THE HISTORY OF BANKRUPTCY

Hokitika Guardian, 3 December 1931, Page 7

THE HISTORY OF BANKRUPTCY

LAWS OF THE; PAST. OFFICIAL ■ ASSIGNEE’S ADDRESS. CHRISTCHURCH, December 1. 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 Oeditmen’s Club luncheon yesterday. The vice-president, Mr W. R. Henev, was in the chair. “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 Air Robertson. “It provides for the public investigation of the Conduct of a debtor and extends its benefits towards 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 anotner. 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 -v 1 licit meant broken bench. HARSHNESS AND SEVERITY. "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 lintil death,” continued the speaker. Relief under bankruptcy law was at first only applicable to traders. The first laws, enabling a bankrupt’s property to be seized and divided among bis creditors, were passed in the reign of Henry the Eighth. Further statutes, some of which were in force in England today, were passed in the reign of Elizabeth. ; 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 bad 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 fore-runner of the present-day discharge from bankruptcy. The foundations of modern bankruptcy Jaw were established in the Acts o/ 1861, 1869 and 1883. English law was based on Scots law, which had the old Roman law for its origin. In New Zealand, the first bankruptcy statute was the Debtors and Creditors Act of 1844. In 1867 a committee was feet 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 of a bankrupt estate until .the creditors appointed a trustee. The administration of the Act was controlled by an official known fis the Accountant in Bankruptcy, in Wellington. GIVEN A BONUS. One of the provisions in those days was for a bankrupt who paid more than 10s in the £ to be given a bonus or gratuity, probably as an incentive to disclose all his assets. The 1867 Act did not 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 bad been only one amendment, in 1927, and that did not affect . the structure of the Aot. Mr Robertson spoke on points of interest in the administration of the Act and explained technical details. “The charge is sometimes made that debtors who are not entitled to relief use the Act for the purpose of escaping payment of their liabilities," concluded' Mr Robertson. “If this has any basis of truth, the fault does not lie with the Bankruptcy Act, the provisions of which are complete for penalising mis-eonduct. r lh© loopholes are the difficulty of obtaining proof and the frequent apathy of creditors, but the evil in a large part arises out of the case with which credit is obtained in modern society. The magnitude of the tax on the community is apparent. In the direction of mitigating that taxassociations of creditmen fulfil a valuable function and their efforts are worthy of encouragement.