Evening star., 1933-02-18

nous thing for the debtor, but from a
/ purely selfish point Of view, he has tnx
creased the value Of his own claim. =
i might illustrate the point am endeavS
oring to make by dozen examples that
! Immediately come to my mind. But, 1t
seems to me that what / have said Is
thing so well known that 1t must be
admitted by thoughtful people every
| where.
| One of the first lessons which the
youth learns in the average American
! home of which we so proudly boast is
that In order to be successful In life, he
must adopt one cardinal principle, and
that is to pay his tust debts. The average
American who has had the advantages
of any such training as this, looks with
| horror upon having to resort to the
,, BANKRUPTCY laws for relief. I have per-
! sonally known Of men who seriously
| considered ending their very existence
! rather than to be ever afterwards re-
| ferred to as person who escaped pay
ing his debts by voluntary bankruptcy.
think this dread of adopting any
such avenue of escape should be en-
couraged, and the payment of debts as
sociated always with honor and good
conduct. I think also~we should avoid
as far as may be, the use of the pres
ent economic conditions as sufficient
excuse This principle must not,
! however, be carried so far as to sap the
| energy ambition and hope which has
| heretofore been the foundation of
| Americas greatness.
Stigma of Bankrupt" Avoided.
In all of the sections under this
chapter, it is contemplated that those
seeking the relief shall never bear the
| stigma of bankrupt" and in order to
, avoid 1t we have provided that they
/ shall be referred to as debtors" In
| deed, these sections undertake to FUR
nish relief for those who are not bank
rupt as that terms has been defined
under the old act. In all of these sec
tions the person filing the application
must allege one of two things, namely,
that he is insolvent, which is the term
used in the old law, but here is added
another very important provision, "or
unable to meet his debts as they ma
ture." There are, therefore, two pro-
visions. Insolvency means that he has
not sufficient assets to be pay his debts,
while the other provision makes no
such admission, but alleges that his
financial condition is such that he can
not meet his debts as they mature.
If the debtors proposal be compo-
creditors by which he is to pay in cash
sum less than the face value of their
claims, or if his proposal be an exten-
sion of time for the payment OF his
debts, it becomes necessary for him to
get a majority in number of all OF his
creditors, which number must also rep
resent a majority in amount of all his
debts, to consent in writing to his pro-
posal.
This is presented to the court, and
1.-THE court shall confirm the pro-
posal if satisfied that Q) it includes an
equitable and feasible method OF liqui-
dation for secured creditors whose
claims are affected and of financial re-
habilitation for the debtor; (2) it is for
the best interests of all creditors; (3)
that the debtor has not been guilty of
any of the acts, or failed to perform
any of the duties, which would be a
ground for denying his discharge; and
"a the offer and its acceptance are in
good faith, and have not been made or
procured except as herein provided, or
by any means, promises, or acts herein
forbidden"
Time Extension Provided.
This section distinctly provides also
that the terms of an extension propo-
Sdl may tAtCuu b1AC til1lC Ol Pdy "a
either or both unsecured debts, as well
as secured debts, provided the security
is in the actual or constructive pos
session of the debtor or Of the Gus
todian or the receiver. 1t can well be
understood that the provision affecting
secured creditors did not find its way
into either the House bill or the Sen
ate bill without a very serious discus
sion and the most careful consldera-
ton. I did not. suppose at the begin
ming of such discussion that could
be persuaded to agree to write into any
bankruptcy bill anything which would
in any way affect secured creditor.
but I came to the conclusion that in
these days of uncertainty and distress,
with threats of physical violence to
those in authority and with the duty
resting upon them to uphold the law,
that 1t was wise to do something that
would compel an arbitrary and un-
reasonable secured creditor from fore
closing his lien and thus in many in
stances destroying the debtor as we'll
as all of the claims of the unsecured
creditor The committee had in mind
in this connection the operation of the
present law, which, under the decisions
of the courts, gives to the Bankruptcy
Court the authority to stay all pro-
ceedings against the debtor from the
time he is adjudged bankrupt" until
the estate has been administered.
Using this as basis and as justi-
flcation for dealing with the secured
creditor, we have deliberately and pur
posely written into this bill the right
of the court to extend the time for the
payment of secured debt as we'll as
that of an unsecured. We think we
have sufficiently safeguarded the. po-
sition Of the secured creditor In para
graph O, page As, by the following
language:
Provided, however, that such extern
sion or composition shall not impair
the lien of any secured creditor, but
shall affect only the time and method
Of its liquidation"
In order for such secured creditor to
be so affected 1t becomes necessary for
the debtor to take the amount of such
secured debt into consideration when
he undertakes to get a majority in
number and a majority in amount to
consent to his proposal.
In these days there is much talk and
much effort being made to secure
moratorlums on mortgages. The bill
presented here makes no pretence of
doing any such thing and in that re-
spect it may be disappointing to many
persons 1t is not expected that this
bill will work any wonders. The
chances are all of its provisions will
not be applicable to more than a small
percentage of the distressed debtors,
but it is believed that it reaches
sufficient number to warrant the Sen
ale giving immediate and careful con-
sideration to it.
Section Applies to Farmer.
In this connection, 7 desire to point
out that in the House bill there was
a provision for the extension of time
OF the payment of debts. both secured