بَابُ الْإِفْلَاسِ وَالْإِنْظَارِBankruptcy and Deferment

¹ The statement: “Equal to the creditors”: For this reason, it is said in the completion of Bahr Ar-Ra’iq: This means that if someone buys goods and becomes bankrupt while the goods are still in his possession, the seller of the goods is equal to the creditors in it. The intent is after the buyer takes possession of the goods with the seller’s permission. If it is before possession, the seller may withhold the goods until he receives the price. Likewise, if the buyer takes possession without the seller’s permission, the seller may reclaim and withhold it for the price. It is stated in Umdat Al-Qari: Ibrahim An-Nakha‘i, Al-Hasan Al-Basri, Ash-Sha‘bi in one narration, Waki‘ ibn Al-Jarrah, ‘Abdullah ibn Shubrumah, the judge of Kufa, Abu Hanifah, Abu Yusuf, Muhammad, and Zufar held that the seller of the commodity is equal to the creditors. It is authentically reported from ‘Umar ibn ‘Abdul-‘Aziz that if someone receives part of the price of his commodity and then the buyer becomes bankrupt, he is equal to the creditors. This is also the view of Az-Zuhri, and a similar view is narrated from ‘Ali ibn Abi Talib (may Allah be pleased with him). Ash-Shafi‘i, Malik, and Ahmad argued with what Bukhari and Muslim narrated from Abu Hurairah, who said: “If a man becomes bankrupt and someone finds his property as it is, he has more right to it than others.” They followed the apparent meaning of this hadith, stating that if a man becomes bankrupt and possesses goods he purchased, which remain as they are, the owner has more right to them than other creditors. At-Tahawi responded to this hadith, saying that it refers to someone finding his property as it is, but the sold item is not his actual property; it is only property that was his. His actual property refers to usurped items, borrowed items, deposits, and the like. That is his property as it is, so he has more right to it than other creditors. This hadith from the Messenger of Allah (ﷺ) supports this, as does what is narrated from the Messenger of Allah (ﷺ) in the hadith of Samurah, where he said: The Messenger of Allah (ﷺ) said: “If someone’s property is stolen or lost and he finds it as it is with someone, he has more right to it, and the buyer may seek the price from the seller.” Al-Tabarani also narrated it, clarifying that the hadith of Abu Hurairah refers to deposits, borrowed items, usurped items, and the like. The owner of the property has more right to it if he finds it as it is in someone’s possession, and the creditors have no share in it because it remains in his ownership. The hand of the usurper is one of transgression and injustice, as is the thief’s, unlike when it is sold and delivered to the buyer, as it then leaves the seller’s ownership, even if the price is not received. The seller here is no longer the owner of the property, as it has left his ownership, and the characteristic has changed as the essence has changed. Thus, the sold item is no longer his property, though it was his property initially.

¹ The statement: “From Abu Sa‘id”: This hadith was mentioned recently in the chapter on prohibited sales.

² The statement: “In fruits he purchased”: This indicates that if the fruits are damaged, the buyer is responsible for them. This was discussed in detail in the chapter on prohibited sales, so refer to it.

³ The statement: “And you have nothing beyond that”: Meaning, you take what you find, and the implication is that you have nothing beyond taking what you find and deferring the remaining debt until a time of ease. It does not mean that you take only what you find, and the remaining debt is void, due to the saying of Allah, the Exalted: And if someone is in hardship, then [let there be] postponement until [a time of] ease (Al-Baqarah: 280). This was stated in Al-Marqah.

