Chapter: A Compendium of the Rulings Concerning the Bankrupt
When a man is pronounced bankrupt and some creditors substantiate their claims with evidence while he merely admits the claims of others, nothing is allotted to those whose rights rest only on his admission until the creditors who produced evidence have been satisfied in full. Should anything remain, it is handed over to those whose claims were based on his acknowledgment.
If his existing estate does not cover the proven debts and he subsequently acquires new wealth, payment is again made first to the creditors whose claims were established by evidence; whatever remains is then given to the creditors whose rights relied solely on his admission.
If a debtor is declared bankrupt, his property is distributed among his creditors yet still falls short, and thereafter he incurs further debts and is declared bankrupt a second time, the second set of creditors have priority over whatever assets are then in his possession; the earlier creditors do not share with them. Should a surplus remain after the second group have received their due, the first creditors divide that remainder proportionately. This ruling applies to assets that reach his hand through subsequent business dealings.
With respect to wealth acquired by gift, inheritance, compensation for injury, or bequest, the earlier and later creditors stand on equal footing and share it according to their respective claims.
If a gift, charity, bequest, or a right of pre-emption (shufʿa) that promises profit is offered to the bankrupt, he cannot be compelled to accept any of it if he refuses; but if he accepts voluntarily, it is distributed among his creditors. Inheritance is different, for it enters his ownership without the need for acceptance.
When a person—whether man or woman—is declared bankrupt, it is not permissible for him or her to forgo half of the marriage-portion (ṣadāq) or any part of it.
A slave who has been given permission to trade is, in the matter of bankruptcy, like a free man: whatever is in his hand is divided among his creditors. The creditors of his master do not share in anything the slave has earned from being hired, nor do they have any claim over the slave’s person or over his master—unless the master has guaranteed a debt on his behalf, in which case the master is held liable. If the master sells something to him in a transaction resembling the ordinary sales of people and establishes that with evidence, he is included along with