Official thereupon proceedings by all unsecured creditors are stayed; ss. 9 (1) (2) but the order, as explained above, does not operate per se to and 10, 11. divest the debtor of his property or to affect his status. receiver. The immediate duty of the official receiver is to make a statement of the debtor's affairs and causes of failure, as well as of his assets and liabilities; unless the creditors apply to have a special manager of the debtor's business appointed, the official receiver will himself fill that position. Sch. 1. s. 16. s. 18 (1). Still pursuing the duties which the official receiver has s. 15 (1) and to perform, we find that within fourteen days (unless a later date is specially allowed) of the receiving order, the first meeting of creditors must be held; and of this a First meetseven days' notice by advertisement must be given. This ing meeting will be summoned by the official receiver, who will further provide each creditor with a copy of the debtor's statement, accompanied by the official receiver's observations thereon. The main object of this meeting is to Its object. consider whether a composition shall be allowed or whether the debtor shall be adjudged bankrupt. It is hoped, apparently, that this latitude of power will enable the creditors to discriminate between a man who has become insolvent through mere misfortune, and one who has brought himself into that condition by his own acts. If the creditors are of the opinion that the debtor should be adjudged bankrupt, they may at once appoint a trustee. Careful provision is then made with regard to proofs, Appointvotes, and proxies, and these will be found set out at trustee. length, with notes, in their proper place; attention is here called to them because of one important fact, which is this, that the rights of bill-holders to vote at creditors' Creditors' meetings are very properly cut down to a lower level than has hitherto prevailed. This portion of the law of bankruptcy is one to which bankers very naturally attach great importance; it appears, on the whole, that the interests represented by Sir John Lubbock during the discussion of the Bill while before the Grand Committee of the House of Commons have been sufficiently regarded. ment of votes. Sch. 1, rr. 11, 12. Taking the provisions of this Act in the order in which s. 17. they are printed, the next point for consideration is the Public public examination of the debtor. This is imperative, tion of whether the creditors accept a composition or whether debtor. examina s. 17 (7). 8. 17 (8). Resolu- they proceed to adjudication; and it is this clause which is more likely than any other to impress the public with the fact that the new law of bankruptcy is stringent and severe. "The debtor shall be examined upon oath," says the Act, "and it shall be his duty to answer all such questions as the Court may put or allow to be put to him." Notes of what he says are to be taken down, read over to and signed by him, and they shall then be open to the inspection of any creditor at all reasonable times. As the Court, the creditors, the official receiver, and the trustee (if any), may take part in the examination (which may also be adjourned from time to time), it appears probable that debtors, as a class, may not take a favourable view of this provision of the Act. But to resume our account of proceedings at the first meeting. It is required that a special resolution should be passed before a proposal for a composition can be entertained. Now, there are two kinds of resolutions in English bankruptcy law: an ordinary resolution means a resolution decided on by a majority in value of the creditors present resolution. personally or by proxy, with a further limitation that those who are present personally or by proxy, but who abstain from voting, shall not be considered in estimating the majority. A special resolution, on the other hand, means a resolution decided by a majority in number and threefourths in value of the creditors who are present personally or by proxy, and who vote on the resolution. But for the purposes of declaring their acceptance of this proposal for composition, the creditors must pass a subsequent Confirming confirming resolution by a majority in number and threeresolution. fourths in value of all the creditors, whether or no they Special resolution. B. 18 (3). are present or voting. It is also necessary to the validity of this confirming resolution that it should not be passed until after the debtor's public examination is concluded, nor until there has been circulated among the creditors a notice stating the terms of the proposal and the official receiver's report thereon. And yet even thus the creditors are not thought capable of protecting their interests; for Approval of the Court must approve of the scheme. This approval, the Court. however, being obtained, the composition may be carried out and a trustee appointed to effect it. tion. Trade. receiver as This, then, is the result of a receiving order, if the creditors and the official receiver and the Court see fit to let that result come about. Otherwise the Court, whether Adjudicaor no the creditors resolve it, may proceed to the adjudi- s. 20. cation of bankruptcy. The consequence of adjudication is, of course, that the debtor's property becomes divisible, and vests in a trustee, who may be appointed by the creditors. To this appointment the Board of Trade may s. 21. object; and, as the appointment is not valid without the s. 21 (8). certificate of the Board, it will be seen that the Board has Veto of a substantial control over the individual in question, sub- Board of ject only to appeal against their opinion to the Court. A remarkable clause provides that, in the event of a vacancy s. 70 (1). in the office of trustee, the officer of the Board, namely, the official receiver, shall act as trustee. It is not altogether The official clear what relationship exists between the official receiver trustee. and the trustee; but it is stated in an official memoran- ss. 68-70, 82 (4). dum that after the trustee's appointment the official receiver will "watch" the case, and act, if necessary, in the