HOW SOLVENT ESTATES ARE TREATED IN BANKRUPTCY.

Wairarapa Daily Times, Volume 3, Issue 748, 21 April 1881, Page 2

HOW SOLVENT ESTATES ARE TREATED IN BANKRUPTCY.

(From the Economist.) _The Mowing statement of the cost of winding-up a solvent estate in bankruptcy have been forwarded to us under circumstances which leave no doubt as to its oomplete acouraoy, incredible as it appears at firgt sight. It will be observed that

the realised proceeds show the estate to have been entirely solvent, but that the expenses consumed such a vast proportion of the proceeds that a dividend of threepence in the pound was all Jlie unsecured creditors received. How the unfortunate trader drifted into the position which led to this result is not stated. We have, however, in more instances than one, known entirely solvent traders so bewildered by the sudden demand for pay. mentof a sum in ready money which they were not immediately ready to meet, as to place their affairs in the handspf professional men. And it has been vpiin our knowledge also, that the honorable conduct of the professional who was consulted, and the advice then tendered, has saved the trader from discredit and ruin. Similar good fortune, : however, did not attend on the occasion described in the statement The victim, as we must term him, in this case found that his own destruction brought no advantage to his oreditors.

That suoli a perversion of justice should be possible is .certainly marvellous, Business men may well inquire,'"How long is the present state of the law to continue ?" The price paid is indeed a heavy one. The tax levied by insolvency on solvent traders in' this country is not less than £20,000,000 a year. This would v go a long way to meet the interest ohttbe Funded Debt. £20,000,000 a year foima a very heavy deduction from the proms oi trade. The point is well worth the consideration of the Chancellor of the. Exchequer himself, from the effect produced on the income-tax. At the present rate of that tax it means a loss of £500,000 a year to the revenue. Nor are the consequences confined to money losses alone. The slackening of commercial good faith resulting from .this commercial loosejointedness, is almost as disastrous as the losses themselves. The subject calls for immediate attention, but 'the evils complained about are of so long standing that they seem almost ineradicable.. We have ourselves too often pointed out in this journal both the ill effects of the present law and the remedies which should be applied, to be sanguine of any improvement being rapidiy made, however much it is heeded.

The bankrupt was a jeweller and silversmith. The property realised 41250 lis 4d; the book debts being £lB 15s 6d; stock and furniture, £1231 15s lOd. There was paid to preferential and secured creditors, £289 3s Gd; leaving the net assets, £961, 7s lOd. The expenses of realisation were—law 'charges, £487 Gs 8d; trustees' remuneration, £228 15s 8d; receiver's charges, £22 lis 8d; taxed charges (auctioneer's, &c.), £17712s 3d; and incidental outlay, £25 15s sd; total, £945 16s Bd. There was paid to the creditors, £9l7s 2d, which produced a dividend of 3d in the £, thus showing that the total amount of secured, preferential, and unsecured' debts was only £107716s lOd, or £17214s lOd less than the amount of realised assets. There can be no doubt that the stock and furniture, which realised £123115s lOd, would have produced considerably more if sold under different circumstances, and it would be interesting to learn how it was that this most undoubtedly solvent debtor found his way or was forced into the Bankruptcy Court, but filed do not disclose this information; but how lie and his creditors fared after he got there is stated with commendable candor, Not having paid a dividend of 10s in the £, and his creditors not having passed a resolution that his inability to pay such a dividend had arisen from-circumstances for which he could not justly, be held accountable, although in this case such a resolution might have been most righteously passed, the debtor is now an ■ discharged bankrupt, and the creditWp! instead of getting 20s in the £l, exactly an eightieth part of thataupH How it happened that the collection'of book debts, amounting to £lßlss 6d, and the sale of jewelry, plate, and furniture, should have required an expenditure of £945 16s 8d is a mystery we must leave professional accountants and bankruptcy solicitors to explain.