept anything of value in exchange for any act, vote, objection, or forbearance in a bankruptcy case.
Relevant Law: Act of Congress - Bankruptcy Act

29 - Obstruction of a Trustee
Offence Type: Indictable
Penalty: Up to 900 Penalty Units; up to 30 minutes imprisonment
A person commits an offence if the person knowingly:
(a) obstructs, impedes, or interferes with a Trustee, or a Department of Commerce officer acting as a Trustee, in the performance of their duties under the Bankruptcy Act; or
(b) refuses a Trustee access to property, books, or records the Trustee is entitled to under the Bankruptcy Act; or
(c) intimidates or misleads a Trustee for the purpose of frustrating the administration of the estate.
Relevant Law: Act of Congress - Bankruptcy Act

30 - Unauthorized Post-Petition Disposition of Estate Property
Offence Type: Indictable
Penalty: Up to 900 Penalty Units; up to 30 minutes imprisonment; restitution to the estate
A person commits an offence if the person, after a bankruptcy petition has been accepted by the court, knowingly sells, transfers, encumbers, conceals, or dissipates property of the estate without the authorization of the court or the Trustee.
Relevant Law: Act of Congress - Bankruptcy Act

31 - Retaliation Against a Worker or Whistleblower in Bankruptcy
Offence Type: Indictable
Penalty: Up to 900 Penalty Units; up to 30 minutes imprisonment; restitution and reinstatement where applicable
A person commits an offence if the person dismisses, demotes, blacklists, threatens, or otherwise retaliates against a worker or any other person for:
(a) filing a Proof of Claim in a bankruptcy case; or
(b) cooperating with the Trustee or the court in a bankruptcy case; or
(c) reporting suspected bankruptcy-related criminal conduct.
Relevant Law: Act of Congress - Bankruptcy Act

32 - Collusive Secured Lending
Offence Type: Indictable
Penalty: Up to 2,250 Penalty Units; up to 60 minutes imprisonment
A person commits an offence if the person knowingly enters into an agreement with a debtor to extend a secured loan, or to take, perfect, or enforce a security interest in the debtor's property, where a substantial purpose of the agreement is to place that property beyond the reach of another creditor or of the bankruptcy estate, in contemplation of a bankruptcy process.
Relevant Law: Act of Congress - Bankruptcy Act

(2) Part III of the Criminal Code Act is hereby amended to include the following offence:

18 - Violation of the Automatic Stay
Offence Type: Summary
Penalty: Up to 450 Penalty Units; restitution of any improperly collected amount
A person commits an offence if the person:
(a) knowingly takes action prohibited by the Automatic Stay under the Bankruptcy Act, after notice of the stay.
Relevant Law: Act of Congress - Bankruptcy Act

PART X — COORDINATION WITH OTHER ACTS

35. Debt Recovery Quick Fix Act

(1) The Debt Recovery Quick Fix Act is amended to add the following provision:

7 - Bankruptcy Stay
(1) All asset seizure proceedings, fines for non-compliance, and related actions under this Act are stayed upon the filing of a bankruptcy petition by or against the debtor under the Bankruptcy Act.
(2) Creditors whose recovery actions are stayed shall be entitled to file a Proof of Claim in the bankruptcy case.

(2) The Debt Recovery Quick Fix Act is further amended to add the following provision:

8 - Trustee Standing for Asset Seizure
(1) A Trustee appointed under the Bankruptcy Act shall have standing to apply for an asset seizure warrant under the warrant procedure of this Act, on behalf of the bankruptcy estate, to recover non-exempt property of the debtor that has not been surrendered.
(2) The Department of Justice shall process such applications under the same procedures applicable to applications by other authorized parties.
(3) A Trustee's application must be supported by:
(a) Proof of appointment as Trustee in a pending bankruptcy case;
(b) Identification of the property sought to be seized;
(c) Evidence of the debtor's refusal or failure to surrender the property; and
(d) A court order or referral from the Federal Court of Redmont supervising the bankruptcy case.

