attested by a witness, so as to be received by the official receiver not later than the day preceding such subsequent meeting, and such creditor is to be taken as being present and voting at such meeting (s. 18). (43.) A composition or scheme having been accepted by the creditors, what is the next step to be taken, by whom and when?

Next step after com

position or scheme

The debtor or the official receiver may, after accepted. the composition or scheme is accepted by the creditors, apply to the Court to approve it, and must give notice of the time appointed for hearing the application to each creditor who has proved (s. 18).

(44.) How is the discretion of the Court guided and restricted as to approving a composition or

scheme?

Before approving a composition or scheme the Court is to hear a report of the official receiver as to the terms of the composition or scheme, and as to the conduct of the debtor, and any objections which may be made by or on behalf of any creditor. If the Court is of opinion that the terms of the composition or scheme are not reasonable, or are not calculated to benefit the general body of creditors, or in any case in which the Court is required under the Act, where the debtor is adjudged bankrupt, to refuse his discharge, the Court must; or if any such facts are proved as would under the Act justify the Court in refusing, qualifying or suspending the debtor's discharge (a), the Court may, in its discretion, refuse to approve the composition or scheme; and no composition or scheme is to be approved by the Court which (a) See question 69.

Discretion

of Court, how guided and re

stricted.

D

Debtor ad

judged bankrupt notwith

standing acceptance of composi

tion or scheme.

How provisions of composition or

scheme enforced.

does not provide for the payment in priority to other debts, of all debts directed to be so paid in the distribution of the property of a bankrupt (s. 18).

(45.) Under what circumstances may the debtor be adjudged bankrupt, notwithstanding the acceptance by the creditors and approval by the Court of a composition or scheme?

If default is made in payment of any instalment due in pursuance of the composition or scheme, or if it appears to the Court, on satisfactory evidence, that the composition or scheme cannot in consequence of legal difficulties, or for any sufficient cause proceed without injustice or undue delay to the creditors or to the debtor, or that the approval of the Court was obtained by fraud, the Court may, if it thinks fit, on application by any creditor adjudge the debtor bankrupt, and annul the composition or scheme; but without prejudice to the validity of any sale, disposition, or payment duly made, or thing duly done under or in pursuance of the compositon or scheme; and where a debtor is so adjudged bankrupt any debt provable in other respects, which has been contracted before the date of the adjudication, is provable in the bankruptcy (s. 18).

(46.) How may the provisions of a composition or scheme be enforced?

They may be enforced by the Court on application by any person interested, and any disobedience of an order of the Court made on the application will be deemed a contempt of Court (s. 18).

Adjudication of Bankruptcy.

(47.) In what cases must the Court adjudge Adjudica

bankrupt a debtor against whom a receiving tion of

order has been made?

bank

ruptcy

whom

(1.) If the creditors at the first meeting, or of debtor any adjournment thereof, by ordinary resolu- against tion resolve that the debtor be adjudged bank- receiving rupt; or

(2.) Pass no resolution; or

(3.) Do not meet; or

(4.) If a composition or scheme is not accepted or approved in pursuance of the Act within fourteen days after the conclusion of the examination of the debtor, or such further time as the Court may allow, the Court is to adjudge the debtor bankrupt; and thereupon the property of the bankrupt is to become divisible among his creditors, and is to vest in a trustee (s. 20).

order made.

(48.) What notice is to be given of a debtor Notice of having been adjudged bankrupt? adjudica

tion of

Notice of every order adjudging a debtor bank-bankrupt, stating the name, address, and description ruptcy. of the bankrupt, the date of the adjudication, and the Court by which the adjudication is made, is to be gazetted and advertised in a local paper in the prescribed manner, and the date of the order is for the purposes of the Act to be the date of the adjudication (s. 20).

(49.) State how a trustee of the bankrupt's pro- How perty is appointed, and what security is required of trustee of him?

bankrupt's property

and what

Where a debtor is adjudged bankrupt, or the appointed, creditors have resolved that he be adjudged security bankrupt, the creditors may, by ordinary reso- required.

Objection

Trade to

lution, appoint some fit person, whether a creditor or not, to fill the office of trustee of the property of the bankrupt; or they may resolve to leave his appointment to the Committee of inspection. The person so appointed must give security to the satisfaction of the Board of Trade, and the Board if satisfied with the security, is to certify that his appointment has been duly made unless they object to the appointment. And when a debtor is adjudged bankrupt after the first meeting of creditors has been held, and a trustee has not been appointed prior to the adjudication the official receiver is forthwith to summon a meeting of creditors for the purpose of appointing a trustee (8. 21).

(50.) On what grounds may the Board of Trade of Board of object to the appointment of a particular person as trustee, and how may the validity of such objection be decided?

appointment of

trustee.

How

validity of

objection to be decided.

When appointment of trustee takes effect.

On the ground :—

(1.) That it has not been made in good faith by a majority in value of the creditors voting; or (2.) That the person appointed is not fit to act as trustee; or

(3.) That his connection with or relation to the bankrupt or his estate, or any particular creditor, makes it difficult for him to act with impartiality in the interests of the creditors generally.

The Board must, if so requested by a majority in value of the creditors, notify the objection to the High Court, and thereupon the High Court may decide on its validity (s. 21).

(51.) From when does the appointment of trustee take effect?

From the date of the certificate by the Board of Trade of the appointment (s. 21).

(52.) What is the effect of the creditors neglect- Effect of ing to appoint a trustee?

creditors neglecting

If a trustee is not appointed within four to appoint weeks from the date of the adjudication, or, in trustee. the event of negotiations for a composition or scheme being pending at the expiration of those four weeks, then within seven days from the close of those negotiations, by the refusal of the creditors to accept, or of the Court to approve, the composition or scheme, the official receiver is to report the matter to the Board of Trade, and thereupon the Board of Trade is to appoint some fit person to be trustee of the bankrupt's property, and is to certify the appointment. But the creditors or the committee of inspection (if so authorised by resolution of the creditors) may, at any subsequent time, if they think fit, appointed a trustee, and on the appointment being made and certified, the person appointed is to become trustee in the place of the person appointed by the Board of Trade (s. 21).

(53.) How and for what purpose are the Committee of inspection appointed, and who may be appointed?

The creditors, qualified to vote, may at their first or any subsequent meeting, by resolution, appoint from among the creditors qualified to vote, or the holders of general proxies, or general powers of attorney from such creditors, a committee of inspection, consisting of not more than five nor less than three persons, for the purpose of superintending the administration

Committee of inspec tion, how appointed.