interests of justice. It may be anticipated that some difficulties will arise in the working of this part of the new law, and further that these difficulties will not be smoothed over by the following sub-section, the terms of which are apparently calculated to meet every eventuality: "The The trustee trustee shall supply the official receiver with such informa- official tion, and give him such access to, and facilities for, receiver. inspecting the bankrupt's books and documents, and generally shall give him such aid as may be requisite for s. 68. enabling the official receiver to perform his duties under this Act." and the of inspec The powers of the creditors are not, however, exhausted Committee by the appointment of a trustee. They may nominate a tion. Committee of Inspection, numbering three, four, or five s. 22. members, chosen from among creditors qualified to vote, or holders of general proxies or general powers of attorney. The consent of this Committee is essential to many of the Acts which the trustee is authorised to do. If such a committee is not appointed, the Board of Trade, acting probably on the advice of the ubiquitous official receiver, will perform its duties. The Act next proceeds to make what will probably be a Composition after adjudication. s. 23. s. 31. s. 28 (1). very useful provision for permitting a composition or scheme after adjudication. If default is made in carrying it out, the debtor may be then adjudged bankrupt under this section of the Act. This part of the Act concludes with provisions relating to the bankrupt's discharge. The peculiarity of these is that a serious attempt is made to make a discharge worth having, and to make its acquisition a thing difficult to obtain if the bankrupt has been guilty of misconduct. The bankrupt may apply for his discharge Bankrupt's whenever he likes; but this apparent freedom is somedischarge. what limited by the fact that his application may not be heard until after his public examination is concluded. When it is heard, the Court is to take into consideration the official receiver's report on the debtor's conduct and affairs, and the Court has then free discretion to grant or refuse the discharge, with this exception, that the Court is directed to refuse it where the debtor has "committed 8. 28 (2). Debtor's afteracquired property. s. 28 (b.) Undischarged any misconduct " (to use the awkward phrase of the official memorandum) under the law of bankruptcy, or under the Debtors' Act. There are also two serious innovations to be noticed here, which will doubtless serve to make the insolvent debtor's path more thorny still. One is that the Court has power to make an order charging the debtor's after-acquired property for the benefit of the creditors; the other is that an undischarged bankrupt who obtains credit to the extent of £20 or upwards, without informing the lender of his position, is liable to punishment. In this connection it may also be noted bankrupt's that the Court may commit a bankrupt or any other person" for trial, if there is reason to believe he has been SS. 165, 166. guilty of a misdemeanor under the law of bankruptcy; and the Public Prosecutor shall prosecute. A technical difficulty is removed by the provision that discharge or composition shall be no defence against such a prosecution. Another way out of bankruptcy is provided by giving the Court power to annul a bankruptcy on approval of composition, or where it considers the debtor ought not to have been adjudicated, or on proof of payment in full. credit. 8. 31. Power of Court to commit. s. 167. Power of Court to annul. s. 23. s. 35. 66 Creditors under estates in bankruptcy will note with satisfaction that the provisions relating to the distri dividend. dividends. Committee. bution of the debtor's property are very precise. Subject s. 58. to the retention of the costs of the administration, the trustee (or the official receiver acting as trustee) will declare and distribute the first dividend within four months First of the conclusion of the first meeting, unless the committee of inspection allow a longer time. Subsequent dividends Subsequent will be distributed at intervals of not more than six months. It may be mentioned here that the new law of bankruptcy appears to allow the committee of inspection Powers of considerably larger powers as compared with what they enjoyed under the Act of 1869. The powers thus conferred on the committee are usually subtracted from those hitherto vested in the general body of creditors; but there is something very illusory in this gift to the committee when it is seen thatthese powers are almost invariably subject to the control of the Court. An instance of this may be Bankrupt's noticed in a sub-section, entitled "Allowance to Bankrupt 8. 64 (2). for maintenance or service," which provides that the trustee, with the permission of the committee, may make an allowance for maintenance, or for services rendered in winding up the estate, but any such allowance may be reduced by the Court. There can be no doubt that the matter will come before the Court on the motion of the official receiver, as a rule, if he differs in opinion from the committee. allowance. Before proceeding to discuss the position of official Disqualifi receivers and trustees, a word must be said about the dis- cation of qualifications attaching to bankruptcy. These will be s. 32, &c. bankrupt. found in detail in the text of the Act and notes; but what we have to notice here is that these disqualifications for holding office and the like do not attach where only a receiving order is made and followed by composition. The debtor must be adjudicated bankrupt before these consequences ensue. Another important point is that the disqualifications having once attached shall not be removed until the adjudication is annulled, or until the bankrupt obtains from the Court his discharge, with a certificate to the effect that his bankruptcy was caused by misfortune, Misconduct without any misconduct on his part; moreover, the Court and has absolute power to grant or refuse its certificate, and the refusal only is subject to appeal. Here again it will misfortune. |