36. Legal Entity Act

(1) Liquidation of an Incorporated Entity under Part V of this Act shall be conducted in accordance with the receivership and winding up provisions of the Legal Entity Act, with the following modifications:

(a) The order of distribution shall follow Part VI of this Act, not the default distribution rule under the Legal Entity Act;

(b) The Trustee under this Act shall serve as receiver under the Legal Entity Act.

37. Contracts Act

(1) Section 22 of this Act (Executory Contracts) overrides any provision of the Contracts Act that would prevent the Trustee from assuming or rejecting contracts as part of bankruptcy administration.

38. Anti-Scam Insurance

(1) The Anti-Scam Insurance program under the Debt Recovery Quick Fix Act remains in force. Insured claimants may seek partial recovery under that program for losses caused by a bankrupt debtor, in addition to or in lieu of recovery from the bankruptcy estate.

(2) The Department of Commerce, having paid out under Anti-Scam Insurance, shall be subrogated to the claimant's rights against the estate to the extent of the payout.

39. Taxation Act

(1) Sales of estate property conducted under this Act, whether by the Trustee directly or through the Department of Construction and Transportation auction system, are exempt from the Eviction Tax and the Auction Levy under the Taxation Act.

(2) Bankruptcy sales are court-supervised distributions to satisfy lawful debts and are not ordinary evictions of inactive players walking away with proceeds. Imposing the Eviction Tax or Auction Levy on such sales would reduce creditor recovery, force creditors to seek deficiency judgments, and clog the courts.

(3) Reasonable administrative costs incurred by the Department of Construction and Transportation in conducting bankruptcy-related auctions shall be treated as Class 1 administrative expenses under Section 25 of this Act.

40. Redmont Civil Code Act

(1) Relationship. This Act constitutes a specialised statutory framework. Where this Act and the Redmont Civil Code Act address the same matter, this Act prevails to the extent of any inconsistency. Causes of action, remedies, procedures, and limitation periods established by this Act are operative notwithstanding any provision of the Redmont Civil Code Act to the contrary.

(2) Part II, Section 3(2) of the Redmont Civil Code Act is amended as follows:

"(2) Any civil violation purportedly created by another Act of Congress shall be null and void unless incorporated as an amendment to this Code."

"(2) Any civil violation purportedly created by another Act of Congress shall be null and void unless incorporated as an amendment to this Code, except for rights, remedies, causes of action, and procedures established under the Bankruptcy Act."

(3) Part II, Section 4 of the Redmont Civil Code Act is amended to add the following subsection:

"(6) This Code operates concurrently with, and does not limit or affect, the Bankruptcy Act, which establishes a specialised statutory framework for insolvency, estate administration, creditor priority, avoidance and clawback, and trustee accountability. Where the Bankruptcy Act and this Code address the same matter, the Bankruptcy Act prevails to the extent of any inconsistency. Statutes of limitation, lookback periods, and standing rules established by the Bankruptcy Act apply notwithstanding any contrary provision of this Code."

PART XI — DEPORTATION AND CIVIL INCAPACITY

41. Definitions

(1) For the purposes of this Part, "Short Deport," "Long Deport," "Ban," and "Return" have the meanings given to those terms by the server rules as published and amended by staff from time to time. This Act does not restate or modify those definitions.

42. Effects of Deport Status

(1) The political, legal, asset-related, and platform-access effects of a Short Deport, Long Deport, or Ban on a debtor are governed by the server rules as published and amended by staff from time to time. This Act does not restate, modify, or override those effects.

43. Pre-Filing Long Deport or Ban

(1) Where a debtor is subject to a Long Deport or Ban before any bankruptcy petition is filed:

(a) Any creditor may file an involuntary bankruptcy petition under Section 7(1)(b), notwithstanding the three-creditor and $5,000 thresholds, if the debtor's total outstanding debts exceed $10,000;

(b) The Trustee shall administer the estate without debtor cooperation;

(c) The Federal Court may treat the Long Deport or Ban as analogous to the death of a natural person, and may apply rules customary to administration of a deceased debtor's estate;

(d) All property of the debtor shall be deemed non-exempt, as no debtor remains to occupy or use the property;

(e) Discharge shall not be granted, as it serves no personal benefit; and

(f) Any surplus after creditors, the Worker Carve-Out, and Class 2 customer deposits are satisfied shall be transferred to DCGovernment.

