A bankruptcy case begins with the creditor filing a petition in court after which the debtor is summoned.
This petition should always be backed with a proof.
In cases where one objects to the claims, he can move to court to seek a dismissal of the objection.
This will require the creditor to produce proof that indeed his claims are true.
There are three modes of debt collection.
The first is where the pledged property is seized and sold at an auction by the debt consolidation officer.
The second mode is where the unsecured property is seized and auctioned in a bid to pay the outstanding debt.
This will only work if the debtor is not a registered commercial entity.
The last mode deals with the registered commercial debtor.
In cases where the assets proceeds are not enough to cover the overall debt but can cover at least the cost of the case, then the officer in charge of the case publishes a bankruptcy suit in the Official Gazette of Commerce to ask for their proof of claims.
This is followed by several court proceedings to approve the claims.
Once the claims are validated, the assets are no longer contested.
A meeting is held in which the liquidation method is determined.
Liquidation in this case is through an auction held in the presence of the two parties and the debt consolidation officer or direct sale of the assets.
Once the liquidation process is over, the proceeds are discharged to the creditors according to their ranks.
In cases of bankruptcy cases against businesses, workers are given the first preference.
In case some of the creditors still remain unpaid, they receive certificates to prove this but they cannot continue with the insolvency case against the debtor unless they confirm that he has acquired new assets.