The Sun.
London, England, 1845-05-15 00:00:00

6. Persons who have accepted and executed letters
of licence, deeds of composition, &c., registered in the
Court according to provisions to be presently men-

tioned.
The Bill then proceeds with provisions regulating
private arrangements between a debtor and his cre-
ditors, whether by composition-deeds, trust-deeds, or
otherwise; and no portion of any code respecting in-
solvents will probably be of so great pecuniary bene-
fit to the trading classes as this part of the proposed
law. Under all the faults and frauds of the present
system, it is notorious that the advantages of
private arrangements are so great, that :it
is a constant occurrence for a dishonest
trader to rob his creditors, and to create
a fund for himself, by offering a small when he is
able to pay a much larger dividend, the creditors
allowing themselves, often knowingly, to be wronged,
because persuaded that the estate is not likely to pay
over even the trifle offerei, if subjected to the process
of a fiat in bankruptcy. The advantages to be de-
rived from private arrangements are principally these
—a larger and earlier dividend is in almost every case
obtained, as there is neither the delay which is inse
parable from legal proceedings, nor the sacrifice at-
tending forced sales, nor a diminution in the means
of payment by the loss of an established business.
Debts owing to the trader are paid in due course,
while under a bankruptcy debts 'especially in the case
of foreign correspondents, are 'frequently contested,
and sometimes wholly lost. Sales made by foreign
correspondents show better prices and lower charges
when made for the trader himself, than when made
for his estate, worked under a bankruptcy ; and,
finally, in cases of dispute, !a merchant will obtain
much better results for himself than can be obtained
for a bankrupt estate, where the only remedy is
frequently by hostile proceedings in a foreign court

of justice. -
On the other hand, the advantages attending private
arrangements consist in the necessity of obtaining the
concurrence of all the creditors in the absence of any
check upon the proof of debts ; in the want of ade-
quate controul over the proceedings of the trustee in
getting in and distributing the assets ; in the danger
of the trustee himself becoming insolvent with the
assets in his hands ; in the want of controul over the
expenses of working the trust ; in the scandalous im-
munity obtained by a dishonest trader on the one
hand, and in occasional oppression on the part of a
grasping creditor on the other ; in the insecurity of
tithes and property sold under trust deeds ; in the in-
ability of the trustee to sue in his own name ; and,
finally, in the circumstance that any malversation or
culpable negligence on the part of the trustee can
only be corrected by the slow and costly interposition
of the Court of Chancery; while, on the other hand,
any creditor, by filing a bill, may transfer the whole
administration of the trust to that Court.
The operation of the 7th and Bth Victoria, c. 70,
is very circumscribed. Its provisions apply only to
parties who are not traders ; and even with respect
to them the Act gives no relief with respect to debts
payable in future, or to contingent liabilities ; and
it contains no clauses for the purpose of annulling
these proceedings, which are generally resorted to for
the purpose of preventing an equal distribution.
To avoid the disadvantages, and secure the advan-
tages of private arrangements, is the object of the
next fifty-seven clauses of the Bill, of which the
following is a brief summary.
It is proposed that a majority of the creditors of
any person, whether trader or non-trader, who has
not the immediate means of fulfilling his pecuniary
engagements, shall have power to bind the whole
body of creditors in any agreement for a composition
deed, trust deed, letter of licence, &c.; such majority
to consist of not less than three-fifths in number, and
four-fifths in amount of creditors to the extent of 201.
and upwards.
Every such agreement to be under seal (in order
to secure the advantages which the law now gives to
instruments having this formal incident), and to con-
tain a state of affiirs, dated and signed by the debtor,
disclosing a full account of his pecuniary situation,
such as the number and amount of his debts, whether
admitted or disputed ; the statement of all his assets
of whatever description, and various other particu-
lars relating to his insolvency.
Every creditor to be duly served with a notice of
the proposed agreement, using the term as signifying
every description of arrangement between a debtor
and his creditors, whether by letter of licence, trust
deed, deed of composition, or other similar com-

promise.
The judicial confirmation of the agreement to be
open to be opposed by creditors who can show that
the required majority has been improperly consti-
tuted, or that some fraud, unknown at the time of
signing the agreement, has since come to light, or
where notice to any creditor has been fraudulently
withheld.
If such opposition is effectual the agreement to be
annulled, and the creditors remitted to their original

