The Press. WEDNESDAY, JANUARY 3, 1877.

Press, Volume XXVII, Issue 3584, 3 January 1877, Page 2

The Press. WEDNESDAY, JANUARY 3, 1877.

Ty one point of view the new Debtors and Creditors Act is likely to give a fair degree of satisfaction. It ia anything but what it would have been, had it been framed on the principle of making the necessary amendments in the Act of 1875, but it is very considerably better than a mere reproduction of the Act of 1867. It is very far from placing the.whole management of a debtor's affairs in the hands of hie creditors, but it does allow proceedings in bankruptcy going on to a much more considerable extent than formerly without the intervention of the Court. If the new Act be regarded, as it was doubtless intended by its framere, as an improved edition of the Act of 1867, there ie a good deal to be eaid in its praise. It is a very great improvement in the new Act, that when a debtor has once filed his declaration of insolvency, he is actually concluded. He cannot, as frequently happened under the old Act, omit to follow it up, or take advantage of any lapse of hie creditors in forming a meeting. The mere fact of filing his declaration makes a bankrupt of him at once. The Registrar fixes a time and place for the meeting of hie creditors. If they do not appoint a trustee, the Registrar himself nominates one of the certificated Accountants in Bankruptcy to fill that office, and the trustee bo appointed immediately proceeds to realise and distribute the assets. In the same way in regard to the debtor, he is no longer exposed to the danger of inattention on the part of hie creditors to his claim for a discharge. In any event he can apply to the Court, which has now a clear jurisdiction to grant it, even although his creditore should oppose. If for any reason the Court should not make the order, the debtor nevertheless stands absolutely discharged at the expiration of three years from the date of filing his declaration. The whole of that portion of the old Act which rendered the debtor liable in respect of afteracquired property, and limited the effect of his discharge to 10s iv the £ of his liabilities, is altogether swept away. In another point of detail, improvement iff already generally recognised. Under that Act, whether it was the fault of the measure itself or the way in which it was worked, the creditore as a body had no means open to them of examining for themselves the debtor or his books, so that they might ascertain how his affaire really stood, or what were the causes of his insolvency. Under the present Act, all this is reversed. It is made the duty of the debtor to attend the creditors' meeting, previously to which, and indeed concurrently with his filing his declaration, he has placed his books in the hands of the Eegistrar, and discovered the necessity of informing that official fully of the extent and whereabouts of his assets. The Registrar also attends, places the books in the hands of the Chairman, and informs the meeting fully of what he has learned. Thus armed, the creditors are under no difficulty in questioning the debtor as to his affaire, and are at all events in a position to elicit from him, if not the whole truth, enough to furnish the groundwork for a further enquiry. We are not surprised to note that it has already become usual to engage the services, for this opportunity of examining the debtor, of the most skilful handlers of adverse witnesses to be found in the profession. So far as this goes, and while it continues to work, there can be no question but that a very great alteration for the better is thus effected in the Act of 1867. But it must not be lost sight of that the working of the whole system still depends upon the willingness of the debtor to subject himself to the provisions of the Act. If, as we have said, he has once filed his declaration, everything thenceforward goes on smoothly enough. But if for any reason he refuees to take this preliminary step, the creditors are then left to their own powers of initiating proceedings, and these in general may be regarded as a practical nullity. Now, most certainly, the immediate prospect of a severe cross-examination is not the likeliest thing in the world to tempt a debtor to place himself I at the disposal of his creditore ; and if this sort of thing is to become the general rule, as would eeem probable if the Act is to work efficiently, we may naturally expect that debtors will become less willing than they hare ehewn themselves heretofore to take the benefit of the Act. It must be remembered that the inducements to this course are by no means without counter-balancing considerations. In the times when a debtor's person could be imprisoned for an indefinite period, and the whole of hie future property as well as his present assets be rendered liable to the claims of hie creditors, an ordinary debtor might be expected to eubmit to a con' ' siderable amount of badgering in order to obtain relief. Under the existing laws of New Zealand there is, it is true, a process by which, if an execution against his property fails to ; satisfy his creditor, he may ultimately and for a short time be imprisoned. But this process is so tedioue, and**

involves such ample notice to the debtor, that it must be his own fault entirely if he cannot escape it; while, "as to his property, it does not much matter to him, supposing it is to go, whether it is all taken in a lamp by the creditore in a body, or each one successively takes what he wants of it as long as there is anything left. "We should cay that if a debtor ia conscious of having given his creditors any serious cause of offence, he-will best consult his own comfort by leaving the Bankruptcy Act to be dealt with by others. He certainly ought to have nothing to do with it. ■ • . - .

