THE BANKRUPTCY ACT.

Evening Star, Issue 4130, 23 May 1876, Page 2

THE BANKRUPTCY ACT.

The Canterbury Chamber of Commerce have brought up a well-considered report on the above, and will forward their suggestions to the Minister of Justice. They think that the distinction created as to the mode of summoning uncalled for ; that in both cases it ought to be made the debtor’s duty to give immediate notice to all his creditors that a declaration of his insolvency has been died, but a proper ‘ Gazette’ notice ought to be sufficient for the lagal validity of the meeting; that whenever a debtor declares his insolvency, he should be required to file with his declaration the statement of his assets and liabilities, usually known as the “ Four-day statement,” and that when the creditors’ meeting is summoned by a creditor, he should be required to produce to the meeting along with his books a similar U>t; that whether the meeting be summoned by himself, or by a creditor, the debtor ought, in all cases, to be under a legal duty to attend; that the debtor s property should not only vest in the Registrar as at present immediately on the filing of a declaration, but that it should be his duty to take interim possesswn until the general meeting, on the requisition and indemnity of any creditor. That the present plan 1 e proof of debts is unnecessarily complicated ; a simple declaration in writing, signed as at present (which might be made, if necessary, sulrect to the penalties of perjury), ought to be sufficient; the Chairman of the meeting, .as such, to have power to take such declaration; provision to be made enabling proof, proxies, &c., to be transmitted by tbe telegraph as well as by post. The provisions as to place and quorum of meetings should remain as at present. The principle of a scale of voting is a good one, and if, as it, has been lately said on high authority, the existing regulations are ultra vires, power should now be given to make them. It is, however, a mistake to exclude creditors under LlO from the right of voting ; they might either be allowed one vote each, or might combine in certain numbers to appoint a proxy. That trustee’s elect;ou as to leaseholds should be made within one month after appointment. That it is undesirable to continue in its present form the provision in the Act which requires the presence of half of the whole body of creditors to confirm a liquidation resolution. That power should be given to trustees to declare a dividend without an order of Court, ’t hat bankruptcy proceedlugs should, be exempted from tbe operation of the Stamp Act; and that where creditors do not attend a meeting, or if attending do not agree to a liquidation, tbe debtor should remain, as to property and liabilities, where he was before the meeting was sum* moned—practically in the position of one who could not obtain a release from his debts, and the (burt should not interfere except upon tome well defined ground. There are other two recommendations which are of sufficient interest to our mercaiitilo readers to admit of their quotation in full• intended to he effected by tbe Act, that of snbstilmi. K the action of the credi ors as largely as pos.sll to for ihat of a court of law, in every way desivuh.o and we liust the Le. wil! not be induced, at all events until the rtsult of a very sufficient experience has shown that it will not work, to abandon the priiic pie of the resent measure. On the contrary, we are of opinion that there ought 10 be no insuperable difficulty in ensuring its efficient working. +^^l r « Served J oth . elaß l wliat appears to us to bo by far the at st senous defect in the Act—tho great obstacles which it 1 laces in the way of oredi. Qorswhomy wish themselves, to commence proceedings in liquidation, instead of. leaving it to the debtor. A debtor has nothing to do but to declare himself insolvent, and the proceedings commence at once. The creditor, on Ihe contrary, must fli-st prove that the debtor’s liability to him amounts to L musfc then obtain au order of Court ■•i.abliug bun to summon a meeting. This nraih will only he issued after a summons calling on tho debeor to show cause against it, and must be based upon proof cf one of these acts of tho debtor havmg been committed, which have for a long period been known to the law as " Acts of Bankruptcy ** For instance, it the creditor can prove that tho debtor Las executed on assignment; made a wav with his property, denied himself to his creditors or suffered execution against himself to the extent of LSO, he may then, after the debtor has been heard m opposition, obtain the neoess rv order, and commence proceedings. Wo r- commend this amount should be reduced to LlO. This course of proceedings by no means deals out even-handed justice-to .the creditors. It obviously ex loses any creditor attempting to avail himself of it to both expense and trouble, and it is quite possible to place the creditors in a much more advnutngcous position, without diminishing any of the safeguards against oppression which ought undoubtedly to be secured to the debtor. The question naturally arises, why if a debtor is allowed to ©Man the benefit of the Act, by simply declaring t. at he is iruolvent, his creditors a so should m.t be allowed to put the Act in morion, by declaring th > same thing. The facts u pen which the order of the Court is at present obtain able are really acted! pon, because they afford good reason to believe that the pe son of whom they can be affirmed is in insolvent circumstances. But they are by no means all the foots capable of legitimately establishing this conclusion It is obvious that a man may be insolvent, and may be well known to his creditors to be insolvent who has not committed himself in any one of the particulars just mentioned. Are there no conditions under which tho creditors can safely be permitted to act on their commercial knowledge of their debtor’s position, without being confined to tho proof of one of these extreme cases of insolvency which has been handed down to ns in successive Acts of the Legislature from a when the law of Bankruptcy ha-1 hardly hetrau to exist? We think that if a limited numSer of creditors (say three) are willing to unite in a declaration, to be signed by them and filed in Court, that they verily believe A. B. to be insolvent, they ought thereupon to he authorised to summon a meeting. At this meeting it ought to be made incmnbent on tho debtor to be present and to produce his books, and four-day list. If he can then succeed in explaining his position to the satisfaction of the meeting he has the opportunity of doing so. If he does not so succeed, the meeting should have the power of adjourning for the purpose of considering a liquidation resolution. And if in the case of meetings sdmmoned by creditors this resolution is forbidden to be passed until after an adjournment, the debtor and other creditors will practically secure sufficient safeguards against tbe action of nndne motives. In tho first place, it must be remembered that tho ucctssity of uniting (three) cred.tors In this procceding is in itself an important safcguaid against the debtor 1-ehu? exposed to the malicious feeling or harsh temper of an individual. Secondly—A creditor has litile temptation to declare a man a bankrupt so long -b he thinks ho baa a ohaneo ©f ultimately getting his debt. Thirdly—lf le> ft disposed to act maliciously, he is checked by his liability to an action for doing so; and, in the fourth pined, his whole proceedings are subjected to the immtidiale judgment of Lie Ixother orea. tors, who are at liberty to pass whatever 1 esolutiou they think fit pertinent to the matter.