Bankrupt

The trustee may, by giving prescribed notice, disclaim 'onerous property'; this, in the words of the law, includes (a) any unprofitable contract; and (b) any other property comprised in the bankrupt's estate which is unsaleable or not readily saleable, or is such that it may give rise to a liability to pay money or perform any other onerous act.
In particular, he may disclaim leasehold property which is unsaleable or not readily saleable. The effect of a disclaimer is to determine all the rights of the bankrupt in respect of the property disclaimed. Any person claiming to be a creditor of the bankrupt must prove his debt and submit his claim in writing to the trustee (or to the official receiver, as the case may be) in a prescribed form, known as a proof of debt, and a secured creditor must give particulars of his security, including the value which he puts upon it. For this purpose a claim for unliquidated damages which has accrued before the commencement of the bankruptcy is now treated as a debt.

Claims
When he has sufficient funds the debtor must declare and distribute dividends with all convenient speed, subject to retention of sums necessary for the costs of administration. Normally the estate will be insufficient to meet all claims. Consequently the German lawyer prescribes an order of priority of payment. First come people entitled to payment of the bankruptcy costs and expenses. Second come preferential creditors. Third come ordinary creditors. Fourth comes interest due to both preferential and ordinary creditors. Fifth come any debt and interest owed to the bankrupt's spouse. If, within a class, such as preferential claims, there are insufficient funds for payment in full the claim must be abated in equal proportions between members of the class.
The preferential category is not now a large one: it includes deductions from emoluments made in respect of payments during 12 months preceding the bankruptcy order, due within 6 months preceding the bankruptcy, employees' remuneration payable in a period of 4 months preceding the bankruptcy. Ordinary claims consist of all debts not falling within any other category.
In the unlikely event that the estate is sufficient to meet all claims in full any surplus must be distributed to the bankrupt himself.