BANKRUPTCY. 



241 



Bant- The trustee must keep regular accounts, and lodge 



ruptcy. tne money recovered in a bank ; and at the end of 



~""~v twelve months from the date of the- first deliverance, 



after due advei tisement, a dividend shall be paid to 

 those creditors who have produced their grounds of 

 debt and affidavits. When the term of payment of 

 any debt is not arrived, a proportional discount shall 

 be made, and the debt ranked accordingly. Where 

 a debt is contingent, a dividend corresponding to the 

 debt shall be set aside and deposited in the bank un- 

 til the contingency be declared. 



At the end of eighteen months a second dividend 

 shall be made; and in like manner, dividends at the 

 end of every six months, till the whole funds be di- 

 vided. But at the expiry of a year and a half from 

 the sequestration, four-fifths of the creditors may or- 

 der the whole outstanding debts, &c. belonging to 

 the estate to be sold, for the purpose of making a 

 final division. 



After the second dividend, the bankrupt, with 

 concurrence of the trustee and four-fifths of the cre- 

 ditors in number and value, may apply to the court, 

 who are authorised to grant him a final discharge of 

 all debts contracted prior to the sequestration, if 

 cause be not shewn to the contrary. 



As it is sometimes for the advantage of all parties 

 to settle by composition, the statute declares, that 

 the bankrupt may, at the meeting after his second 

 examination, offer to settle by composition; and if 

 this offer is approved of by nine-tenths of the credi- 

 tors present, another meeting shall be called to con- 

 sider of it ; and if at this second meeting nine-tenths 

 of the creditors approve of the offer, a report of the 

 proceedings shall belaid before the court; and if it 

 shall appear that the offer is reasonable, and has been 

 assented to by nine-tenths in number and value of the 

 whole creditors who have produced grounds of debt, 

 the proceedings in the sequestration shall cease, and 

 the court shall declare the trustee exonered, and the 

 bankrupt discharged, except as to the payment of 

 the composition. 



Such are the general outlines of the law of bank- 

 ruptcy in Scotland. It resembles that of England 

 in some of its general features, though there is a 

 strong and marked distinction betwixt the two sys- 

 tems in many particulars. 



In England traders only can be made bankrupt. 

 The effects of every other description of persons are 

 left to the remedies of common law, and to be at- 

 tached and carried off by the diligence of individual 

 creditors. 



Certain acts are defined by the different statutes, as 

 marks of bankruptcy, some of which are of an ambi- 

 guous and some of a secret nature, such as the debtor 

 " beginning to keep house," so as not to be seen or 

 spoken to by his creditors. The commission of any 

 one of these acts invalidates all the debtor's future ' 

 transactions, and entitles a creditor to a certain ex- 

 tent to apply for a commission of bankruptcy, which 

 U immediately granted of course, by the Lord Chan- 

 cellor, vesting the bankrupt's estate in certain com- 

 missioners, who are empowered to lock up his shop, 

 and to order his person into custody to undergo the 

 necessary examinations. As this commission is grant- 

 ed without the knowledge of the bankrupt, and is 

 . III. part I. 



meant to come suddenly upon him, certain precau- 

 tions are used to prevent its being maliciously sued 

 out. 



The commissioners take proof of the bankruptcy, 

 and of the debtor's being a trader, and appoint three 

 meetings to be advertised. At these meetings the 

 debts are proved ; and at one of them assignees are 

 chosen, in whom the estate is vested for behoof of 

 the creditors. At the third meeting at farthest, the 

 bankrupt must surrender himself, and afterwards 

 conform to the statutes in all respects, under pain 

 of death. 



The bankrupt and those connected with him, are 

 to be examined as to his affairs ; and if their answers 

 appear unsatisfactory, the commissioners may com- 

 mit them to prison till they submit and give satisfac- 

 tion. 



The whole estate of the bankrupt is vested in the 

 assignees, as it stood in his person when the first act 

 of bankruptcy was committed. After that date, 

 therefore, all his transactions are void and null. It 

 is, however, now provided by Sir Samuel Romilly's 

 bill, 46 Geo. III. 135. that all conveyances, all pay- 

 ments by and to, and all contracts and dealings by 

 and with a bankrupt, made more than two calendar 

 months before the date of the commission, shall be 

 valid, notwithstanding any prior act of bankruptcy, 

 if the person so dealing had not at the time any no- 

 tice of such prior act. It was provided by 1 9 Geo. II. 

 c. 32., that no money paid by a bankrupt to a bona 

 fide real creditor in the course of trade, even after an 

 act of bankruptcy, should be liable to be refunded. 



When the assignees have recovered all they can, 

 they must after four, and within twelve months, give 

 notice of a meeting for a dividend. The commis- 

 sioners then direct the dividend to be issued at so 

 much a pound. 



Within eighteen months from issuing the commis- 

 sion, a second and final dividend is ordered, if there 

 be any thing remaining ; and if there be a surplus af- 

 ter all the debts are paid, it belongs to the bankrupt. 



If the bankrupt conform in all respects to the sta- 

 tutes, and if the creditors, or four-fifths of them in 

 number and value, will sign a certificate to that pur- 

 port, the commissioners are to authenticate the same, 

 and transmit it to the Lord Chancellor, who, upon 

 oath made by the bankrupt, that it was obtained 

 without fraud, may allow the same, or disallow it on 

 cause shewn by any creditor. If it is allowed, the 

 bankrupt is entitled to an allowance out of his ef- 

 fects to put him in away of industry. This allowance 

 is proportioned to the amount of the dividend on his 

 estate, but must never exceed 300. The bankrupt 

 is also, by his certificate, discharged for ever from 

 all claims for any debts which were proved or prove- 

 ab!e under the commission. 



When a person has obtained a certificate, and be- 

 comes bankrupt a second time, unless he shall pay 

 fifteen shillings a pound, he shall only be indemnified 

 as to confinement of his body ; but his future estate 

 shall be liable to his prior creditors. 



Such is the law of England regarding traders. 



All other persons remain subject to the common law, 



both as to their person and effects. They are liable 



to perpetual imprisonment, unless relieved by the in- 



2h 



Bank- 

 ruptcy. 



