BANKRUPTCY LAWS

Hawke's Bay Tribune, Volume XXI, Issue 303, 7 December 1931, Page 11

BANKRUPTCY LAWS

REVIEW OF EARLY DAYS HARSHNESS AND SEVERITY. BENEFITS IN MODERN TIMES. A summarised history of bankruptcy law and comments on the administration of the New Zealand Act were given by the official assignee, Mr J. H. Robertson, in an address at the Creditmen's Club luncheon in Christchurch. ‘‘{Bankruptcy law is primarily designed for the equal and fair distribution of a debtor’s estate and for the proving of debts against it.” said Mr Robertson. “It provides for the public investigation of the conduct of a debtor and extends its benefits toward honest debtors whose insolvency is caused by misfortune. It is intended to be a disagreeable process and not to afford relief in cases of fraud and the reckless piling up of debts.” Going back into early history, Mr Robertson said that, at fairs conducted in the Mediterranean countries, where practically all the world’s business was done, there were groups of merchants travelling from one place to another. These men occasionally defaulted in their payments and it was then the custom to break the bench which they had used in the market—hence the word “bankrupt," the Latin derivation of which meant broken bench. “Early bankruptcy laws were marked by harshness and severity, and men who failed to pay their debts were frequently thrown into gaols, where they sometimes stayed until death." continued the speaker. Relief under bankruptcy law was at first only applicable to traders. Tho first laws enabling a bankrupt’s property to be seized and divided among his creditors were passed in the reign of Henry thy Eighth. Further statutes, some of which were in force in England to-day, were passed in the reign of Elizabeth. THE STUART KINGS. Under the Stuart Kings, commissioners were appointed whose duty it was to attend to the proving of debts, gathering assets and the division among creditors. That system had resulted in corruption. In Queen Anne’s reign, Bankrupts by the wish and consent of creditors, were issued with a certificate of conformity, which was the forerunner of the present-day discharge from bankruptcy. The foundations of modern bankruptcy law were established in the Acts of 1861, 1869. and 1883. English law was based on Scots law, which had the old Roman iaw for its origin. In New Zeidanu, the first bankruptcy statute was the Debtors and Creditors Act of 1844. In 1867 a committee was set up to inquire into the whole question, and, as the result of its deliberations, the 1867 Act was passed. Under that Act. Mr Robertson explained, the Court official took charge w a bankrupt estate until the creditors appointed a trustee. The administration of the Act was controlled by an official known as the Accountant in bankrutpey, in Wellington. GIVE A BONUS. One of the provisions in those days was for a bankrupt who paid more than 10s in the pound to be given a bonus or gratuity, probably as an incentive to disclose all his assets. The 1867 Act did nor work very smoothly, and, under an Act passed in 1883, official assignees were appointed. Judges then had summary power on an application for discharge and there were strict penal clauses which were made less severe in 1892. Since then there had been only one amendment, in 1927. and that did not affect the structure of the Act. Mr Robertson spoke of points of interest in the administration of the Act and explained technical details. “Th. charge is sometimes made that debtors who aro not entitled to relief use the Act for ths purpose of escaping payment of their liabilities." concluded Mr Robertson. “If this has any basis of truth, fhe fault does not lie with the Bankruptcy Act, the provisions of which are complete for penalising misconduct. The loopholes are the difficulty of obtaining proof and the frequent apathy of creditors, but the evil in a large part arises out of the ease with which credit is obtained in modern society. The magnitude of the tax on the community is apparent. In the direction of mitigating that tax associations of creditmen fufil a valuable function and their efforts are worthy of encouragement."