The Evening Star TUESDAY, NOVEMBER 28, 1876.

Evening Star, Issue 4292, 28 November 1876, Page 2

The Evening Star TUESDAY, NOVEMBER 28, 1876.

The provisions of the new Debtors and Creditors Act, which came into force on the Ist instant, illustrate the truth of a remark we made some time ago to the effect that the right policy to have pursued in dealing with the bankruptcy law was to consolidate and amend it upon the basis of the Act of 18(>7, instead of making a fundamental change of principle as was done by the Act of 1875. A twelvemonth's experience of the latter Act proved that our legislators had got off the proper track entirely, and they are now discovered retracing their steps from sheer necessity. The Act of 1875, it will be remembered, excluded deeds of arrangement from the bankruptcy law altogether, and thus deprived a debtor and his creditors of the ability to use that cheap and easy mode of settling their difficulties. These deeds are resuscitated by the present statute, and, as in the Act of 1867, can be made either without the filing of a declaration of insolvency, or after such a step has been taken. In the former case the debtor must, after executing the deed himself, file it in Court, and give notice in the ' Gazette ' of his having done so ; likewise, by the same notice, convening a meeting of his creditors for the purpose of assenting to the instrument. Within four days afterwards he must further file a statement of his assets and liabilities. The deed will not be daemed completely executed until it has been assented to by a resolution in writing passed by a majority in number represent ing three-fourths in value of the creditors ; while the Court must subsequently declare it to have been completely executed, when it becomes valid and binding upon all parties. There is, of course, always the risk of fraud in these cases, and to prevent such malpractices it is provided that, if a declaration of complete execution is not applied for within two months after the filing of the deed, its execution by the debtor shall be deemed an act of bankruptcy in the event of a hostile petition being presented against him. Where a declaration of insolvency has been actually filed, ample power is given to change the proceedings from bankruptcy to arrangement, by means of a resolution passed by the creditors and confirmed by the Court. Every, bankruptcy law, whatever be its leading principle, must needß provide for the proceedings being initiated either by the debtor or by the creditors ; for bankruptcy invariably arises from one of two causes—either the debtor thinks he cannot go on any longer; or the creditors think it is time his affairs were wound up ; and the present statute, like its predecessors, meets both cases. Apart, however, from the dissimilarity in respect of deeds of arrangement, it differs extremely from the last Act in the course of procedure which it marks out to be followed in dealing with the debtor's efctate. The principle of

the latter was that the parties should be allowed to manage the estate themselves, looking only to the Court as the arbiter of disputes—a pretty theory, but betraying a remarkable lack of knowledge of human nature as displayed in the average creditor, who does not care a rush about his debtor's estate beyond what he can get out of it, and is not likely to trouble himself to attend innumerable meetings simply fortho purpose of enabling his defaulting debtor to got himself legally whitewashed. The present Act, if less artistic in theory, is more practical iu its application, and consequently likely to work better. Undei it an insolvent may seek release from his debts by filing in Court a declaration that he is unable to meet his engagements with hi :■ creditors, whereupon the Registrar will appoint a time and place for the first meeting of creditors, which is not to be held sooner than four days after the filing of the declaration. Notice of the meeting must be duly gazetted ; but it is declared in the interpretation clause that "gazette shall mean any newspaper published and generally circulated within the district in which the proceeding or matter is taken or pending ;" so that the Minister of Justice is deprived of a little piece of patronage conferred by the Act of IS7o, which it will be remembered was at first exercised in a manner that evoked some complaints. The Act of 1867 left it to the Judges to decide upon what journals should be constituted Gazettes iu Bankruptcy; but the present arraignment, which permits the notices to be published iu any of the local newspapers, is a far more sensible one. The effect of filing a declaration of insolvency will be to vest the whole of the debtor's property in the Registrar of the Court until the appointment of a creditors' trustee; but, in the not uncommon event of a sufficient number of creditors to constitute a meeting failing to assemble, it will become the duty of the Registrar to appoint a certificated Accountant in Bankruptcy as trustee, and, should it be found impossible to induce anyone to act in that capacity, the estate will remain vested in the Registrar, who is to wind it up forthwith. The " Accountant in Bankruptcy "is our old friend the "Provisional Trustee" under another name, only he will now hold his appointment from the Judge of the Court instead of from the Governor, and will, moreover, be subject to competition, since "each Judge of the Court may, within his judicial district, appoint one or more fit and proper persons to be certificated accountant of bankruptcy." In the early stage of the proceedings the distinction between the provisions of the last Act and those of the present is der'.y apparent. The Act of 1875 left it to the creditors to decide at their first meeting whether the estate should be placed in liquidation or not; but now there is no alternative, and they must accept the position. Their neglect or refusal to appoint a trustee merely results iu the estate falling into the hands of an accountant of bankruptcy, and this provision of course liberates the debtor from that risk r f becoming " an unliquidated man" during the rest of his natural life, which was so graphically described by Judge Waed at Oamaru. Where the initiatory steps are taken by the creditors, they must be the consequence of an act of bankruptcy committed by the debtor, which will entitle a creditor or creditors to the amount of £SO to proceed against him, within three months, by way of petition, whereupon a summons will issue from the Court calling upon him to show cause why he should not be adjudged bankrupt, and in the event of an order of adjudication being made, proceedings in bankruptcy will go on ii. the same manner as if the debtor had filed a declaration of insolvency. The mode provided for granting a discharge to the debtor is rather clumsy. Before he applies to the Court a general meeting of his creditors must be summoned, for the purpose of passing a resolution, either in favor of his immediate discharge, or recommending his suspension for any period not exceeding three years; but in neither case is the resolution conclusive, since the Court can act upon it or not, as it pleases, while notwithstanding the resolution, any creditor may appear in Court to oppose the debtor's discharge, so that the only use of the resolution is to express the meeting's opinion of his conduct, about which the Court would, by that time, have probably formed its own. The passing of such a resolution, moreover, is not made a condition precedent of the debtor's discharge, because in the very likely event of the meeting lapsing for want of attendance he cau apply to the Court just the same. Another contingency is met by the stipulation that if no order of discharge at all is made, the debtor shall be deemed to be absolutely discharged at the end of three years There are many features ©f the Act worth notice, but we shall only advert to one more, namely, that whereby the Registrar of the Supreme or Clerk of the District Court is clothed with all the powers of the Judge, except as to hearing appeals during vacation or the absence of the Judge from any cause. That seems a large power to give a Clerk of the District Court, although suitable enough in the case of the Registrar. However, on the whole the Act is a great improvement upon the last.