44. Pre-Filing Short Deport

(1) Where a debtor is subject to a Short Deport before any bankruptcy petition is filed:

(a) Any creditor may file an involuntary bankruptcy petition;

(b) The debtor may file a voluntary petition during the Short Deport, exercising their right to legal representation under the applicable server rules;

(c) The case shall proceed normally, with the debtor afforded the cooperation rights of an ordinary debtor;

(d) The automatic stay under Section 5 remains in full effect during the Short Deport;

(e) If the Short Deport is extended to a Long Deport or converted to a Ban during the case, the case shall proceed under Section 43.

45. Deport During Proceedings

(1) Where a debtor becomes subject to a Long Deport or Ban during open bankruptcy proceedings:

(a) The case shall continue under Section 43;

(b) Acts already taken by the Trustee remain valid;

(c) Discharge shall not be granted.

(2) Where a debtor becomes subject to a Short Deport during open bankruptcy proceedings:

(a) The case shall proceed normally with the debtor exercising their rights under the applicable server rules;

(b) Acts already taken by the Trustee remain valid;

(c) Deadlines for debtor action may be extended at the court's discretion to accommodate the Short Deport.

46. Special Rules for Deported Workers

(1) Where a worker entitled to the Worker Carve-Out under Section 24 is subject to a Long Deport or Ban:

(a) The Trustee shall calculate and reserve the worker's share of the carve-out;

(b) Reserved funds shall be held in escrow by the Department of Commerce for up to 2 months;

(c) If the worker is no longer accessible to receive the funds by the end of this period, the funds shall revert to the estate for distribution under the general waterfall.

(2) Where a worker entitled to the Worker Carve-Out is subject to a Short Deport:

(a) The Trustee shall pay the worker's carve-out share by means accessible to the worker, including but not limited to deposit to the worker's in-game account.

(3) Where a worker entitled to a Mechanic's Lien under the Property Lien Act is subject to any deport before filing the Lien:

(a) The 14-day filing window under that Act is tolled for the duration of the deport;

(b) The worker shall have 14 days from Return (in the case of a Short Deport) or from determination of the case otherwise to perfect the Lien.

47. Anti-Abuse: Deport-Induced Insolvency

(1) Where a debtor is subject to a deport or ban, the following shall apply:

(a) Debts incurred in connection with, or in furtherance of, the conduct that caused the deport or ban shall be non-dischargeable, in addition to those listed in Section 30;

(b) The court may deny discharge in whole or part under Section 31;

(c) The Trustee shall investigate the circumstances and report findings to the court.

(2) The Trustee bears the burden of demonstrating the connection between the debts and the deport-causing conduct by clear and convincing evidence. Where no such connection is established, no debts shall be rendered non-dischargeable under this Section.

48. Interaction with Pruning Tax and Eviction

(1) The Pruning Tax under the Taxation Act is suspended for any player who is a debtor in active bankruptcy proceedings, regardless of activity.

(2) Eviction proceedings under the Property Standards Act and the Department of Construction and Transportation are stayed under Section 5 of this Act for any plot of a debtor in active bankruptcy proceedings.

(3) Where bankruptcy proceedings conclude with eviction of the debtor, the Trustee may coordinate with the Department of Construction and Transportation to expedite the auction of estate property.

PART XII — TRANSITION AND REPEALS

49. Repeal of the Bankruptcy Band-Aid Act

(1) The Bankruptcy Band-Aid Act is hereby repealed in its entirety.

