THE BANKRUPTCY LAW.

Star (Christchurch), Issue 621, 19 May 1870, Page 3

THE BANKRUPTCY LAW.

A Committee of the Dunedin Chamber of Commerce, recently appointed to consider the state of the Bankruptcy Lav, agreed to the following report:— 1. The first point taken into consideration by the Committee was the definition of an " act of bankruptcy," in regard to which the present Act is ■•verjr defective. In order to do away with the existing difficulty of obtaining adjudication of bankruptcy against a trader, who may have voluntarily acknowledged his insolvency, but refuses to take any steps to protect the interests of the general body of his creditors, the Committee would suggest that "insolvency admitted or proved" ought to be declared an act of bankruptcy. "Insolvency" is a word frequently used in the Bankruptcy Act, and it would appear to be desirable that it should be distinctly defined as "inability to pay just debts." It is also desirable that the words " or suffer execution of a judgment decree, or order to be levied by seizure and sale of his personal property, or any part thereof," with which the sth clause of the definitions of acts of bankruptcy concludes (see section 27, Bankruptcy Act, 1867), should be constituted a separate clause, so that their meaning may not be modified by the previous words, M with intent to defeat or delay bis creditors." The Committee is of opinion that it is scarcely possible for any case to arise in which injustice could be done by an adjudication of bankruptcy against a debtor whose goods have been levied upon for debt. 2. A provision ought to be made to secure instant possession being , taken of a debtor's assets for the benefit of his creditors upon his being adjudicated a bankrupt. The necessity for this is too obvious to need comment. S, A large proportion of insolvencies under the present Act are cases in which the whole debts do not exceed £100. Tht provisions of the Act are in many points Tery unsuitable to these cases, and the committee is of opinion that arrangements should be made for their being dealt with in a summary manner by the inferior courts. 4. It appears to the committee desirable that the principle introduced into the English Law by the Bankruptcy Act passed last year, in accordance with which the debtor is deprived of the right of petitioning the Court on bis own behalf, should be adopted in this colony. Cases might occur in which the interests of distant creditors might be jeopardised by this change. To obviate any chance of this, it is suggested that all creditors should be allowed to share in the proceeds of any exocution levied within thirty days of bankruptcy, a system which would not differ much from the state of the law as it exists in Scotland. The right to petition for adjudication should be granted to any creditor whose claim amounts to £50, or to any number of creditors acting in concert, whose joint claims reach that amount. 5. The present law provides for the administration of bankrupt estates by the creditors themselves, or under their direction, when they choose. to avail themselves of its provisions. If they take no action, the Court, by its officer, the Provisional Trustee, steps in to realise and distribute the assets. The committee thinks that the principle of the English Act, by which the Court is restricted to jndicial action only, is much more sound, and recommends that the administration of estates should be made compulsory on creditors. At the same time, every possible facility should be given to creditors for proof of debts, and for joint action in regard to the common interest. The power at present given to a few local creditors to accept any arrangement on composition offered by a debtor (see sections 246 to 248, Bankruptcy Act, 1867) ought to be withdrawn, and the rule as to the number of creditors whose assent shall make an arrangement with the debtor binding oh all Bhould be the same as in the case of an ordinary assignment, viz., a majority in number representing three-fourths of the amount of his debts. A simple form for proof of debts should be given in the schedule to the Act. A proof of debt, made upon information properly furnished, tendered by an attorney or an authorised agent for an absent creditor, should also stand good, unless the claim Bhould be disputed on its own merits. Notice ought also to , be served upon all creditors immediately after an adjudication of bankruptcy, or advertised in every province in which the bankrupt may have creditors, and proper time should be given for proof of debts to all distant creditors. 6. Tbe committee unhesitatingly recommends that the provision of the new English Act, by which a debtor cannot obtain a discharge (except by consent of hig creditors)

unless a dividend of 10s in the £ is paid, should be brought into force in this- colony. A fair period, say two yean, should be allowed to the debtor to make up a diridend of that amount, if his estate fail to realise bo much. Two very important points (besides others) would be gained by this change.. Debtors would not postpone an admission of insolvency until their estates had been all but exhausted in fruitless efforts to stave.it off, and they would have a personal interest in assisting the trustees to make the most favourable realisation of their assets. 7. The committee is of opinion that after adjudication of bankruptcy the law coßts incurred on the debtor's account should not be made a charge upon his creditors by being paid out of the estate. 8. In the case of debtors who are in the receipt of salaries or wages, the committee would . recommend that a part of future in* come should, upon an order of the Court to that effect, be made liable for the purposes of dividends until made up to ten shillings in the pound. ' • 9. . A remedy ought to be provided for the present difficulty of making a firm bankrupt where one of the partners is absent from the colony; 10. Fraud, where manifested in connection with a bankruptcy, ought, in the opinion of the committee, to .he prosecuted by a public: officer, and at the public expense, as in the case of other crimes. ' 11. As closely' connected with the questions already discussed, the committee has had under consideration the subject of bills of sale over traders' stocks, and desires to express its opinion that billß of sale should only be valid when given over specified articles which can be scheduled and identified.