LAW OF BANKRUPTCY.

Putaruru Press, Volume IV, Issue 156, 28 October 1926, Page 1

LAW OF BANKRUPTCY.

NEW ZEALAND LAGS BEHIND. An. interring le-curej on “The Law o£ Bankruptcy” was .recently delivered before the Wellington Accountant Students’ Association by Mr H. p. O’Leary, M.A., LL.M. At the outset of his lecture Mr O’Leary stalled that tliefie: had been no material change 'in the bankruptcy law in New Zealand since 18S2, end that although minor amende in nrs had been introduced] since that date the present law 'was in every respect obsolete, and a substantial reform must be not long delayed. stressed the fact that in all the large countries of the 'British Empire the bankruptcy law had been modernised. 'ln England the law had been brought up to date in 1914, while in Ausetralia the Commonwealth Bankruptcy Act, 1924, was claimed to be the best legislation of its kind in tkte Empire. He mentioned that Canada had recently amended its legislation in regard to bankruptcy, whereas in South Africa a. new Bankruptcy Act had been passed in 1926

Mr O'Leary, in a concise exposition of the present law in New Zealand, stated that the substantive law dealing with the rights and liabilities of creditors and debtors was similar in many respUlcts throughout the. British Empire, but the procedure was very different in each country. In Elag'land a receiving order was first made, and the official deceiver usually a;v pointed a manager of the affairs of the debtor. Atf.elr a receiving order was made the first meeting of cr-ed.t-_QT;S was called, •whkltn the 1 debtor gave kde fi n ire's -at ?me n t of his -affairs,

and the law in England provided for a public examination of a del tor before the first meeting of creditors. He stres'std the provisions in the English legislation wfh'oreby a del.'otvr might avoid bankruptcy anil also effeet a composition with his creditors before t'ankrupto.f proceedings were instituted. Furthermore, Mir O’LLar'y stated that in England every ’effort was made to avoid bankruptcy. In 'Australia a debtor could make a composition with his creditors without committing bankruptcy, provided he obtained the requisite majority, bult in NeKv Zealand one creditor could s.tand out, thiuig rendering futile any attempt at a satisfactory composition by the remaining creditors. The fundamental principle in Australia was .to eindeavour to avoid bankruptcy by a deed of arrangements and,, failing that the administration by a receiver in bankruptcy.

The 'lecturer was inclined t.o the opinion that the English system, by which a composition was arranged aftsir th!a receiving order was made, was more ‘beneficial t all parties, yet the Australian .principle whereby a debtor could make an attempt through tire Court to avoid bankruptcy was preferable to this obsolete New Zealand system whereby a universal consent of five creditors ’wa s . necessary to avoid bankruptcy. Under the English law all property vested in tlie official receiver immediately on bankruptcy; yet the creditors might ap- | point private trustees even after an I official iLceiiver had been appointed ,by the Court. In Australia either prii rate trustees or the official receiver ! acted in controlling the affairs of a debtor, tut the decision was entirely ' in tliie hands of the creditors; while I in New Zealand the creditor© had no . option, and the official assignee had | to adt in sole, control of the affairs of , a debitor. 1 r l Mr O’Leary pointed out the advant-

1 r.eag accnaing from the appointmtnt : ■ of a privote recleiver with a specialised | J knowledge of the business of the debt- j I or to wind up his affairs to the best . ! advantage, and stated that a reform j j in ithls law in New Zealand along these j lines would be welcome to the legal j profession, as well as Itlhe business j 1 community in general. IHo Outlined I the provisions Of 'the law in England, I and in Australia, whereby i+ «-as toOi'e 1 difficult lor A fleb-tor ‘to obtain bis dr> ! o't-Afrjie from bainkrufAcy than in New j Zealand, and also Hb *Ma fa'bt that in Australia a .debitor c.oVild' be made . bankrupt for a debt of £sb at any time j within six months of 'proceedings as \ against a debt of £3O within three month© in New 'Zealand. The- fraudulent preference clause operated for

six moniihs in Australia instead cf for | .three months here, and lie considered (he longer period a decided advantage. Mr O'Tdzary stated that one of the weakest features o*f New Zealand law was itib'ls foet that there was no provision for sale of assets fcy private treaty as in other countries, and tnat | ‘he sale in Nlew Zealand must be b> I public auction or nkiihlic tender. Af.er i referring in measured terms to the difference in order of in various countries, lie concluded an ex'exposition of thc law by ac_ fenowledging tbls* services accountants were alle by their special training to render to both creditors and debtors in cases of insolvency. \t the completion of the address the lecturer answered a number of questions, and was accorded a vote of thanks 1