Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-08-01


tions. filed by friendly or fictitious
creditors at the request of or on be-
hair of the debtor; allowed fraudu-
lent compositions, by which some
creditors were preferred over others,
permitted easy discharges from bank
ruptcy. regardless of fragrant viola
items of the bankruptcy act: its Grim
inal provisions were not adequate
and there was a lack Of prosecution:
delays were entailed in settling
estates, and in some cases costs of
administration were excessive.
The accountants believe that nearly
all OF these defects will be corrected
by the amendments and by the new
general orders in bankruptcy pronul-
gated by the United States Supreme
Court.
Some Of Provisions.
Some Of the high lights In the
amendments are as follows;
C0liusive petitionS--,A new general
order OF the Supreme Court requires
that petitioners in Involuntary cases.
whose claims have been obtained by
assignment. make affidavit as to the
consideration paid for the assigned
claina- AS collusive petitions usually
rest on assigned claims. II Is hoped
this new order will eliminate this
evil. Solicitation of claims by re-
eeivers OF their attorneys Is prohibited
by another new general order of the
supreme Court, and another prohibits
the employment by receivers and
trustees Of attorneys who are In any
way connected with the bankrupt
Denial Of allowances to attorneys for
petftiontng creditors Is provided for In
net hn1s Oh,
pear that the proceedings were insti-
tuted in collusion with the bankrupt
or were not instituted in good faith"
Fraudulent composittons-A section
in the amended law provides for the
payment. from the estate, of the ex-
penses of creditors who investigate
and successfully oppose confirmation
of a composition. This new section
Is intended to aid creditors who have
reason to believe that compositions
offered areSnot fair. in that they do
not disclose all the payments to be
made by a debtor or bankrupt. Here
tofore creditors have been slow to
investigate offers in composition,
owing to the trouble and expense in
volved. with the result that many
compositions have been ac-
copied. A general order Of the Su.
preme Court requires creditors who
waive participation in compositions to
disclose under oath all agreements
with the bankrupt. and to make affi-
dayit that no payment or promise of
payment has been made, except such
as are disclosed in the composition
offer.
Easy hargeS-Hereafter if a
bankrupt can be shown to have mutt
lated, falsif1ed or concealed any book
or record. regardless of the intent OF
the act, discharge may be refused.
I Likewise, If a bankrupt obtains credit
or an extension of credit on ma
terially false financial statement,
which is published through any
agency, a discharge may be refused,
Likewise il a bankrupt fails to &C
count satisfactorily for assets, he may
he refused a discharge. An important
amendment to this section is one
which places on the bankrupt the
burden of proving that he has not
any of the acts which
would act as an obstacle to his dis
charge.
Longer Prison Term.
Insufficient criminal provisions
and lack of proseeution--Many OF the
amendments are aimed at these de-
fects. Offenses are more carefuiiy
defined and several additional OF
lenses are enumerated. The period
~ nossibIe IMPRISONMENT for viola
ttons is increased from two years TO
FIVE wears, for series of eight specl-
aed acts. three of which are new.
One of the three new punishable acts
is the eoncealment or transfer or
property of the debtor by an officer
al. agent of a person or corporation,
nrior to bankruptcy; another Is the
destruction, muttlatton
or Justification by any one OF any
record relating to the affairs Of a
the third is the withhold
ipcr nv any one from the receiver or
trustee of any record relating to the
affairs of a bankrupt. The time in
which prosecution Of apparent Of
tenders may be undertaken Is eX-
tended in the amended law from one
wear to three. An important amend
nent which it Is hoped will stimulate
prosecutions of bankruptcy law vio-
lators is one which makes 1t obEga-
tory for referees to report to prose
cutting attorneys all apparent viola
lions of the law that come to their
notice.
OGl3yS LII oSlthHe< NSNSse~~ - AANAN+
the amended act, adjudication as a
Ia nkrupt and administration of the
estate NAV not be delayed by the
mere making of an offer In compost.
tion. unless the court is satisfied the
estate will not deteriortate. A uni
form time of 80 days for taking APP
peals is set, and the time for proving
claims is reduced from one year to
six months.
Costs Now Limited.
"costs of administration No
amendments to the bankruptcy act
are designed to meet complaints OF
excessive cost, but several of the new
General orders of the Supreme Court
nut limitations on expenditures from
estates.
"Other important amendments -
Creditors communications to other
creditors and to referees and trustees
relating to the affairs Of a bankrupt
are made privileged communications.
EMO more than one discharge from
bankruptcy, regardless Of whether
the case is voluntary or involuntary,
shall be granted within a period OF
si,y wears. Heretofore discharges in
voluntary cases were limited to one In
six wears: but there was no limit on
discharges in involuntary cases.
"Paynaent of wages is given prior
ity over payment OF taxes.
------o.-------------
rr MI ME-, Y.@n,.aa asxa o.