the extension to “any creditor of a debtor who is notour bankrupt,” without reference to the amount of his debt, of the right hitherto limited to the debtor himself, to petition the court for a decree of cessio, the prayer of the petition, whether presented by the debtor or by a creditor, being “to appoint a trustee to take the management and disposal of the debtor’s estate for behoof of his creditors”; (2) the discretionary power given to the court upon such petition to award sequestration under the bankruptcy act, in any case where the liabilities of the debtor exceed £200; and (3) the right of the debtor to apply for his discharge under similar conditions to those obtaining in the case of sequestration. An important modification of the law relating to discharge which equally affects a debtor under the Bankruptcy and Cessio Acts, is also effected by the provision of the act of 1881, which requires, in addition to the concurrence of creditors, the fulfilment of one of the following conditions, viz., “(a) That a dividend of five shillings in the pound has been paid out of the estate of the debtor, or that security for payment thereof has been found to the satisfaction of the creditors; or (b) that the failure to pay five shillings in the pound has, in the opinion of the sheriff, arisen from circumstances for which the debtor cannot justly be held responsible.” Orders of cessio are only made in the sheriff courts, and when made, the court also appoints a trustee, who conducts the proceedings without the control exercised by the creditors in a sequestration. Under these conditions it will be seen that the original purpose and constitution of the process of cessio has entirely disappeared, and it has now become a modified form of official bankruptcy procedure, with a less elaborate routine than in the case of sequestration, and one perhaps more suitable to the smaller class of cases, to which in practice it is limited.
The Bankruptcy Frauds and Disabilities (Scotland) Act 1884 applies to sequestrations and decrees of cessio the criminal provisions of § 31 of the English Bankruptcy Act 1883, relating to the obtaining of credit for £20 and upwards by an undischarged bankrupt, without disclosure of his position. It also places the law relating to the disqualifications attaching to such bankrupts on a similar footing to that of the English act.
The Judicial Factors Act of 1889 contains a provision calculated to check excessive costs of administration, by requiring that where the remuneration of a trustee under a sequestration is to be fixed by the commissioners, intimation of the rate of remuneration is to be given to the creditors and to the accountant of court before being acted on, and the latter officer is empowered, subject to appeal, to modify the same if he deems it expedient.
It may be pointed out that the Deeds of Arrangement Act 1887, which applies to England and Ireland, does not apply to Scotland, and there is no analogous provision requiring registration of private deeds of assignment for the benefit of creditors as a condition of their validity in that country.
Finally, it is to be noted that the office of accountant in bankruptcy, which was established by the Bankruptcy Act of 1856, has under the Judicial Factors Act 1889 been abolished, the duties being merged in those of the office of accountant of the court of session.
Irish Bankruptcy Legislation.
The Irish law of bankruptcy is regulated by the two leading Irish statutes of 1857 and 1872, together with the Irish Debtors Act 1872, and corresponds in its main features to some of the older English enactments, with modifications adopted from the English act of 1869. It may be pointed out, however, that the system of liquidation by arrangement and composition without the approval or control of the court, which proved fatal to the success of the latter, has not at any time been imported into the Irish law. A special act was passed in 1888 for establishing local bankruptcy courts in certain districts in Ireland, and an act was also passed in 1889, applying the main provisions of the English Act of 1888, relating to preferential payments in bankruptcy, to Ireland.
The Deeds of Arrangement Act 1887, which has been already discussed above under the head of English bankruptcy legislation, also applies in its main provisions to Ireland, and as supplemented by the Irish Deeds of Arrangement Amendment Act 1890, places the law relating to this branch of insolvency procedure upon a similar footing in both countries, so far as regards the publicity of such deeds. The last-mentioned act also requires a similar registration of all petitions for arrangement under the Bankruptcy Act 1857. (J. Sm.*)
Comparative Law
British Empire.—In most parts of the British empire the law of bankruptcy has been modelled upon the English system. This is particularly the case in Australia and New Zealand. Victoria, South Australia, Western Australia and New Zealand follow the lines of the existing English acts. In Queensland, Tasmania and New South Wales the system is rather that of the English act of 1869, leaving more to the creditors’ management and less to officialism.
One point may be mentioned in which the Australian colonies have improved on the English system. Under the English acts a bankrupt is under no obligation to apply for his discharge. The result is that the United Kingdom contains a population of 70,000 undischarged bankrupts—a manifest danger to the trading community. Under the bankruptcy systems of New South Wales, Victoria and New Zealand, a bankrupt is bound to apply for his discharge within a fixed period, otherwise he is guilty of a contempt of court.
In Canada, under the British North America Act 1867, the Dominion parliament has exclusive legislative power in regard to bankruptcy and insolvency: but there is no existing Dominion act on the subject. A Dominion act was passed in 1875, but repealed in 1880. The failure of this act may perhaps be ascribed to the diversity of the pre-existing provincial systems, embracing such contrasts as the English law of Ontario, and the French code based on cessio bonorum—which ruled in Quebec. Bankruptcy is dealt with in a fragmentary way by the provincial legislatures by acts regulating such matters as priority of execution creditors, fraudulent assignments and preferences, imprisonment of debtors, administration of estates of deceased insolvents.
In Cape Colony and Natal English law is substantially followed. In the Transvaal, where Roman-Dutch law prevails, the law governing the subject is the Insolvency Law, No. 13 of 1895. It provides for voluntary surrender and compulsory sequestration. The law of the Orange River Colony is similar.
In British Guiana, Gambia, Jamaica, Hong Kong, Mauritius, Grenada, Trinidad, Tobago and the Straits Settlements the law is modelled on the English pattern.
In India insolvency is regulated by the Indian Insolvency Act 1848, extended by the Act XI. of 1889.
An English bankrupt, it may be added, is entitled to plead his discharge in England as a defence in a colonial court. The explanation is this. The English act vests all the bankrupt’s property, whether in the United Kingdom or in the colonies, in his trustee in bankruptcy. Having thus denuded him of everything, it has been held to follow that the bankrupt’s discharge must also receive recognition in a colonial court.
France.—Bankruptcy in France is regulated by the Commercial Code of 1807, amended and supplemented by the law of 9th June 1838. By Article 437 of the code bankruptcy is defined as the state of a trader who is unable to meet his commercial engagements. Simple insolvency of this kind is known in France as faillite. Insolvency attended with circumstances of misconduct or fraud is known as banqueroute simple or banqueroute frauduleuse. Only a trader can become bankrupt. The debt, too, for obtaining adjudication must be a commercial debt, the laws regulating bankruptcy being designed exclusively for the protection of commerce. To be made a bankrupt a trader need not be insolvent: it is sufficient that he has suspended payment. Commercial companies of all kinds are liable to be declared bankrupt in the same manner as individual traders. A trader-debtor can be adjudicated bankrupt upon his own petition, or upon the petition of a creditor, or by the court itself proprio motu. A petitioning debtor must within fifteen days file at the
