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(3) The vendor of the goodwill of a business who is to receive as consideration a share of the profits.

(4) A limited partner under the Limited Partnership Act,


Discharge of Bankrupt.

At any time after the making of the Order of Adjudication, the bankrupt may apply to the court for an Order of Discharge, that is, an order of the court releasing him from bankruptcy. The application, which will not be heard until after his public examination, is taken in open court after a fourteen days' notice to the creditors, who may oppose the application, as also may the official receiver and trustee. The court takes into consideration the report of the official receiver as to the bankrupt's conduct and affairs and has discretion to

(1) Grant unconditionally the order asked for; or (2) Refuse an absolute order of discharge; or

(3) Suspend the operation of the order for a specified time;


(4) Grant an order subject to any conditions with respect to any earnings or income or after-acquired property of the bankrupt; or

(5) Grant the order subject to (3) and (4) together.

The court must refuse the discharge in all cases where the bankrupt has committed any misdemeanour under the Act or connected with his bankruptcy, or any felony connected therewith, unless for special reasons it determines otherwise.

Powers of Court as to Discharge.-On proof of any of the following facts, the court must either

(1) Refuse the discharge; or

(2) Suspend the discharge for not less than two years; but it may be for less than two years if the only fact proved is that his assets do not equal ten shillings in the pound on the amount of unsecured liabilities; or

(3) Suspend the discharge until a dividend of not less than ten shillings in the pound has been paid to the creditors ;


(4) Require the bankrupt as a condition of discharge to consent to judgment being entered against him by the official receiver or trustee for any balance which is not satisfied, such balance to be paid out of the future earnings or after-acquired property of the bankrupt.

If, however, after the expiration of two years from the date of such order the bankrupt satisfies the court that there is no


reasonable probability of his being in a position to comply with the terms of the order, the court may modify the terms. The facts above referred to are

(a) That the assets are not equal to ten shillings in the pound on the amount of the unsecured liabilities, unless he can show that this is due to circumstances for which he cannot justly be held responsible :

(b) That proper books of account have not been kept within the three years preceding the bankruptcy:

(c) That the bankrupt has continued to trade after knowing himself to be insolvent :

(d) That he had contracted any debt provable in the bankruptcy without having, at the time of contracting it, any reasonable or probable ground of expectation of being able to pay it :

(e) That he has failed to account satisfactorily for any loss. or deficiency of assets:

(f) That the bankruptcy was brought on or contributed to by rash and hazardous speculation, or by unjustifiable extravagance in living, or by gambling, or by culpable neglect of his business affairs:

(g) That any creditors have been put to unnecessary expense by a frivolous or vexatious defence to any action properly brought against the bankrupt :

(h) That he has, within three months preceding the date of the receiving order, incurred unjustifiable expense by bringing a frivolous or vexatious action:

(i) That within three months preceding such date, when unable to pay his debts, he gave undue preference to any of his creditors:

(j) That he has, within three months preceding such date, incurred liabilities with a view of making his assets equal to ten shillings in the pound on the amount of his unsecured liabilities:

(k) That he has on any previous occasion been adjudged bankrupt or made a composition or arrangement with his creditors:

(1) That he has been guilty of any fraud or fraudulent breach of trust.

Disabilities of Bankrupt.-A bankrupt who is still undischarged, and for five years after discharge, is subject to disabilities as to holding certain public offices, viz., he cannot

(1) Sit or vote in the House of Lords or any committee


(2) Be elected to or vote in the House of Commons,

(3) Be appointed or act as a Justice of the Peace,

(4) Be elected to or hold office on any municipal or local


but, in some cases, the disability is removed if he obtains a certificate from the court to the effect that the bankruptcy was caused by misfortune, without any misconduct on his part. This is granted, at the discretion of the court, in proper cases, and any refusal to grant such a certificate is subject to appeal. Effect of Order of Discharge.-An order of discharge releases the bankrupt from all debts provable in bankruptcy, except(1) Debts due to the Crown,

(2) Debts incurred by fraud or fraudulent breach of trust, (3) Any judgment debt in an action for seduction, under an affiliation order, or under a judgment in a matrimonial


The order of discharge does not release any person who, at the date of the receiving order, was a partner or co-trustee with the bankrupt, or a joint contractor or joint surety.

