THE NEW BANKRUPTCY ACT AND BILLS OR SALE ACT.

Inangahua Times, Volume IX, Issue 1360, 11 February 1884, Page 2

THE NEW BANKRUPTCY ACT AND BILLS OR SALE ACT.

(Otago Daily Times.) Some important alterations have been made iv the law as to the administration of the bankrupt's property. AH the property is divisible among the creditors, with the exception of the " tools " (if any) of his trade and the necessary wearing apparel of himself, his wife, and his children ; and his furniture to the value — inclusive of tools, apparel and furniture — of £25, or to such further value as the creditors may determine." And all property coming to the bankrupt between the date of his bankruptcy and his discharge also vests in the assignee. The provisions as to setting aside voluntary settlements are the same as in the repealed Act: such settlements are declared to be fraudulent and void as against the assignee if the settler become bankrupt within three years the date of settlement, unless it is proved that the settler was at the time he made the settlement able to pay his debts independently of the property settled. The fraudulent perference section is the same as before, except in one important particular ; every transfer of property of payment made by the debtor to the creditor at the time when the debtor was unable to pay his debts as they 1 became due is void if the bankruptcy occurs within three mouths after, and that " whether the act be voluntary on the part of the debtor or done under pressnre on the part of the creditor." But of course " bona fide" transactions for valuable consideration are not affected by this enactment. The words quoted above effect a great improvement in the law of fraudulent preference by ridding it of the absurdities into which the Courts had been led by the rule that there could be no fraudulent preference in cases in which the creditor has exercised pressure, however slight. Although this doctrine was greatly modified by a recent decision of the late Master of the Rolls, we are of opinion that tho simplest and wisest course was to sweep it away althogether. The next section is entirely new, and the first part seems to us quite unnecessary. It is as follows . — " 1. If a debtor makes any payment, or gives or delivers any satisfaction or security to a creditor in respect of a debt, the consideration for which was either wholly or partly antecedent to the date of the payment, gift, or delivery, and is adjudicated a bankrupt within three months after that date, and whether the payment, gift, or delivery was voluntarily made, or under pressure from a creditor, the Court may declare the payment, gift, or delivery to be void as against the assignee in the bankrupty." " 2. If a debtor pays any money, or delivers any property to a creditor who has presented a bankruptcy petition against him, and within sixty days after the payment or delivery another bankruptcy petition is presented against the debtor, and he is adjudicated bankrupt thereon, the payment or delivery shall be void against the assignee in the bankruptcy." We now come to the alterations in the law as to the bills of sale, which are effected partly by the Bankruptcy Act and partly by " The Chattels Securities Act, 1880, Amendment Act, 1883." Section 4 of the latter Act is as follows : "No bill of sale shall have any legal force or effect unless it shall set forth a full, true, and clear statement of the entire amount of money paid, or value of a.uy goods supplied by the grantee thereof to the grantor in consideration whereof such bill of sale is given, distinguishing in such statement the amount of money paid or value of any goods supplied respectively prior to the execution of such bill of sale and contemporaneously therwith." The provision in the- | Chattels Securities Act is supplemented by the following section in the Bankruptcy Act: "Every bill of sale shall be null aud void as against the assignee of a bankrupt's estate if it has been executed within six months prior to < the order of adjudication being made, except as to money actually advanced or paid, or the actual value of goods or

[.chattels . sold or supplied by the ("grantee of "the bill of sal* to the | grantor contemporaneously with the ' execution thereof/ '-_■'. ' These provisions should, effectually ' remove the main objections to the system of bills of sale, and wo belie w they will be found beneficial in their operation. We doulit whether the other provisions affecting bills of sale will be equally beneficial. It is. enacted that a bill of sate . cannot be made to apply to goods acquired by the grantor after the execution of the instrument. Every bill of safe nrußt contain a schedule or inventory of the goods intended to be covered by it j, and the instrument is declared to have no effect as to any chatties not described in the inventory, except ".so far as relates to trade fixtures^ machinery, plant, and' appliances fixed or substituted in place of the like contained in the BcheSulft."" ' All Bankruptcy Acts contain a provision; intended to give to- the bankrupt's creditors the benefit of goods" belonging to other people which are in the- possession of the debtor at the time of his bankruptcy by the consent of the- owner thereof, on the ground! that creditors in dealing with a mart naturally rely upon the property in his possession as an indication of his financial position, and it is only fair that those who allow their property to be in the reputed ownership of a man when he becomes bankrupt should suffer loss rather than those who may have given credit to the debtor on the strength of such goods being apparently the debtor's property. These provisions, however, do not apply 99 as to "prejudice or affect any bona fide security, lease, or bailment of chattels which has been duly registered" ; nor to consignments Of goodsheld by the bankrupt, in the ordinary course of his business, for sale on account of any other person.