THE INSOLVENCY BILL.

Mount Ida Chronicle, Volume IV, Issue 237, 19 September 1873, Page 3

THE INSOLVENCY BILL.

The Insolvency Bill now before the House, to which we frequently alluded, contains some radical defects. It provides that, except by the'special recommendation of his creditors, no insolvent shall obtain a discharge from the Court, whose estate has not paid a dividend of 10s. in the pound. The clause is not only tyrannical and unjust, but also unsound in principle. Why should an honest but unfortunate man be refused his discharge, and after the lapse of two years be liable to further proceedings on the part of vindictive creditors, because, after giving up everything, his total assets are insufficient to pay 10s. in the pound, and those costs of proceeding which come out of the estate ? If the man 'has given up everything he possesses, is it not cruel and unjust to invest his creditors with a power of coercion, more or less tyrannical, which may be used against him to obtain satisfaction of a vindictive character ? But it may be urged that in most cases insolvents have been guilty of extravagance, recklessness, or fraud, and that the [provision is a just one, which enacts that only by the payment of a certain dividend will they get rid of their just debts. This argument, though plausible, is entirely Jallacious. If an insolvent has been guilty of fraud or dishonesty he should be punished much more severely than by merely withholding his certificate, and in the penal clauses of the Act provison is made for this being done. According to these clauses, if the insolvent, in the opinion of the Court, has been guilty of a felony or misdemeanor under this Act, not only is his certificate refused, but he is liable besides to a year's imprisonment, with or without hard labor. Moreover, if the insolvent has not kept proper accounts ; if he has put creditors to unnecessary expenses by frivolous defences to any action at law ; if he has avoided sequestration in order to give an unfair preference to one creditor over the others ; if he has diminished his means of payment by gambhng, extravagance, or vice ; if he has carried on trade by means of fictitious'capital; if he has not made a full surrender of his property ; if he has contracted debts without any reasonable expectation of being able to pay them ; if he has fraudulently made away with property —in each and all of these cases he is liable not only to suspension of his certificate, but also to imprisonment for six months.

Seeing, therefore, that the Act x>rovides for the exemplary punishment of the fraudulent insolvent, we contend that the insolvent who has only been unfortunate, and who has made a full surrender of his property, should receive a discharge sooner or later, whatever dividend may have been paid. . The only just and sound principle to adopt is" that of making a clearly-defined distinction between the honest but unfortunate insolvent and the fraudulent one. Unless, indeed, it be held that inability to pay a certain dividend is a crime, it is not right that the yoke should be continually kept on a man's neck, and that, while struggling to get his head once more above water, and provide "for his wife and family, he should be liable for the rest of his life for the debts of thelold insolvency. Iu this respe'ct the • old Act is oppressively stringent, because it provides that should the insolvent not j>ay 10s. in the pound, he is liable, after two years' respite, to seizure of property and imprisonment, at the suit of any creditor vindictive enough to take x>roceedings. This system, indeed, of vesting the right of discharge in the hands of the Court is altogether unsound. In cases of fraud, let the Court punish the insolvent in any w r ay it sees fit-, .YAit in• all other cases the right of consenting to or withholding the discharge should rest with the creditors. The Scotch Bankruptcy Code adopts this principle. Should the insolvent apply for his discharge there within two months of his sequestration, he requires to have his petition assented to by something like a majority of two-thirds in number and value of the creditors. Should he not be able to obtain this, he can apply again within 6, 12, 18, or 24 months, the majority of creditors required being less each time. The practical effect of this system is that any insolvent who has acted fairly finds no difficulty in obtaining his discharge, while in cases of a different kind the discharge is either not obtained for a considerable time, or possibly not at all, because a man who had swindled his creditors would certainly not get a majority of them to assent to his release. It is to be hoped that the few members •of the House who have given attention to this question will obtain an alteration of the Act in the direction we have indicated. And while lessening the stringency which it displays towards the honest class of insolvents, it would be well to see that the penal clauses are less loosely framed. In the Bill before us these clauses leave many loopholes of escape, while they fail to make punishable several offences of • frequent occurrence in Bankruptcy. In

the Trench Code of Commerce our legislators would find some provisions bearing specially on this part of the subject, which might, with great advantage, be imported into the present Bill. That code provides, among other things, that if an insolvent's house expenses have been excessive ; if he has borrowed largely or resold merchandise below the current XDrice, after it appeared by his last stocktaking that his debts exceeded his assets by one half; or if he has issued negotiable securities to three times the amount of his available assets —he is liable to imprisonment for any term up to two years. In cases of concealing or making away with property, the offenders are even more severely punished. In this direction it is well that the law should be exceedingly stringent. " The law," as Mr. Mills justly observes in reference to fraudulent bankrupts, "is bound to take care that insolvency shall not be a good pecuniary speculation ; that men shall not have the privilege of hazarding other people's property without their knowledge and consent, taking the profits of the enterprise if it be successful, and if it fails throwing the loss on the rightful owner ; and that they shall not find it answer to make themselves unable to pay their just debts, by spending the money of their creditors in personal indulgence."—' Wellington Evening Post.'