(2) Any bankruptcy proceeding commenced under the Bankruptcy Band-Aid Act that has not been completed by the effective date of this Act shall continue under the Bankruptcy Band-Aid Act framework until completion. Parties may petition the court to convert to a case under this Act.

50. Severability

(1) If any provision of this Act is held invalid or unconstitutional, the remainder shall continue in full force and effect.

51. Effective Date

(1) This Act takes effect 7 days after presidential assent, as provided in Section 1(2).

(2) The Department of Commerce shall publish implementation guidance within those 7 days.

 

[EATB]

CONGRESS OF THE
COMMONWEALTH OF REDMONT

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A BILL TO

STREAMLINE ANTI-SCAM INSURANCE ADMINISTRATION

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The people of the Commonwealth of Redmont, through their elected Representatives in the Congress and the force of law ordained to that Congress by the people through the constitution, do hereby enact the following provisions into law:
​

PART I — PRELIMINARIES

1. Short Title and Enactment
(1) This Act may be cited as the ‘Anti-Scam Insurance Administrative Relief Act’

(2) This Act shall be enacted immediately upon its signage.

(3) This Act has been authored by Representative EATB.

(4) This Act has been co-sponsored by President of the Senate Talion77.

(5) This Act amends the following acts:

(a) Debt Recovery Quick Fix Act

2. Reasons and Intent

(1) Currently, the law mandates that the Department of Commerce must individually track every single insurance policy's due date and manually inform players and companies when they miss a payment.

(2) This places a massive, unnecessary organisational and administrative burden on the Department of Commerce to act as a collection agency and micromanage individual accounts.

(3) The responsibility of keeping track of insurance coverage and making timely payments should lie squarely on the insured party, not the government.

(4) By shifting this responsibility, the Department of Commerce can focus its resources on verifying claims and processing payouts rather than chasing down missed payments.

PART II — AMENDMENTS TO THE DEBT RECOVERY QUICK FIX ACT

1. Amendments to Government Anti-Scam Insurance

(1) Section 5 of the Debt Recovery Quick Fix Act shall be amended as follows:
"5 - Government Anti-Scam Insurance
(1) The DoC is to run Anti-Scam Insurance, which provides players and companies with protection against entities declared bankrupt.
(2) The Insurance will cost an initial rate of $1,500 per month, payable to the government. The DoC will initially cover 70% on claims up to $25,000 submitted by insured players and companies. All of these figures may be adjusted internally by the DoC once per 30 days, and the public must be informed of such changes through an announcement. Claims will be submitted and reviewed on a case-by-case basis by the DoC.
(3) Players are automatically insured for free for the first month after their joindate. Claims by the uninsured may be submitted for an incident that occurred within a player's first month after joindate.
(4) Players and companies that have missed an insurance payment will be informed by the DoC and be given a window of one week to pay. Missing two consecutive payments will result in coverage immediately suspended until payment is sufficiently provided.
(4) It is the sole responsibility of the insured players and companies to track their coverage dates and submit their monthly insurance payments on time. Failure to submit a payment by its due date will result in the immediate and automatic suspension of coverage, without the requirement of a notice or grace period from the DoC. Coverage shall remain suspended until the required payment is sufficiently provided.
(5) Any damages that are not part of any actual financial loss are not eligible. (e.g. Punitive Damages, Emotional Distress), as well as inflation costs and opportunity costs."

 

[Technofied]

Presidential Assent

This bill has received Presidential assent and is hereby signed into law.

Reason: This Bill replaces the temporary Bankruptcy Band-Aid Act with a permanent bankruptcy framework.

This new framework establishes clear procedures for personal bankruptcy and business insolvency, creditor priority rules, trustee accountability, and workers’ wage recovery.

Technofied

 

[Technofied]

Presidential Assent

This bill has received Presidential assent and is hereby signed into law.

Reason: This Bill shifts responsibility for tracking insurance coverage and making payments onto the insured, with missed payments resulting in automatic suspension of coverage.

This reduces the administrative burden of the Department of Commerce having to track every policy and chase missed payments.

Technofied