The Sun.
London, England, 1858-07-31 00:00:00

BANKRUPTCY LAW.

The LORD CHANCELLOR, on rising, according to
notice, to call their lordships' attention to this 8411 j-et,
said that though there was a very wide spread feeling in
favour of some amendment in the law of bankruptcy,
yet the opinions entertained as to the mode in which
that amendment should be made were various and con-
flicting. Any one, therefore, who undertook the task of
reforming this branch of the law must expect to be be-
sieged on all sides by suggestions fr m practical men and
theorists, from merchants and lawy re, and from debtors
a-d creditors, all of whom were entitled to be heard on
such a subject. Under those circumstances it was, pEr-
have leas a matter of surprise that his learned friend the
Attorney General, in the midst of his multifarious occu.
pations, should have been so long in framing a measure
on this important question than that in the end lee should
have been enabled to produce a bill in a form which
might be submitted to their larJships' approval. Nor
was it to be wondered at if, after the measure had been
prepared by the industry and ability of his learned friend,
tthoseost, who were to be responsible for it should, as•
en
gto its leading features, yet object to other—and
those not utimportant—parts of it. In 1849 a bill to
consolidate the bankruplr.wc-_tyhi,l,oanwpwasajdnturneddoureetdh,eaanudspaitcteesr
the most careful cone.de
of Lor Brougham, to
indebted for his services in the
this
country was greatly
maft,r,,,,ard% direction. Not
prac icai
more than four years however, de-
fects seriously Impairing the efficiency'oo
rfwkthat g Aa
and
were d covert d in its
a commission to inquire into its operation
accord-
ingly appointed in August, 1853. In April, 185 as
.1 the
commissioners made their report, recommending
eva,rileus
alterations in the law, some of which bad sieet.t then
been carried into effect. Many of their other suggestions,
however, had not yet been adopted, and some :hoer's'
were embodied in the bill which he was now about to
ay on the table. He was not presumptuous enough too
anticipate a complete aequescence on the part of their
lordships in the bill in its present shape. He invited
friendly, and even hostile, criticism, because the quests
,ion was not a pary one, and the earnest desire enter-
tained on all ties must be to make whatever' Measure
roasse.ultrrimeatneloympaws-171h,,5i
,pmetif,,rt as possible for
to point out the l-ading
principles on which the Government
tehnatrmeant to proceed in
tolit anhsuklmtehreoiurlord-
hips to
to this important subject
s
to agree to details which were both
entitled to matur.Econsiderati,n, combined
amendments with consolidation. It wasi
in all questions of law reform to determinewbeth-r
necessary
they ought to unite those two objects in the s,n,e
It seemed advisable—though hie mind was not de-
initively made up on this point—to pursue the course
recently taken with respect to the law of c pyhold. Ma-
terial amendments having been made in that law, as he
understood, a measure was now in preparation for its
consolidation. Hid intention was to give their lordships
a mere iadt of the present Lill instead of a minute de-
scription of its details, .Suppning the quatiola iier9put

at the outset, what would be the most desirable amend.
meet of the bankrupt law, and that which would be mo,t,
acceptable to the commercial community, be would refei
their lordships for an answer to the important petition
he had lately presented horn no fewei than 4,000 mei
chants and bankers of the city of London, who put pr
ininently forward their earnest wish that some legisl—
ive sanction should he given to the arrangement
debts by liquidation under the superintendence of in-
spectors. In that suggestion lay the principal key to th.
measure which he was about to introduce. ,There wer,
orovisions in this bill which would enable creditors tt
avoid going through the expensive course of proceeding•
in the Bankruptcy Court, in which, as their lordship
knew, there was a per ventage upon the'estate of even)
insolvent debtor who went into the court, and in whirl
the creditors had very little power over the pr.ceint
logs, which were entirely under the control'of the office
assignee. By the provisions of this bill either the credi-
tor or the debtor might proceed to the C of Bank
ruptcy and there petition for an order with a view
liquidation. When the petition was presented the debt())
immediately received a protection from the Court, an.
was bound instantly to prepare a schedule of his debt,
and assets. A meeting of creditors was then to be cals.
within three or four days, at which meeting the credi.
tors were to decide whether the estate of the bankrup
should be wound up by means of liquidation, and in who,
manner ; and if three-fourths in value and number uf
the creditors agreed that the estate shoull be wound up
that manner, that agreement should be binding on all
of them. They might then proceed to the Bankruptc3
Court to o`z,tain an order of liquidation in the manna,
agreed upon between them, and to appoint in-
spectors, and the debt r might be called upon to assist..
