The Caucasian. (Clinton, N.C.) 188?-1913, 1898-07-14
THE BANKRUPTCY LAM


WI" '"N"s INFORM system OF hank
ruptry.
fending the passage or the confer
ence report on the bankruptcy bill by
the Senate, Mr.. Nelson, in explanation
OF the bill, said:
AT the last session Of Congress the
Senate passed bankruptcy bill. Ill
was In its chief provisions q voluntary
bill. 1t contained provisions for in
voluntary bankruptcy in two classes
OF cases-cases where q man made q
transfer OF his property with intent to
defraud his creditors and cases where
man transferred his property with
intent to prefer some of his creditors.
Those two grounds were stated in gen.
eral terms, but were ample to cover
those two classes Of cases.
When the bill went over to the
House, they adopted as a substitute for
it substantially, with some modifica-
tions, what has been known for years
as tue Torrey bill. The bill came
back in that condition and went into
conference on the Bird of March last.
and We have been wrestling with it in
conference from that time until about
a week ago.
l may say, Inasmuch as | was to
some extent the author of the Senate
bill that always felt that in the matter
OF procedure it was not as complete q
bill as it ought to be. 1t left good deal
to be supplied by rules Of court. The
House bill, on the other hand, contain
ed elaborate provisions as to adminis-
tratiOn and procedure. A good deal
of it perhaps might hsve been we'll
left to rules of court. The conferees,
however, concluded that it was per-
h4 hoof tn hat
the administrative and procedure fea-
lures of the House bill.
The main contention between the
two Houses and between the cOnferees
of the respective Houses was in re-
spect to three questions First, as to
the grounds of involuntary bank
ruptcy; next. as to the ofYenses for
which bankrupt could be imprison-
ed; and, thirdly, what Limitation and
restrictions should be placed upon dis
charge.
The House bill contained nine diff
ferent classes of grounds for bank
ruptcy, put under eight distinct heads,
one of them, the fourth, containing
two grounds. Four of those grounds
have been entirely eliminated by the
conference, and the other five have
been greatly modified. The five
grounds for involuntary bankruptcy
agreed upon by the conferees are these {:
First, a transfer or concealment of
property with intent to defraud ones
creditars;
Second, a transfer of property while
insOlvent with intent to prefer one or
more creditors over the other;
Third, q preference through legal
proceedings, coupled with the fact that
the alleged bankrupt must be insol-
vent 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 u man has n a lie q
general assignment TO his creditors
; and,
Fifth, where a man has admitted
in writing his insolvency and his
, willingness to be put into bankruptcy
on that ground.
1t will be perceived that in respect
. of the last two grounds they are prac-
7 tically voluntary. If man makes no
general assignment to his creditors, he
> if man is in an insOlvent condition
he has one of two options. He can
3 either 20 into voluntary bankruptcy OF
he can make general assignment fol
8 the benefit of his creditors; in either
Z case his estate is administered in bank.
t rupucy and he gets his discharge.
= The fifth ground, of course, is purely
e within his control. 1t is admitting his
d insolvency and mis- willingness TO g(
: into bankruptcy on that ground. In
d other words, it amounts to this: The
man says, II do rot care about being
put to the trouble of going into bank
ruptcy. | admit l am insOlvent. L
my creditors care about it, they Cal
put me into bankruptcy"
h Practically, then, there are only
n three grounds of involuntary bank
i ruptcy, and two of those-a transfer o
= property to defraud creditors and ,
d transfer to preferred creditors-ar
is bill, though in more general terms
n These two grounds are, moreover
e wholly at the the option and under tn
y control of the bankrupt.
The only other ground is what i
ID termed preference by legal proceed
J. ings; that is, if man is insolvent ant
n his creditors proceed against him b.
attachment, and through such process
seek to take his property, in that cas-
if he is not able to discharge those pro
ceedings before a final sale on execu
tion, he can be put into bankruptcy.
be 1t is to be observed in respect to thi
ground, considered in connection wit
other provisions of the bill, that the al
taching creditor can easily be deprive
~ of his preference. II bankruptcy pro
or ceedings are instituted within fou
le months, his attachment is set aside an
m the property that he has attached g0t
st into the general estate of tbs bankrul
n- for distribution among the creditor
A. Hence, while there may seem to be a
a. apparent hardship in the eyes of thot
~ who are opposed to involuntary banl
~, - ruptcy IN this case, yet there is, on tt
y other hand, protection in it again
n the attaching creditor, for he will
st. slow to move when he knows that tt
other creditor can put the man in,
Va bankruptcy and vacate the attachmen
m and he will have nothing left but Il
~, expense of paying costs and attorney
~ fees.
ne Now, coupled with these grounds f
ne involuntary bankruptcy which I ha'
on described is another thing that Civ
,x- color to the whole matter and tax
"a away the harshest features of tho
ch grounds. Under the House bill if
,ot man had committed one of the Nil
w. classes of acts of bankruptcy, he cou
800 be put into bankruptcy on the petite
al of his creditors, even though he "
ss- solvent. In the conference bill we ha
ith made it a condition that no man,
re- matter uuhat act Of bankruptcy h. b
cts committed, can be put into bankrupt
ha unless he is insOlvent.
70 Then we have adopted a new rule
new definition Of insolvency. Cnd
VI the old bankruptcy law and at CO.
ces mon law a man was deemed insolve
ed. when he did not pay his debts in
be ordinary course of business when th
ew were due. l will read brief citati
from Bump on Bankruptcy, which
familiar to most lawyers. 1t will j.
take a moment: