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The Ashburton Guardian. Magna est Veritas, et Prevalebit. MONDAY, JULY 24, 1882, Bankruptcy Law Committee’s Report.

TOWN EDITION. \lssued at 4.20 p.m.;

The joint committee’s report, which was brought before the House on the 6th instant, on the existing bankruptcy law in the colony, points out the great difficulty of providing against the frauds and other malpractices which unscrupulous traders have for years past, in numbers of cases, perpetrated, to secure themselves from paying their just debts. The committee acknowledges the difficulty of aiming at a system which shall establish a sound principle for proceedings in bankruptcy, owing to the utter failure of the last and most carefully-prepared Act—the English Act of 1869, and the numerous attempts for years past in this and neighboring colonies to cope with the difficulty in a satisfactory way. Not the least surprising is the little assistance given to the committee in the matter of needful reform in bankruptcy law suggested by the Supreme Court judges in answer to questions put to them by the joint committee. The Judges’ opinions are various and conflicting, and in many cases the questions put to them have not been answered at all. Perhaps, after all, this is not to be wondered at, because there are one or two lawyers on the committee, and sometimes their questions evolve difficulties in the matter of direct reply, even from a Judge. One of the learned Judges proposes, in cases of fraudulent bankruptcy, that the creditors should prosecute only by leave of the Court. We daresay his Honor has very excellent reasons for doing so, but why, the expense involved in indicting a fraudulent bankrupt, or the delays in the usual processes of the Courts, should have to be resorted to by the creditors, we are unable to comprehend. The recommendation to deal summarily by the Court with certain cases, as made by the committee, is, we think, a wise one, and one that will be found to work well. With reference to the discharge of bankrupts, we quite agree with the committee that, generally, the suspension of bankrupts hitherto has been a farce, as they can be relieved of their trouble by the assistance of kind friends in paying a composition to creditors. The proposed condition is that a bankrupt shall pay such sum in the £ as the Court may fix, the Court having further power to rescind or alter such order, so long as it does not increase the amount to be paid. The first clause of the report deals with the most cardinal points of the proposed amendments. First of all, full powers are to be vested in a Judge sitting in bankruptcy to try all cases, and nothing is to prevent the Judge of the Court from exercising all the powers, as in the Supreme Court, in all matters arising out of bankruptcy, the setting aside of fraudulent deeds or transfers of property, or in any matter which the official assignee claims as property from third parties, and that proceedings in such Courts can be effected by simple procedure without pleadings, with the right of appeal when the amount exceeds £3OO, to the Appeal Court, whose decision shall be final. Section 9 of the New Zealand Act of 1876 is stated to be useless in practice, and will, most likely be amended or struck out. Official assignees are recommended to be appointed, who should give security to the extent of £5, 000 at least, the creditors having power to appoint one or two of their number to advise with the official assignee, to be called supervisors. A penalty is to be imposed on all official assignees who omit to file a statement of the bankrupt’s accounts and pay a dividend (we presume, if there is any) once at least in every three months, or any enlarged period assented to by a meeting of creditors, a creditor may, if he can show good cause, order the official assignee to pay any money into Court, to proceed with the distribution of estates forthwith, or any matter, in fact, which the exigencies of the case require. If any creditor makes frivolous applications to the Court, the latter may order the applicant to pay what costs it thinks fit. Clause 5 provides that a Judge sitting in Bankruptcy shall have power, as before stated, to try all cases of fraudulent bankruptcy under the Act in open Court, and that witnesses may be examined as in other Courts. If the Court is satisfied that fraud has been committed under the bankruptcy laws, or a bankrupt has been grossly misconducting his business, it has power to sentence the guilty one to imprisonment for a period not exceeding twelve calendar months,

either whh or without hard labor. This will be a step in the right direction. 1 For years past the procedure towards fraudulent bankrupts has been, so far | as New Zealand is concerned, a matter of unfavorable comment in Home and foreign commercial circles. Cases have ccme under our notice where the foreign creditor has enriched the New Zealand creditor by providing the only assets available for paying a dividend. In such instances the goods of a creditor delivered immediately proceeding a trader’s bankruptcy, become, •if available, the property ot the body of the creditors, and we see nothing in the joint committee’s recommendations to protect the unfortunate creditor who unwittingly provides the best part of the dividend. Such a creditor should be allowed fully xo per cent more than anyone else. We knew a case a few’ years back in which a cultivator was delivered one afternoon to a contractor in this neighborhood, and the day following the delivery the implement appeared in a bill of sale given to a previous creditor. The contractor became bankrupt, and there was no dividend. Many such cases are known to occur day after day, and nothing seems more flagrantly illegal than to secure particular creditors for past debts with a trader’s stock-in-trade by means of a bill of sale. The farmer or the manufacturer stand in quite a different position to the trader, because in their case important industries would be fettered were such instruments as bills of sale not held valid against assignees in bankruptcy. With the trader, however, it is either bankruptcy or fraud to give security over goods for which he has not paid one farthing. Another important matter is the regulation of the costs of solicitors or counsel in cases of bankruptcy. The scale will be similar to that in force in the District Court, which is undoubtedly the lowest, and consequently the most satisfactory obtainable, but under no circumstances are costs to be allowed, as at present, between solicitor and client. The former is not allowed to take from the debtor any sum of money on account of costs, excepting actual Court fees, cost of advertising, etc. The fixing of charges allowable to solicitors for opposing as well as for debtors, is also provided for, the presiding Judge to fix the sum payable in cases of dispute between solicitors, and official assignees or supervisors. In section 29 of the present Act, an alteration is to be made, so that its effect will be not conditional but all Acts thereon mentioned are to be actual acts of bankruptcy, for particulars of which our readers are referred to the Act. Various other recommendations are made by the joint committee, such as Bills of Sale being unavailable if made within three months of bankruptcy as against creditors, excepting to secure actual cash advanced at the time of execution, but we fail to see how this would work if the assignment of property for the benefit of one or more creditors shall be an act of bankruptcy, whether made fraudulently or The costs and fees of official assignees are to be fixed on the amounts realised in estates up to per cent, and over that amount 1 per cent. —unless a Judge shall otherwise order. Creditors supervisors must notto be paid more than per cent, in all, costs.of bankrupt not to exceed j£zo in addition to Court fees, not payable unless by order of the Judge, and solicitors cost up to debtors discharge not exceed £2O. There are a few unimportant points which we have not touched upon in this article, but enough has been said to show that the joint committee on bankruptcy law have made some very good recommendations, in their report, and if not altogether meeting the wishes and views of creditors generally, they have at least laid down a fairly practicable system, which will, to a certain extent, lessen fraudulent transactions, secure the prompt distribution of estates, and fix within theirproper limits the legal costs, which under the present Act seems utterly impossible. The earnest consideration of the Government in respect to bankruptcy reform is one of the greatest moment to the community, and we hope these amendments will be made before the session closes.

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Permanent link to this item

http://paperspast.natlib.govt.nz/newspapers/AG18820724.2.6

Bibliographic details

The Ashburton Guardian. Magna est Veritas, et Prevalebit. MONDAY, JULY 24, 1882, Bankruptcy Law Committee’s Report., Ashburton Guardian, Volume III, Issue 696, 24 July 1882

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1,494

The Ashburton Guardian. Magna est Veritas, et Prevalebit. MONDAY, JULY 24, 1882, Bankruptcy Law Committee’s Report. Ashburton Guardian, Volume III, Issue 696, 24 July 1882

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