note

1. bankruptcy
Definition
The word bankruptcy is formed from the ancient Latin word …
bancus (a bench or table), and ruptus (broken). Now a "bank" originally
referred to as a bench, which the first bankers had in the public places, in
markets, fairs, etc. on which they tolled their money, wrote their bills of
exchange, etc. Hence, when a banker failed, he broke his bank, to
advertise to the public that the person to whom the bank belonged was no
longer in a condition to continue his business. As this practice was very
frequent in Italy, it is said the term bankrupt is derived from
the Italian bancorotto, broken bank.
By definition bankruptcy / insolvency is a legal status of a person
or an organization that cannot repay the debts it owes to its creditors.
Creditors may file a bankruptcy petition against a business or
corporate debtor ("involuntary bankruptcy") in an effort to recover a
portion of what they are collect or initiate a restructuring. In the majority
of cases, however, bankruptcy is initiated by the debtor (a "voluntary
bankruptcy" that is filed by the insolvent individual or organization). An
involuntary bankruptcy petition may not be filed against an individual
consumer debtor who is not engaged in business.
Moreover, on the brighter side bankruptcy also offers an individual
or business a chance to start fresh by forgiving debts that simply can't be
paid while offering creditors a chance to obtain some measure of
repayment based on what assets are available. In theory, the ability to file
for bankruptcy can benefit an overall economy by giving persons and
businesses another chance and providing creditors with a measure of debt
repayment.

2. Bankruptcy law in Pakistan
Bankruptcy are a natural phenomenon of doing business in a
capitalist economy. Our Islamic economic model is also based on the
same principles of private enterprise, trade and sharing of profits and
losses. Thus business will flourish, new firms will enter and old firms will
die out. Profit making is the core of capital formation, step-up of
economy, employment generation and export growth.
First, if profits are privatized then the losses should not be
socialized. While the private entrepreneurs in Pakistan gladly appropriate
the profits whether normal or windfall-they are always reluctant to bear
losses. Second, if the businesses make profits then it is incumbent upon
them to pay a portion of their profits as taxes. Third, profits made in
Pakistan by utilizing the country’s resources should be reinvested in its
economy for maximizing economic activity and employment rather than
keeping them away in foreign bank accounts overseas. Fourth, profits
have to be generated through competition in a level playing field and not
through selective favors, concessions and privileges to a chosen few
among the business community.
The taking of control by the trustee of the property of the bankrupt
actually or constructively in his possession at time of filing of petition in
bankruptcy, the distribution of the proceeds received from such property, ,
among bankrupt's creditors whose claims have been filed and allowed,
and the discharge of bankrupt from liability for the unpaid balance of
such claims. Bankruptcy (in the sense of proceedings taken under the
bankruptcy law) is either voluntary or involuntary; the former where the
proceeding is initiated by the debtor's own position to be adjudged a
bankrupt and have the benefit of the law, the latter where he is forced into

3. bankruptcy on the petition of a sufficient number of his creditors.
Bankruptcy proceedings are governed by the Bankruptcy laws and
official rules and forms.
Bankruptcy Distribution
After payment of administration, priority and other debts and expenses of
bankrupt estate, trustee in bankruptcy makes prorate distribution to
creditors.
Bankruptcy Forms
Official forms used in Bankruptcy Court for most matters (e.g. petitions,
schedules).
Bankruptcy Rules
Rules governing proceedings in bankruptcy courts; a great many of which
make the Federal Rules of Civil Procedureapplicable.
Bankruptcy Schedules
Official forms for listing of bankrupt's assets, liabilities, and all unsecured
creditors.
Case study
Brief History:
Pakistan Stock Exchange Limited (PSX) (formerly: Karachi Stock Exchange (Guarantee) Limited (KSE)
was established on September 18, 1947. It was incorporated on March 10, 1949. Only five companies
were initially listed with a total paid-up capital of 37 million rupees. The first index introduced in KSE was
based on fifty companies and was called KSE 50 index. Trading used to be carried out on open out-cry
system. Computerized trading system called Karachi Automated Trading System (KATS) was introduced
in 2002 with a capacity of 1.0 million trades per day and the ability to provide connectivity to an unlimited
number ofusers.
In October 1970, under the Securities and Exchange Ordinance of 1969 by the Government of Pakistan,
a second stock exchange was established in Lahore in response to the needs of the provincial metropolis
of the province of Punjab. It initially had 83 members and was housed in a rented building in the crowded
Bank Square area of Lahore. The LSE was the first stock exchange in Pakistan to use the internet.
Yet another stock exchange known as Islamabad Stock Exchange was established in Islamabad, the
capital city of Pakistan on October 25, 1989 with the main object of setting up of a trading and settlement
infrastructure, information system, skilled resources, accessibility and a fair and orderly m arket place that
ranks with the best in the world and to cater to the needs of less developed areas of the northern part of
Pakistan.It was licensed as a stock exchange on January 7, 1992.

4. All these three exchanges had separate management, trading interfaces, indexes, listing criteria etc and
thus had no mutual links to each other. All three exchanges were previously operating as a non -profit
organizations with mutualized structure wherein there respective members had trading as well as
ownership rights. This structure inherently created conflict of interest and perceived to jeopardize the
investors' interest. Therefore, the Stock Exchanges (Corporatization, Demutualization & Integration) Act,
2012 (known as "Demutualization Act") was promulgated by the Government. As a result these three
exchanges were merged together to form a new combined exchange called Pakistan Stock Exchange
Limited (PSX) which started its operations on January11, 2016 under this new title.