¹ The statement: “The Prophet (ﷺ) sold all his property”: This means that if the creditors of a bankrupt person request restriction, the judge restricts him, sells his property if he refuses to sell it, distributes his property among the creditors, and prevents him from transactions that harm the creditors, such as acknowledgment or selling at less than its value. It is narrated in this hadith that Mu‘adh was overwhelmed by debt, so the Messenger of Allah (ﷺ) sold his property and distributed the proceeds among his creditors proportionally. This restriction is in consideration of the creditors to prevent harm through acknowledgment. This is the view of Abu Hanifah’s two companions. Abu Hanifah said: He is not restricted due to debt, even if the creditors request it, because restriction diminishes his legal capacity and equates him to animals, which is significant harm and thus not permissible. However, if the creditors of a debtor request his imprisonment, the judge imprisons him to compel him to sell his property to pay his debt, as paying the debt is obligatory, and delaying is injustice. The ruler imprisons him to prevent his injustice and ensure the right reaches its owner, not to coerce him into selling, as the purpose of imprisonment is to compel payment of the debt by any means. This is derived from the completion of Bahr Ar-Ra’iq. ² The statement: “The delay of a wealthy person makes his honor and punishment permissible”: This hadith is used as evidence for the permissibility of imprisoning someone with a debt until he pays it, if he is capable, as a disciplinary measure and to be strict with him, but not if he is incapable, as indicated by “wealthy.” This implies that the honor and punishment of an insolvent person are not permissible. The Hanafis and Zaid ibn ‘Ali permitted imprisonment for the wealthy. The majority said the ruler sells on his behalf, as indicated by the hadith of Mu‘adh. As for the non-wealthy, the majority said he is not imprisoned, but Abu Hanifah said the creditor may pursue him, based on the statement: “The one with a right has authority and speech,” meaning authority refers to pursuit and speech to demanding. This is derived from Nail Al-Awtar and Al-Hidayah.

¹ The statement: “He will have the reward of charity for each day”: There are hadiths on the virtue of lending, and the general Qur’anic and hadith evidence on the merit of helping, fulfilling a Muslim’s need, relieving his distress, and meeting his needs encompass this. There is no disagreement among Muslims regarding its legitimacy. This is stated in Nail Al-Awtar.

¹ The statement: “He demanded from Ibn Abi Hadrad”: This indicates that leniency and demanding payment do not coexist, as the creditor is entitled to demand his debt. Ibn Battal said: It shows the permissibility of raising voices in the mosque if it is not excessive, due to the absence of disapproval. It also permits relying on gestures, which are equivalent to speech if understood, so the oath, testimony, and contracts of a mute person are valid if understood. It indicates the judge gesturing toward reconciliation as guidance. Here, reconciliation occurred with mutual acknowledgment, as their dispute was not about the debt but about demanding it. Reconciliation with denial is permitted by Abu Hanifah and Malik, and it is the view of Al-Hasan, but Ash-Shafi‘i and Ibn Abi Layla said it is invalid. It also indicates persistence in demanding payment, intercession with the creditor, reconciling between disputants, and mediating well between them, accepting intercession in non-sinful matters, and lifting curtains at the room. This is stated in Umdat Al-Qari.

¹ The statement: “He repaid with better ones”: The hadith of Abu Rafi‘ also indicates that if someone borrows something and returns something better or more without a condition, it is an act of kindness, and it is permissible for the lender. It permits lending animals, which is the view of Malik and Ash-Shafi‘i. Abu Hanifah’s view is that it is not permissible. His evidence includes what the Imams narrated from Ibn ‘Abbas that the Prophet (ﷺ) prohibited selling animals for animals on credit, and from Jabir that the Messenger of Allah (ﷺ) saw no harm in selling animals, two for one, but disliked credit. From Ibn ‘Umar, the Prophet (ﷺ) prohibited selling animals for animals on credit, and similarly from Samurah. At-Tahawi narrated it in Ma‘ani Al-Athar. Abu Ja‘far said: This abrogates what we narrated from the Messenger of Allah (ﷺ) permitting the sale of animals for animals on credit, including borrowing animals. In Al-‘Urf Ash-Shadhi, Abu Hanifah said: Lending is only permissible for fungible items, i.e., measured or weighed. Ash-Shafi‘i said: Borrowing animals is permissible like forward sales, with clear specification to avoid disputes. Ash-Shafi‘i has the hadith of Abu Rafi‘, while we have the general prohibition against selling animals for animals on credit. The incident in Abu Rafi‘’s hadith is a specific case. If it is said that the prohibition applies to sales, not loans, I say: Their basis is the same. The context of Abu Rafi‘’s hadith, in my view, is that he bought a camel for a deferred price and gave camels in place of that price, so the narrator expressed it this way. Such transactions are common in our time. This is derived from Badhl Al-Majhud. ² The statement: “There is no harm in it”: Meaning, repaying a debt with something better than what was taken. This is stated in At-Ta‘liq Al-Mumajjad.

