As for his status after the declaration of bankruptcy:
According to Mālik, he is no longer permitted to sell or buy, to take or give, nor may he acknowledge any debt against himself—whether in favor of a close relative or a stranger. Some add: unless one of the claimants can produce conclusive proof; others say: he may acknowledge a debt to someone who is already known to be pressing him for payment.

There is also disagreement over his admission of liability for a specific asset—such as capital in a silent-partnership (qirāḍ) or a deposit (wadīʿa). Within the Mālikī school three opinions are recorded: (1) that his admission is valid; (2) that it is invalid; and (3) a distinction is drawn—if there is evidence establishing the original qirāḍ or deposit he is believed, and if there is none he is not.

Scholars further disagreed about the bankrupt’s deferred debts: do they fall due once bankruptcy is declared or not? Mālik holds that bankruptcy in this regard is like death, while others dissent. The majority maintain that debts become payable upon death. Ibn Shihāb said: “The Sunnah has come down that a man’s debt becomes due when he dies.”

Their proof is that Allah, blessed and exalted, did not permit inheritance until after the debts are settled. The heirs therefore face one of two alternatives: either they do not wish to postpone receiving their shares until the debt’s maturity date—in which case the debt must be treated as immediately due; or they are willing to wait, in which case the debts remain secured only by the estate, not by their own personal liability, unlike the situation before death when the debt rested with the deceased himself. This arrangement better serves the creditor’s interest. For that reason some scholars held that, if the creditors agree to accept personal liability, the debts may remain to their appointed term; among those who said so was Ibn Sīrīn, and the view was favored by Abū ʿUbayd. Even so, bankruptcy is not entirely analogous to death: though both release the personal liability, the bankrupt’s liability may still be replenished with new wealth, whereas the deceased’s cannot.

As for what the creditors may recover from the bankrupt’s property, the ruling depends on the kind and the amount involved. If the very object that constituted the counter-value for which the creditor has a claim has perished, the claim remains a debt in the bankrupt’s liability. But if that object is still intact, though its price has not yet been paid, the jurists of the various regions have held four views:

1. The owner of the goods has an absolute right to reclaim them unless he prefers to forgo that right and share pro rata with the other creditors. This is the position of al-Shāfiʿī, Aḥmad, and Abū Thawr.

2. The goods are appraised on the day bankruptcy is adjudged. If their value is less than the purchase price, the owner may choose between taking them back or joining the creditors in proportional distribution; but if their value equals or exceeds the price, he must take them back as they are. This is the view of Mālik and his companions.

3. The goods are appraised at the time of bankruptcy; if their value equals the purchase price or is less, judgment is rendered …