The New York herald., 1922-03-05

the banks on which relatives are per-
sonally liable through individual In
dorsements. leaving tEat much less
for distribution among the general
creditors.
Temptation to Fraud.
Usually the creditors meet and ap-
point committee to examine into the
Dankrupts affairs and to take I'D the
question OF a compromise. There have
oeen SO many thousands of bank
ruptcies since the war that creditors
are more and more inclined to settle
with the bankrupt for whatever they
can get and let the matter drop.
This has tended to encourage fraud
uient bankruptcies. 1t is temptation
10 man who is in financial difficult
ties, and who with an honest bank
ruptcy might pay 90 or so cents on
the dollar. to transfer cash ard other
assets to relatives and friends and
thus to provide fund for cash settle
ment at 20 CT 80 cents on the dollar.
This would leave the bankrupt free
TO go ahead with new business, with
stock Of goods and no liabilities, and
to collect his own outstanding ac-
counts.
The fees of receiver are per cent.
on the first $500, per cent on the
next $1,000. . per cent. on moneys in
excess of $1,000 and less than $4,000,
and l per cent. on amounts above
$4,000. except in cases of composition
| Composition is where the bankrupt
| !,
pays them a fixed sum in cash or
notes instead of having his assets sold
and distributed among his creditors
In case Of composition the receivers
| fee may not exceed one-half of per
cent. of the amount to be paid the
creditors on such composition"
The Distribution of Funds.
| If there is no compromise to the
creditors the creditors meet and elect
a trustee, who sells the bankrupt's
property or conducts the business for
the benefit of the creditors until a sale.
All the moneys received are to be de-
posted in banks designated by the
courts repositories for the money of
bankrupt estates" From this fund the
actual and necessary expenses in
Cured by the referee, the trustee and
the receiver are to be paid. After they
have been examined and approved by
the court the rest of the fund is dis
tributed as dividends to the creditors.
Before the distribution any and all
taxes owed by the bankrupt are to
be paid In full. Wages due to work
tyc nf. &c Al,
three months of the bankruptcy, not
to exceed $300 TO each claimant, are
also preferred.
Dividends are to be declared to the
unpreferred creditors promptly. the
first dividend within thirty days If it
amounts to per cent. of the allowed
claims, and subsequent dividends as
often as 10 per cent. or more is in
hand. Dividends which are unclaimed
for six months after the final dividend
shall be paid into court and dividends
remaining unclaimed for one year shall
be distributed to other creditors to an
amount sufficient to pay them in full,
and the balance to the bankrupt un-
less the unclaimed dividends belong
to minors.
All transfers OF property within four
months prior to the filing of the bank
ruptcy petition with the purpose to
hinder. delay or defraud the creditors
shall be null and void against the
creditors except as to purchase in
good faith and for present fair
consideration"
To protect creditors against sacri-
flee sales the bankrupt's property
must be appraised by three disinter-
ested appraisers" and shall be sold only
with the approval of the court unless
the price of at least rs per cent. of
the appraised value is offered.
The Uniformity of the Law.
The Supreme Court OF the United
States adopted rules for the procedure
in bankruptcy cases and also an
proved the forms OF the papers re-
quired to be filed with the clerk and
the court. Thus the bankruptcy law,
bankruptcy rules and the bankruptcy
forms are uniform throughout tho
United States.
The present administration OF tie
bankruptcy law is almost opposite In
Its purpose to the laws OF centuries
oSo "a dcOtOI tOulh Dt IilUTlS-
oned for debt and confined In Jail for
an indefinite period. Hardly a CEN
tury ago this was the law in the State
OF New York. The father Of Thurlow
Weed, leader for many years OF the
Whig party and boss in its earlier
stages OF the Republican party, was
imprisoned for debt in Catskill, Greene
county.
In those days there was no way to
discharge n debt except by payment.
IL debtor had vindictive creditors
they could prevent him from making
fresh start. That was evaded by the
debtor ceasing to do business In his
own name and starting a new business
as agent for his wife or other rela-
tives or friends.
The Bankruptcy law provides for
complete new start. So frequent
have bankruptcies become, however,
in the last few years that some asso-
Citations of merchants. manufacturers
and credit agencies arc fearful that the
ease in going through bankruptcy en-
courages laxity In business methods
and lower standards of honesty.
There was a case recently where
diamond dealer sought TO go through
bankruptcy and alleged that he had