¹ The statement: “He bargained with us for trousers, so we sold them to him”: There is disagreement about him wearing trousers. Some denied it, citing that ‘Uthman did not wear them on the day he was killed, but it is confirmed that he purchased them. Ibn Al-Qayyim said: It appears he wore them, and they used to wear them in his time. This is stated in Al-Marqah.

¹ The statement: “Let him follow”: An-Nawawi said: The view of our companions and the majority is that the command is for recommendation. Some said it is for permissibility, and others said it is obligatory. This is stated in Al-Marqah and Umdat Al-Qari.

¹ The statement: “And his debt is on me”: This refers to guaranteeing the debt of a deceased person. Ibn Battal said: Scholars differed on someone guaranteeing a debt for a deceased person. Ibn Abi Layla, Muhammad, Abu Yusuf, and Ash-Shafi‘i said: Guaranteeing is permissible for him, even if he left nothing to cover it, based on this hadith. Abu Hanifah said: If the deceased left nothing, guaranteeing is not permissible, but if he left something, it is permissible to the extent of what he left. The response to the hadith is that it may refer to a prior guarantee, as the wording of acknowledgment and initiation in guaranteeing is the same, and the narration of an act is not general. It may also be abrogated, as its abrogation became clear to him. The hadith of Abu Hurairah, which comes later, indicates abrogation, where he said: “I am more entitled to the believers than themselves. Whoever dies among the believers and leaves a debt, its repayment is on me, and whoever leaves wealth, it is for his heirs.” In the narration of Abu Hazim from Abu Hurairah, the Prophet (ﷺ) said: “Whoever leaves a burden, it is to me, and whoever leaves wealth, it is for the heir.” Abu Bishr Yunus ibn Habib said: I heard Abu Al-Walid say: This abrogates those hadiths about not praying over someone with debt. Ibn ‘Abbas said: The Messenger of Allah (ﷺ) did not pray over someone who died with debt. A man from the Ansar died, and they said: “He has a debt.” He said: “Pray over your companion.” Then Jibril descended and said: “Allah, the Mighty and Sublime, says: The oppressor in debts is with Me for debts taken in transgression, extravagance, and sin. As for the chaste person with dependents, I guarantee to pay on his behalf.” So he prayed over him and said afterward: “Whoever leaves loss or debt, it is to me or on me, and whoever leaves sustenance, it is for his family.” He prayed over them. It may be said that it was not a guarantee but a promise to pay his debt. When the Messenger of Allah (ﷺ) knew the promise was true, he prayed, as the obstacle was lifted. This is derived from Umdat Al-Qari, Al-Luma‘at, and Bahr Ar-Ra’iq. In Ad-Durr Al-Mukhtar, it is stated: Guaranteeing a debt for a bankrupt deceased is not valid according to him, but the three others validated it absolutely, and if someone voluntarily undertakes it, it is valid by consensus.

¹ The statement: “Leaves a debt, its repayment is on me”: In Umdat Al-Qari, Ibn Battal said: This abrogates his not praying over someone who died with a debt. I say: This is because he did not pray over them before the conquests. When Allah granted the conquests, he prayed over them, so this act abrogated his earlier act, as Ibn Battal said. Bukhari indicated this with the chapter title.

¹ The statement: “Where funerals are placed”: This indicates that they did not pray over funerals inside the noble mosque. This is stated in Al-Marqah.

¹ The statement: “My brother died and left three hundred dinars and young children, and I wanted to spend on them, but the Messenger of Allah (ﷺ) said: Your brother is detained by his debt, so pay it on his behalf”: For this reason, our Hanafi scholars said: Debt takes precedence over inheritance. This is stated in As-Siraji.

