A BANKRUPT’S ESTATE

Evening Star, Issue 18254, 19 April 1923, Page 11

A BANKRUPT’S ESTATE

PAYMENT TO A CREDITOR.

[Pee United Press Association.]

CHRISTCHURCH, April 18. Whether a payment made by a man to a creditor sis weeks before his bankruptcy was valid' or not was discussed in the Supremo Court to-day, when the Official Assignee in the estate of Fred. Thomas 6inith, builder, sought an order that payment of £62 11s 9d made by bankrupt to E. Reece, Ltd., be declared void as against the Official Assignee, on the ground of fraudulent preference. Mr Justice Adame heard the application. Mr A. T. Donnelly appeared for the Official Assignee, and hir' W. J. Sim for Reece, Ltd. _ Mr Donnelly stated that Smith made the payment on March 16, 1922, and on May 8 following he became bankrupt. He had since stated that-he had been sued by one creditor, but just before making the payment to Reece, Ltd., ho received £246. He thought that, as he had not enough to go round, he would give preference to those creditors who had been considerate to him and had not pressed him for payment. That was his explanation. Six weeks afterwards his debts amounted to £1,070. lie said that ho knew he was in difficulties, but ho did not think he would have to file. Counsel submitted that bankrupt’s statement clearly showed that he was unable to pay his debts, and that ho had granted fraudulent preference to Reece, Ltd. Sim, in reply, said that the latter had accepted payment in perfect good faith, and that this was sufficient answer to the claim. The company was not aware ■that Smith was in difficulties, as was shown by the fact that it gave him further credit after receiving the payment. His Honor, after reading affidavits filed by the defendant company, said that the statements therein were” uncontradicted. The transactions with Smith appeared to he entirely normal. The company had established ita own good faith, and had shown that it received the money for valuable consideration. In dismissing the application, His Honor remarked that it had been necessary for the Official Assignee to bring the matter before the court.