the whole matter went on completely under their con-
•rol and management, but they were not confined t.
the particular arrangement which had been agreed upon,
because if, in the course of the investigation of the affairs
of the bankrupt, it should be found that a different ar-
rangement was advisable, then they would change the
arrangement, of course with the consent of the majo.
rity of the creditors • or if the debtor should turn out
to be refractory, or if for any other reason it should be
thought desirable that the affairs should be wound up in
bankruptcy, they might abandon the arrangement &to-
gether and proceed to ask for an adjudication. So that
in this manner the whole affairs of the bankrupt would
be completely within the power of the creditors. There
were other provisions of minute detail which would

enable this machinery to work most completely and satis
factorily. Tnose provisions won d not in the slightest de
gree interfere with the mode of winding up the affairs o
an insolvent debtor, which was now very much resorted to,
namely, deeds of arrangement and composition. That he
• egarded as a most important feature in this bill. Then
the question arose how were they to deal with non-traders.
At times a desire had been expressed that all distinc-
tion betwden traders and non-traders should be abo-
lished, and that both alike should be suipject to proceed-
ings in bankruptcy. He had very great doubts whether
it would be desirable to abolish that distinction. As at
present advised, he did not think it would be advisable, but
at the same time he thought it was proper that where a
person who was not in trade had incurred debts which
he was unable to pay, and where he went on wasting
that sub.tance which in justice should be distributed
among his creditors, they ought to have the power of
eof oicing a just and hone- t distribution of his effects. It
would accordingly be found that provision was made for
enabling the creditors to compel a liquidation of the
debts of non-trading debtors by means of the machinery
provided with re pent to traders. But that provision was
guarded in a certain way, and for this reason it ap-
peared to him that it would not be advisable, where
a debt was merely owing, that the creditor should
go at once to the Bankruptcy Court and insist on the
non-trading debtor being brought into the court and
the whole of his effects being distributed in satisfac-
tion of his debts. That provi-ion was therefore Vow
guarded :—Where a creditor had a judgment Upon
which he could issue execution, or where there had
sea an order or decree of a court, for the payment
r.f money, wnich had been served upon the debtor
end bad not been paid at a certain time, then the
eredit sr might go to the Bankruptcy Court and
present a petition for liquidation and obtain an order,
whereupti the non-trader was brought within the juris-
fiction of the Bankruptcy Court and the machinery ot
this liquidation. In that matter he would be compelled
to de justice to his creditore, which, if be was an honest
man, he would be disposed to do without the necessiy
of having recourse to these measures. There was also
this provision—that a person who was not a creditor
might, if he pleased, voluntarily submit himself to the
proceedings of the Bankruptcy Court. There was ano-
ther subject which, as their lordships knew, had occu-
pied a great deal of public attention,—namely, the pro-
oriety of some measure for administering in the
Bankruptcy Court the estates of insolvent debtors after
their decease. There would be found in this bill various
clauses wnich were familiarly known as dead men's clauses.
The subject was full of difficulty. It was very difficult
indeed to know under what circumstances it would be
desirable that the Bankruprey Court should have the
administration of the estate of a deceased creditor instead
of the Court of Chancery, which had now jurisdiction
to administer or distribute the estate through the medium
of a creditor's suit. Their lordships were aware that
where there was an adjudication against a debtor in
bankruptcy and he died the next day, the Bankruptcy
Court, having possession as it were of his property,
could administer it after his death. And therefore this
bill provided, with regard to the effects of a deceased
insolvent debtor, that if there had been an act of bank-
ruptcy committed a month before his death, and if there
were an application for adjudication within a month of
his death, the Bankruptcy Court should then have the
power of administering his property. There was also in
this bill an important provision as to the mode of deal-
ing with partnerships where a firm became insolvent.