rights.
The practice of giving preference to some of the
creditors is effectually counteracted by such an Act,
constituting an act of bankruptcy on the part of the
debtor, and also subjecting the creditor to have his
debt postponed till the dAts of certain classes of cre-
ditors are satisfied, and by taking away the coloura-
ble distinction between payments proceeding wholly
from the debtor, and those made under a real or a
simulated compulsion.
The evils arising at present from the insufficient
powers of trustees on the one hand, and from the vir-
tual unaccountability on the other, are done away with
by vesting in the trustees all the property, whether
real or personal, of the insolvent, including the debt-
ors' right of action, and all such property as may de-
volve on the insolvent before the final dividend, and
by giving the trustee power to sell rights of action
and to mortgage property where such a course is de-
sirable; on the other hand, the abuses at present ex-
isting from trustees keeping assets in their own
hands, will be remedied by obliging every trustee to
pay all assets into the banks agreed upon by the cre-
ditors, within one day of receiving such money, under
penalty of paying interest at the rate of 20 par cent.
for any moneys retained in his hands, besides being
liable to fine and imprisonment upon complaint to the
court by two creditors. The services of all trustees
to be remunerated according to a graduated scale
upon the amount of assets realised.
A majority of creditors in number and amount to
be at liberty to carry on the business of the insolvent
if they think it expedient ; but where such continu-
ance is not unanimously agreed on, and there happens
to be a loss, such 1)35 is to be borne rateably among
those creditors only who have sanctioned the con-
tinaance of the business.
Next follow a variety of provisions respecting the
proof of debts in full, the liabilities of sureties, the
remedies for attempts at fraudulent preferences, the
power of the trustee to stna and to be sued, and to
mike valid conveyances; the right to cancel the
agreement if the instalments promised are not made,
or if other circumstances occur so as to induce a very
large majority of the creditors to desire a revocation
of the agreement; and, finally, the classification of
the insolvency according to the representation of the
trustees, as having occurred through misfortune, im-
providence, or fraud, for purposes to be presently
mentioned.
Such is a brief sketch of the provisions by which it

is proposed to disencumber of 'their defects, and to
r•cnier more efficient, both in safety and in expedition,
th)se descrip'ions of compromise which in this, as
well as in other countries, form the very great ma-
joray of the cases in which an insolvent's property is
divided rateably among his creditors.
We next come to the mode or obtaining a judicial
declaration of insolvency, and the consequences of
such declaration. And here it will be proper to
point out what will be the law of arrest for debt if
the provisions of this Bill shall come into operation.
Hitherto the law of arrest for debt has been a con-
stant theme of disagreement among the friends of
improvement in legislation. The abolition of arrest
upon tnesne process was passed amidst many doubts
and misgivings; and arrest after judgment is still a
vexed question, having its advocates who insist upon
the security of creditor, and opponents who urge
the hardship to the debtor. Yet the solution of the
difficulties attending this question appears simple
enough, now that it is once thought of.
The imprisonment of a debtor is justified on two
grounds only : the prevention of injury to the cre-
ditor; and the punishment of misconduct in the
debtor. With reference to the former object, the
imprisonment of the debtor is often important for the
purpose of preventing his concealing or absconding
with property which ought to be distributed amongst
the creditors, or withdrawing himself from the juris-
diction of his proper judges. The gra hutted punish-
ment of misconduct in the shape of recklessness
and of fraud, will tend to the prevention of such mis-
conduct in debtors, and will thus operate for the fu-
ture benefit of both classes.
Had this principle been kept in view, the extra-
ordinary absurdities of our present law of arrest could
never have existed. As our laws at present stand in
the Insolvent Debtors Court, every debtor must
undergo imprisonment before his petition can be
received at all, so that punishment, instead of only
following ascertained misconduct, has here to be
submitted;to before any trial whatever. On the other
hand, a debtor summoned before the Bankruptcy
Court, though he may be punished for non-attend-
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Tarred debtors, who would have come under the juris-
' diction of this Court, to the jurisdiction of the Com-