No doubt the last conclusion that ought to be drawn from this state of things would be that the stringency of the Act in the particulars we have been alluding to ought to be in any way mitigated. The plainest right which creditors can have against an insolvent debtor is to know what he has been doing with their money, and the only thing one can desire with respect to any machinery which enables them to satisfy themselves on this point is to be assured that it will last. Ifow the only way in which the willingness of a debtor to declare himself insolvent, notwithstanding the unpleasantness to which he will thereby expose himself, can be assured, is by making it evident to him that if he does not make himself a bankrupt his creditors will. And there is no good reason why they should not be in a position to do so. It ought to be just as easy for a man's creditor to make him insolvent, as it is for himself. As far as the relative interests of the parties are concerned, the stake of the creditor is certainly greater than that of the debtor; and if it be objected that the creditors might possibly proceed undef a misapprehension of the debtor'e real position, and declare a man to be insolvent who was not really reduced to that extremity, the answer is that this is scarcely a risk sufficient to be taken into calculation. It must be observed that the debtor is not, in point of fact, meeting his engagements as they arise. If he can do so and refuses, the misapprehension under which his creditore are eupposed to act ie one of his own creating, and can hardly be complained of by him. If he is really unable to meet his engagements, he is then in that state of insolvency which the law recognizes as fit to be acted on.

"We anticipate therefore that the probable success of the new Act in enabling the creditors to detect and deal with misconduct on the part of their debtor, when they have once got him into their hands, will render ife inevitable that the course we have recommended of allowing the creditors to initiate bankruptcy proceedings, on the same basis as they are commenced by the debtor, must undergo further consideration. As yet, we have nothing but the old-fashioned acts of bankruptcy for a creditor to proceed upon. He must show that the debtor hae had an execution against him for £50 and upwards, and that such execution has been returned

debtor has left New Zealand, or at all events gone away somewhere for the purpose of defrauding hid creditors. Or he must produce some fraudulent gift or preference, and establish its fraudulent character. Or he must take advantage of some formal defect in an assignment for the benefit of creditors. Unless he can do some one or other of these thing?, he cannot make his debtor a bankrupt; while if he can do any of them, the probability is that by the time he has got his bankrupt there will be no assets left to realise. Under theee circumstances it is obviously not too much to cay that the power which creditore have of making their debtor bankrupt is practically nil, and so long as this is the case, it must rest entirely with the debtor whether or not he will himself commence proceedings. It may be said indeed that we have not sufficiently proved our case. There is a wide interval, it may be observed, between the acts of bankruptcy at present recognised by law, and allowing two or three of a man's creditors to declare under penalties their belief in his insolvency, and permitting them to proceed upon such declaration. No doubt the interval is considerable. But we think that if the attempt be made to select any particular commercial default as sufficient to indicate insolvency, it will be found that there is no particular act which may not in itself be capable of explanation, and on the other hand that a debtor may be and be well known to be actually insolvent, although he has not yet committed any such act as we are supposing. It is possible, for instance, that the dishonor of a trade bill on the fourth of the m >nth may be accounted for. The debtor may be ill in bed, unable to attend to business, or may have been unexpectedly detained at some place where he could not use the telegraph. On the other band, a trader who contrived to meet all his bills last month may know perfectly well, and his creditors know equally well, that he will not meet them again. Are his creditore in such a case to sit down powerless because he refuses to face the inevitable necessity ? If they are willing to sign a declaration, upon their responsibility for consequences, that they verily believe him to be insolvent, why should not the same credit be given to their declaration as is now allowed to his own ? Iα either case the creditors should be called together, and the debtor required to explain his position. This or something tantamount to it is, as we conceive, the not distant outcome of the improvements effected by the present Act in the system of 1867.