The Republican. [volume] (Oakland, Md.) 1877-current, 1898-08-11
3HE NEW BANKRUPTCYLAW.
Its Operation Explained in the Senate by
Its Author, Knute Nelson, of
Minnesota,

MfnneSOta.
The i've grounds for involuntary bank
ruptcy are these:
First, transfer or concealment of property
with intent to defraud ones creditors.
Second, a transfer of property while insol-
vent with intent to prefer one or more credi-
tors over the other.
Third, preference through legal proceed
ings, coupled with the fact that the alleged
bankrupt must be insolvent and that he has
failed to remove the embargo or preference
that has occurred through legal proceedings
five days before a sale of his property in the
proceedings.
Fourth, where man has made a general as
signment to his creditors, and,
Fifth, Where man has admitted in writ
ilf ais. insolvency and his Willingness to be
t& Shto bankruptcy on that ground.
IItwiD be perceived that in respect to the
last two grounds they are practically volun-
tary. If man makes no general assignment
to his creditors he cannot be put into bank
ruptcy; and if a man is in an insolvent con-
dition he has one of two options. He can
either go into voluntary bankruptcy or he
can make a general assignment for the bene-
fit of his creditors; in either case his estate is
discharge.
The fifth ground, of course is purely within
his control It's admitting his insolvency
and his willingness to go into bankruptcy on
that ground. In other words. it amounts to
this. The man says, 81 do not care about be
ing put into bankruptcy ! admit [ am in
solvent. If my creditors care about it they
can put me into bankruptcy"
grounds of involuntary bankruptcy, and two
of those-a transfer of property to defraud
creditors and a transfer to preferred credi-
torS-are substantially included in the senate
bill, though in more general terms. These
two grounds are, moreover, wholly at the Op-
tion and under the control of the bankrupt
The only other ground is what is termed
preference by legal proceedings; that is if
man is insolvent ana his creditors proceed
against him by attachment, and through
such process seek to take his property, in that
case, if he is not able to discharge those pro
ceedings before a final sale on execution, he
can be put into bankruptcy.
1t is to be observed in respect to this ground
considered in connection with other provis-
ions of the bill that the attaching creditors
can easily be deprived Of his preference. If
bankruptcy proceeding are instituted within
four months, his attachment is set aside and
the property that he has attached goes into
the general estate of the bankrupt for distri-
button among the creditors. Hence, while
there may seem to be an apparent hardship
in the eyes of those who are opposed to in
voluntary bankruptcy in this case, yet there
is, on the other hand, a protection in it
,ot4
slow to move when he knows that the other
creditors can put the man into bankruptcy
and vacate the attachment, and he will have
nothing left but the expense of paying costs
and attorneys fees.
No man, no matter what act of bankruptcy
he has committed, can be put into bankruptcy
unless he is insolvent. We have adopted a
new rule or definition for insolvency. We
say that man is not insolvent if all his prop
erty, exclusive of what he has disposed of or
concealed to defraud his creditors, at fair
valuation is equal to his debts. He may be
in default on his notes and commercial paper
or his other dues, still if he can come into
court and show that his property at a fair
valuation, exclusive of what he has attempt
ed to dispose of to defraud his creditors, is
equal in value to his debts, then he is not in
solvent and cannot be put into bankruptcy.
But on accsunt of adopting this new rule of
insolvency we have in connection with it,
from he necessity of the case, adopted diff
ferent order of proof. We require the alleged
bankrupt to assume the burden OF proving
his solvency. Under the old rule and defini-
tion of Insolvency it was very easy for the
creditor to show that the bankrupt had not
IA 40 = =,
simple thing, and hence it was fair to charge
him with the duty of proving such insolvency.
But under this new rule of insolvency it is
more difficult. ana the matter is to large
extent within the peculiar and special know
ledge of the alleged bankrupt.
The question of Insolvency under the new
rule involves, first the number, character
and amount of debts owed; the location
character and amount of property owned
These are difficult matters tO, discover, 'as-
certain and prove for the creditor, but are
easy of disclosure for the debtor. He can
easily schedule and make known his property
and his debts, and it is by comparing the pro
perty with the debts that the question of in
solvency is determined. There is therefore.
no hardship in adopting this rule of proof.
IN the case Of the first ground of bankrupt
cS thai OF disposng OF property 10 defrgud
his creditors, we put the burden of proving
solvency on the debtor in the first instance.
In respect to the next two grounds We say
that he shan be required to appear in court
with his books and papers and give testimony
as to his property and his debts, and then il
he thus appears the burden Of proof /, on the
petitioning creditors.
In respect to the matter of Imprisonment
there were -four grounds in the house Din au-
thorzing the imprisonment Of the bankrupt
We have reduced the grounds so two. The
first is where bankrupt ha5 concealed his
property from his trustees after proceedings
have been instituted. That is q species OF
embezzlement. The other case is where a
bankrupt has committed perjury I'm his state
ment, has sworn falsely so an account,
We have provided punishment for tine ref
cree for maladministratou, and so for The
trustee Then we have provided punishment
in q case where a creditor malgs q false
claim. That is nothing but a form OF per
jury.
We have also covered another case. We
have made it criminal Tor anybody 10 at
tempt to extort money foractng or forbear
ing to act in bankruptcy proceedings. n
other words, we do not want it to be in .tLt
power Of the creditor or shyster lawyer tC
| go to the wife or relatives or friends Of {
bankrupt ana say;