Untitled

Lyttelton Times, Volume XIX, Issue 1100, 27 May 1863, Page 4

Ox Monday next, the first of June, as our readers are aware, the Act of the General Assembly passed in its last session, and known as the Debtors and Creditors Act, is to come into operation, and as this law effects an entire change in the relations which have hitherto subsisted between debtors and creditors in the colony, a short abstract of it appears to us to be desirable.

The Act is entitled " An Act for relief of Debtors and for the better security of Creditors," and the first two clauses merely give the short title and repeal certain former ordinances. The third clause provides that any debtor who shall have been taken in execution under process may apply to a Judge of the Supreme Court for discharge from custody andforrelief underthe provisions of the Act. The next clause provides for the case of a debtor not in custody, who may, with the concurrence of a creditor or creditors, to the extent of not less than fifty pounds, apply to have his estate sequestrated, and for relief; and clause 5 requires that the petition shall in either case be accompanied by a full statement of the bankrupt's liabilities and assets, and of such other particulars as shall enable the Court to judge as to his " state, circumstances, and condition."

Up to this point the Act supposes the initiative to have been taken by the bankrupt himself. The next two clauses are of importance as pointing out the mode by which creditors may obtain redress where the debtor is unwilling to act with them. By these it is enacted that where any debtor has been three days in custody, or against whom a judgment shall have been out for fourteen days, and who shall have failed to give security to the Court; or where any debtor shall have absented himself from his place of business in such manner as shall reasonably imply his intention to avoid service of summons, or where he shall suffer any part of his estate to be taken with intent to defeat or defraud the general body of his creditors, —or shall himself, knowing ' 7 O his inability to meet his engagements, make away with any part of his property, except in the bond jxde transactions of his trade, then any creditor or creditors, to the extent of Fifty Pounds, may petition the Court for the sequestration of his estates, accompanying the petition with the necessary vouchers and grounds of debt, and setting forth any of the above allegations applicable. The Court hereupon takes the petition [ into consideration, and appoints a day for hearing. The routine to be followed for the sitting of Court and for the notice of hearing, is prescribed in the eighth and ninth clauses. On the day appointed for the hearing, the debtor must attend in Court, and be examined on oath, and the Court may order him to assign his estate for the benefit of his creditors to any person it may think fit, whether recommended by the creditors or not,; and, failing his complying, then the Court may appoint the Registrar or any other person it may appoint, to assign on behalf of the debtor, and to vest his estate in the trustee. Where the debtor complies with the orders of Court, and the Court is satisfied, he may be released and discharged from his liabilities. (Clauses 10 to 16). By clause 17, the Court may at once, on petition, grant an ad interim order of sequestration. This is necessary in cases where a preference may have been obtained by one creditor, and where the period during which it is reducible, would expire before the order for sequestration is issuable under the ordinary rule. Clause 18 provides for the protection of the person and estate of the debtor after filing of his petition ; while clauses 19 to 23 refer to settlements with creditors under the sanction of the Court; the first of these providing that upon the recommendation of

the creditors, the business of a debtor may be wound up under inspection; his trad,. carried on wholly or in part, or the fh m | closing of his business be suspended for amdefinite period; the next declaring that where the Court is satisfied that three, fourths in number and one-third in value, or one-third in number and three-fourth* ni value of the creditors within the colon v. any debtor are desirous that his estate should be wound up under composition or arrant, ment, the Court shall give effect to it. B v clause 23, it is provided that all deeds of arrangement entered into shall be bwidmoon all creditors whether they have been parties to them or not, provided certain conditions shall be complied with. are six in number, the first being the mo-r important, which requires that a majority- in number representing three-fourths in value of creditors of ten pounds and upward*. assent in writing. The 26th to the 29th clauses refer to the mercantile assessors, whose dutv it is m advise and assist the court when required upon any question relating to the conduct of a debtor, or as to the best course to be pursued in the management of his estate. The.se assessors are to be men of mercantile experience appointed by the Governor, and movable at his pleasure. The office i.' unknown in British practice, but has been found to work well we believe on the Continent. The 30th and 32nd clauses declare any disposal of real or personal estate bv a prisoner invalid, unless made with consent of the court, and the 31st declares anv assignment made by an insolvent within three months of his bankruptcy to be fraudulent and void as against his trustee, who is empowered by the 33rd clause to receive and recover any debts, &c., disposed of by a prisoner contrary to the provisions of the Act. as if no such disposition had taken place. The 34th to the 36th clauses provide for the maintenance of prisoners under the ordinance. The 37th authorises the calling of meetings of creditors as required; the 3Stli permits the court to employ from time to time receivers, agents, clerks, and accountants. The mercantile assessors may also be allowed to employ clerks and accountants where necessary. The 39th and 40th clauses provide for an Insolvent Estates Fund, from which the costs and expenses arising under the Act are to be paid. Should the state of the fund be such as to prevent payment of these charges, the Colonial Treasurer is to make the necessary advance by way of loan on the order of the Court. Every estate brought under administration through the provisions of this Act is to pay a contribution of five per cent, on the gross proceeds to the fund. The 41st clause defines certain deeds of omission or commission by which a bankrupt is precluded from obtaining relief under this Act until after the expiration of such time as the court may order, not exceeding one year from the date of his first imprisonment: and the 42nd contains a list of offences enumerated under eleven distinct heads, the commission of any of which by a debtor renders him guilty of a misdemeanor, and liable to imprisonment for three years. The list appears formidable, but is we believe copied from the present English Insolvency Act. By the 43rd clause it is declared that the Act shall not extend to Crown debts, while the remaining ten clauses refer chiefly to the powers of the judges.

Such is a brief outline of this Act, which, we trust, will pi'ove a boon to the community at large, and especially to those engaged in mercantile pursuits. Up to the present time a creditor has had no protection whatever from a designing and fraudulent debtor, while, on the other hand, the upright, though unfortunate debtor, has been in too mauv cases crushed by one or two creditors who I would have their pound of flesh and nothing else. The new law provides a remedy in both cases. Under its stringent provisions it will no longer be an easy matter lor a debtor by collusive transfers of his property to drive his creditors into a corner, with the polite intimation that if they don't take what he chooses to offer, they can have nothing, except his worthless self, nor will one or two individuals have the power ot thwarting the general body of creditors, aiul of blasting the future prospects in life ot an honest and industrious, though unsuccessful man, by unreasonable or vindictive opposition. It is possible that the Act is too cumbrous in its detail. Mr. Justice Richmond, in his charge to the Grand Jury at Otago, congratulated them on having obtained it, but thought that it left too muck in the hands of the Judges. AY e have reason to believe that the Select Committee of the House of Representatives, to whom it was referred, and to whom we owe it in its present shape, were of the same opinion, but felt that if they had carried their alterations farther, the whole Bill would have been shelved for another session. They preferred, therefore, to send it out as a tentative measure, though avowedly most imperfect, rather than that the law should remain longer in its former unsatisfactory state. A beginning

has at least been made, and the necessary amendments will no doubt follow. If our Chamber of Commerce is to be regarded as rea lity, and not as a sham, it will take its part in pointing these out to our representatives. It is but little to its credit to be able to sav that it is in no way responsible, either f or the merits or for the defects of the Bill; let it aid in reforming it.