¹ The statement: “Reconciliation is permissible”: Mawlana Muhammad Yahya, the deceased, wrote from his teacher’s dictation: Ash-Shafi‘i said: Reconciliation with wealth in case of denial is not permissible, because if someone reconciles with part of his wealth, the remainder that the creditor waives remains in the other’s possession, which is unlawful for him. The response is that it is not unlawful after the creditor waives his right. The unlawful and lawful refer to what is supported by Shari‘ah. The unlawful remains unlawful even after reconciliation, or the lawful remains lawful after it and becomes prohibited by reconciliation. Here, it is not so, as the prohibition is only for wasting another’s right. When he permits it, it is no longer unlawful. Ash-Shawkani said: The apparent meaning of this wording is general, encompassing all reconciliations except what the Lawgiver exempted in this hadith. Whoever claims the impermissibility of reconciliation beyond what the Lawgiver exempted must provide evidence. Abu Hanifah, Malik, Ahmad, and the majority followed the general meaning. It is narrated in Bahr from Al-‘Itrah, Ash-Shafi‘i, and Ibn Abi Layla that reconciliation with denial is not permissible. Reconciliation that prohibits the lawful, such as a wife reconciling with her husband on the condition that he does not divorce her, marry another, or stay with her co-wife, or that permits the unlawful, such as reconciling for intercourse with a slave woman that is not permissible for him, or consuming wealth that is not lawful for him, or the like, is prohibited. This is stated in Badhl Al-Majhud. In Al-Luma‘at, it is said: The relevance of this hadith to the chapter is subtle, except that reconciliation is often related to bankruptcy.

¹ The statement: “Chapter on Partnership”: Its legitimacy is established by the Book, as Allah, the Exalted, said in the verse on inheritance: They are partners in the third (An-Nisa: 12), and His saying: Indeed, many partners (Sad: 24). It is also established by the Sunnah, such as the hadith of As-Sa’ib: “The Messenger of Allah (ﷺ) was my partner in the pre-Islamic era,” narrated by Ibn Majah, Abu Dawud, and Al-Hakim, and the hadiths mentioned in this chapter. It is further established by the practice from the time of the Messenger of Allah (ﷺ), his Companions, and the scholars of his nation until our time without objection. Partnership is of two types: partnership of ownership, where multiple people own a specific item, such as through inheritance or purchase, and each is like a stranger regarding the other’s share, so one may not dispose of another’s share; and partnership of contract, whose essence is offer and acceptance. Its condition is that the subject matter must be eligible for agency, so it is invalid for permissible acts like gathering firewood or with conditions that nullify it, such as stipulating a fixed amount of profit for one, as there may be no profit beyond that amount. Its ruling is partnership in profit. It has four forms: mutual partnership, limited partnership, partnership of crafts, and partnership of reputation. Mutual partnership is between equals in capital, actions, and liability, meaning equality in the capital eligible for partnership. There is no issue with additional capital not included in the partnership. It is not permissible between a free person and a slave, a minor and an adult, or a Muslim and a disbeliever. This partnership is permissible according to us by analogy, though in reasoning it is not, which is Ash-Shafi‘i’s view. The basis for analogy is what Ibn Majah narrated from Suhaib, attributed to the Prophet (ﷺ): “Three things bring blessing: sale on credit, mutual partnership, and mixing wheat with barley for the household, not for sale.” Limited partnership is a partnership in all trade or a specific type, not including surety, valid with part of one’s wealth, even if one has more wealth, and with equal or unequal capital, but not necessarily equal profit, contrary to Ash-Shafi‘i, who requires equal profit with equal capital. Partnership of crafts, also called partnership of acceptance, work, or labor, is when two craftsmen, like tailors or a tailor and a dyer, agree to undertake work for a wage shared between them. It is valid even if they stipulate equal work but unequal wages, according to us. Ash-Shafi‘i holds this partnership invalid. The hadith of Abu ‘Ubaidah, mentioned in this chapter, is our evidence for the partnership of labor. Partnership of reputation is when two people without capital partner to buy based on their reputation, sell, pay the seller from the proceeds, and share any surplus. This is permissible according to us, contrary to Ash-Shafi‘i, who deems it invalid. This is derived from Al-Hidayah, Sharh Al-Wiqayah, and Umdat Ar-Ri‘ayah.

² The statement: “So send one of you”: This indicates that the People of the Cave delegated one of their group to buy food, and Allah recounted this without disapproval, proving that agency is established and legislated. This is noted by the commentators of Al-Hidayah, as stated in Tafsir Al-Ahmadiyya.