It was proposed to treat the firm itself as a person, and
to allow a fiat in bankruptcy to issue against the firm in
the same manner in which it might issue against indivi-
dUal partners, and to apply to it the system which ex-
isted with regard to corporate and quasi•corporate bodies,
so as to enable the creditors to compel individual part-
ners to satisfy the joint liabilities of the firm. At the
same time that this was a new system it would not in-
terfere with the old one as to insolvent individual part-
ners, where the firm itself remained insolvent. The sub-
ject of joint-stock companies had of course occupied a
great deal of public attention. Their lordships were
aware that those companies were amenable to the bank-
ruptcy laws, but that the law relating tterthem could
hardly be deemed a part of the bankruptcy code,
i irieeeu
administration
.p ,
tta
ci t
eye .euk upon
ciio o
nhmet
rpheaanth i
subject,
udsf
bbbjtyeehee
ettn:hr
aea
tnCgff ‘d
re,
tuechatrestt
because they were governed by an Act of Parliament
relating exolusively to them. The law provided
forof
Chancery,th e wi• o
cboyntthe,,et between
d i neagnifdu the pf
B author o °r
al
ntj
Legislature had endeavoured to remove all doubts upon
it by bringing the two streams, as it were, into one re
ceptaele. It was propo•ied to take away the business of
winding-up from the Court of Chancery, and to confer
it upon the Bankruptcy Court. He believed that would
69 deemed upon the whole t ) be a very desirable altera-
tion. It was proposed that the Bankruptcy Court should
bave, in adoition to its existing powers, all the powers
which existed under the Winding-up Acts, and that
joint-stock companies should have the same facilities
with regard to the liqu dation of their debts as was
afforded in the case of debt Ts and creditors in the man-
ner already mentioned. If his noble and learned friend
Lord Brougham were then in the house, he would pro-
bably say, " What are you going to do with the County
Court judges ? Are you going to give them any in-
creased jurisdiction on this suhj act l' He thought that
the county tour's badly possessed the machinery which
rendered it desirable that they should have a more
ample jurisdiction in these matters than they had at
present, and he did not propose, therefore, to throw any
portion of this business upon them. In the petition to
which he had already referred, from the merchants and
bankers of London, it was suggested that all distinctions
between insolvency and bankruptcy should be abolished,
and that traders and non-traders should be subjected to
one common law. He did not know that the matter was
quite ripe for that proposition, but he proposed that the
vacancies which took place in the Insolvent Court as
they occurred should not be filled up. He believed that
the processcf liquidation provided in the bill would reduce
the business of the Courts very considerably, and that in
a short time they might be able to put an end to the
Insolvent Court altogether, one Court being suffi-
cient for the business it would then have to transact. The
bill further provided that a good deal of the business ot
the Bankruptcy Commissioners, being purely of an ad-
ministrative character, should be transacted in chambers,
where it might be conducted more conveniently and less
expensively than in open court. There were some of the
officers of the court to whom it was necessary to advert.
His noble and learned friend Lord Brougham bad been
extremely desirous that the official assignees should he
paid partly by salary and pertly by fees, and had ob-
jected altogether to their being paid by salary alone.
The bill did not at present touch that question, because
it was quite uncertain what the effect of the proceed-
ings for the liquidation of the affairs of an insolvent
debtor might be, and it was very possible that it might
remove so much of the business from the Bankruptcy
Court as to leave the official assignees without sufficient
emolument from fees. It would be time to consider ibis
subject moro in detail when they knew exactly what
ointed under the provisions
would be the amount of business. With respect to the
a .theyte r
of any Lax ofwePraerlileanptp, but were selected by each
C imixossioe to attend his court, having the duty im.
them of taking a valuation, in every instance,
posed upon
brokers,
T valuationof broker - a was
of a bankrupt's effects. tie .
costlyandutterly useless proceeding, and it was
a very
proposed by the bill to abolish it altogether, and to pro-
vide for a valuation either under the authority of the
Court or with the sanction of the creditors, as might be
considered most advisable. And inasmuch as those
persons were not appointed ' under any Act of Parlia-
ment, and had no legal claim to their offices, they could
have no title t i compensation on the abolition of their
office). There was another matter which bad led to
tauclelitigation, and on which it was necessary to legis-
laee—that was with respect to the classification a certi-
ficates. As the law now stood there were three classes
of certificates—first, second, and third--.vhich were
awarded according to the suppo,od merits or demerits of
the bankrupt.
Lord CAMPBELL—Do away with them altogether.
The LORD CHANCELLOR continued,—His noble
and learned friend had anticipated him. The bill pro-
posed to do exactly what his noble and learned friend
bad suegested. The coinmiesioners took different views
of what constituted moral delinquency. Then came
appeals to the Lord Chancellor or to the Lord Justices,
and a great amount of time was wasted in considering
the kind of certificate which a bankrupt ought to receive.
The bill abolished the distinction. There was only one
other point—but it was a very important one-4o which
it was necessary to direct attention, and that was with
regard to the offeucs of bankrupts and insolvents, and
their punishment. He was astonished to find that the