118Execution by creditor against property of debtor who becomes a bankrupt etc.

118  Execution by creditor against property of debtor who becomes a bankrupt etc.

 (1) Subject to subsection (2), where:

 (a) a creditor has, within 6 months before the presentation of a petition, or after the presentation of a petition, against a debtor:

 (i) received moneys as a result of execution having been issued by him or her, or on his or her behalf, against property of the debtor, being moneys that are the proceeds of the sale of property of the debtor that has been sold in pursuance of the process or that were seized, or paid to avoid seizure or sale of property of the debtor, in pursuance of the process; or

 (ii) received moneys as a result of the attachment by him or her, or on his or her behalf, of a debt due to the debtor; and

 (b) the debtor subsequently becomes a bankrupt on, or by virtue of the presentation of, the petition;

the creditor shall pay to the trustee of the estate of the bankrupt the amount by which the amount of those moneys exceeds the taxed costs of the execution or attachment, as the case may be.

 (2) Subsection (1) does not apply in relation to a creditor who has received moneys as a result of execution having been issued by him or her, or on his or her behalf, against property of a debtor, or as a result of the attachment by him or her, or on his or her behalf, of a debt due to the debtor, in respect of any liability of the debtor under a maintenance agreement or maintenance order (whether entered into or made, as the case may be, before or after the commencement of this section).

 (3) Where a creditor has, in pursuance of subsection (1), paid the proceeds of the sale of property or other moneys to the trustee of the estate of a bankrupt, the creditor may prove in the bankruptcy for his or her debt as an unsecured creditor as if the execution or attachment, as the case may be, had not taken place.

 (4) Where:

 (a) a creditor has, in pursuance of subsection (1), paid to the trustee of the estate of a bankrupt the proceeds of the sale of property or other moneys that were received as a result of execution having been issued by him or her, or on his or her behalf, against property of the bankrupt or of the attachment by him or her, or on his or her behalf, of a debt due to the bankrupt; and

 (b) that property or debt would not have been property divisible amongst the creditors of the bankrupt if the bankrupt had become a bankrupt immediately before the execution was issued or the debt was attached, as the case may be;

the trustee shall pay those proceeds or other moneys to the bankrupt or to a person authorized by the bankrupt in writing for the purpose.

 (5) Subject to this section, where notice in writing of the presentation of a creditor’s petition against a debtor is given to a creditor: