Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1916-01-21
BANKRUPTCY LAW
COULD BE HELPED
: BY AMENDMENTS
Many Proposed Changes
Should Be Rejected,
Says Credit Man
CREDITORS AT FAULT
By GEORGE MASTERS


phln Credit Mems Association.
The question Of the value of the pres
ent bankruptcy law has been given atten-
tion by many associations of business
men since its enactment, and opinions
have ranged from an unqualified demand
for the repeal of the law in toto to an
equally unqualified Endorsement.
The trend of present dav opinion seems
to be that the bankruptcy law as IL stands
is better for creditors than any of its
predecessors: that the debtor is entitled
to the relief that it affords and that,
with all Its faults It is infinitely to be
preferred to n return to the old days of
the snap judgments" with the accomi-
paniinent of unjust and inequitable pref
erences that made the life of the credit
man an unholy nightmare before its en-
actment.
That It can be improved requires no
argument. for no business law can be
drafted that will meet the ever-changing
conditions indefinitely, nor is IL likely
that any law will be drafted that is so
perfect that the shrewd, or interruptions,
lawyers cannot find ways to circum-
vent It,
THREE CHANGES NECESSARY.
Careful consideration OF the proposed
amendments develops the fact that many
of them are advanced to overcome OBJ
jections that are local in their applica-
ton and they should be rejected for that
reason. The business man has come to
recognize the advantage of uniform laws
for all the States as opposed to the con-
fusion resulting from laws that apply
only to the individual State and to the
business transacted therein.
OF the amendments proposed those that
seem to be most necessary at this time
may be classified as follows:
First. The reduction of the costs of
bankrupt estates by con-
solidatlng the offices of the receiver and
the trustee so that the estate will be
obliged to bear the expense of but one
office and its legal adviser. Granting
statutory fees to petitionlng attorneys and
to the attorneys Tor the receiver and (or)
trustee. vesting in the referee discretion
AIRY powers to cover the extraordinary
case and the case in which there is evil
dence of fraud.
Second. Increasing the difficulty of
obtaining n discharge by requiring the
to prove to the satisfaction of
the referee that he Is not at fault, on |
the safe principle that the petitioner in n |
court of equity must come into court |
with clean hands"
Third. Changing the penal sections of |
the law to afford better facilities for the |
of commercial fraud. Making |
the testimony of the bankrupt n volun- |
tary act and removing the clause proNib- |
ting the use of his testimony in other |
court proceedings.
Many other suggestions are being ad-
vanced that are worthy of consideration. |
but it would seem to be good judgment
TO confine present activities to as few
changes as possible and to bear in mind |
that any amendments that favor the
without due regard to the rights
If the 'clean," though unfortunate, debtor
Ire foreign to the original purpose of the
aw. For this reason 1t is safe to avoid
any change that refuses n discharge to
| debtor whose estate does not pay un-
secured creditors a fixed percentage. un-
ess specified majority of such creditors
gives its consent in writing.
SALARY FOR REFEREE SUGGESTED /
on the other hand, suggestions that 7
irst, referees shall receive n stipulated
alary from the Government; second A
hat the United States District Court
hall appoint permanent trustee, or a
,oard of trustees. to Immediately take
'harge of all bankruptcy cases in their
istrict; third, that all applications for
discharge shall be filed within six months
# the date of adjudication, are all fair
md equitable and might result in improv-
ng the practice, reducing costs and eX-
results
With all of these suggestions lin mind, 1t
s the general opinion of those who have
tudied the matter that the greatest fault
With the bankruptcy law is directly due
o the attitude of the creditors Their
labit of turning claims over to collection
agencies or to attorneys and promptly
orgetting about them until dividends
'each them is so perncious that they
lave no right to criticise the meagreness
# the dividends that usually follow
There may be some excuse for the fall
ire of the out-of-town creditor to attend
meetings before the referee. but such at
endance would be of less moment or
wholly unnecessary if local creditors
we're not equally lax. 1t is only natural
hat the attitude of an attorney should
,e governed by that of his principal and
{ is unjust to expect a collection agency
,r a lawyer TO act as n detective, an eX-
,ert accountant and an all-around Sher-
ock Holmes. in addition to performing
lis duty as u legal representative for a
maximum fee OF 10 per cent. of the diVi-
lend received by the creditor from a
estate.
Referees. lawyers and the representa-
ives of the collection agencies are only
luman, and 1t is not surprising where
he creditors show no personal interest in
case that there should be a growing
disposition to clean it up as quickly as
possible, get what fees lere are and let
he creditors take what is left.
Any statement about the bankruptcy
aw would be incomplete that did not add
word of appreciation for the assistance
low being given by the Department of
Justice to efforts to punish bankruptcy
rauds. IL is a pleasure 10 note that vio-
ations of the act are recognized as
rimes against the Government, and the
'ast machinery of the Cove. nment is at
he disposal of cred. rs who can show
he United States District Attorney sat