Small Bankruptcies.

By the Bankruptcy Act, 1883, it is provided as follows(1) That upon presentation of the petition, if the court is

satisfied that the property of the debtor is unlikely to exceed £300, the court may order his estate to be administered in a summary manner. The official receiver then acts as trustee, without a committee of inspection. But the creditors may, at any time, pass a special resolution to the effect that a trustee be appointed and the bankruptcy proceed as if no order for summary administration had been made. In these cases, the first and final dividend must be paid within six months of the Adjudication Order.

(2) When a judgment has been obtained in a county court and the debtor is unable to pay, and alleges that his debts, including the judgment debt, do not amount to more than £50, the court may, without putting the estate into bankruptcy, make an order providing for the administration of his estate and for the payment of the debts in full or by instalments.

Administration of Estate of Person dying Insolvent.

By Section 130 of the Act of 1914, any creditor of a deceased debtor whose debt would have been sufficient to support a bankruptcy petition had the debtor been alive, may present to the

court a petition praying for an order for the administration of the estate of the deceased debtor according to the law of bankruptcy. Upon an order being made, the official receiver acts as trustee of the estate. The funeral and testamentary expenses are a preferential debt, and are payable in full in priority to all other debts.

Bankruptcy of Partners.

Any two or more persons, being partners, or any person carrying on business under a partnership name, may take proceedings, or be proceeded against, under the Act, in the name of the firm; but in such case the court may, on application by any person interested, order the names of the persons who are partners in such firm, or the name of such person, to be disclosed. Where a receiving order is made against a firm, each partner must file a statement as to his separate estate, in addition to a statement of affairs of the partnership. Adjudication is against the partners individually and not against the firm. It was held in Ex parte Hayman (1878) that, where two persons become bankrupt who have traded as partners, although they were not so in fact, the assets of the business will be administered as joint estate.

The bankruptcy of a general partner acts as a ground for the dissolution of the firm; but the bankruptcy of a limited partner is not a ground for dissolution. Where a partnership estate is being administered, the partnership property, known as the joint estate, is applied in payment of the debts of the partnership, and the separate estates of the individual partners, known as the separate estate, are applied in payment of the individual debts of the respective partners. If the joint estate should be deficient and there should be a surplus on the separate estate, that surplus is transferred to the joint estate. If there should be a surplus on the joint estate, such surplus is dealt with as part of the respective separate estates in proportion to the right and interest of each partner in the joint estate.

A joint creditor who holds any security for his debt on the separate estate of one partner may retain his security and prove against the joint estate, provided that he does not receive, in all, more than the full amount of the debt; and, similarly, with a separate creditor who holds a security on the joint estate. An unsecured creditor has sometimes the right of what is known as "Double Proof," that is, he has the option of proving against either the joint estate or the separate estate, and he may sometimes prove against both estates where each estate represents a different trade carried on by a different firm.

The joint creditors and the creditors of the separate partner's estates attend the first meeting of creditors, and the joint creditors appoint the trustee, but each estate has its own committee of inspection.

An order of discharge of a partner does not release any person who at the date of the receiving order was a partner with the bankrupt, that is to say, the discharge of one partner does not effect the discharge of all; discharge is a personal and individual matter.

Rule in ex parte Waring (1815).

"Where, as between the drawer and the acceptor of a bill of exchange, a security has, by virtue of a contract between them, been specifically appropriated to meet that bill at maturity, and has been lodged for that purpose by the drawer with the acceptor, then, if both drawer and acceptor become insolvent, and their estates are brought under a forced administration, the bill holder, though neither party nor privy to the contract, is entitled to have the specifically appropriated security applied in or towards payment of the bill," e.g., A draws on B and undertakes to give to B certain securities in case he may not be sufficiently in funds when the bill matures. Both A and B become insolvent and the bill is in the hands of C, a holder in due course. C is entitled to have the securities applied to the payment of the bill, even though he was not a party to, and in fact did not know of, the arrangement between A and B.

Deeds of Arrangement.

Where private arrangements are made between a debtor and his creditors, any deed of arrangement for the benefit of creditors generally must be registered at the Bills of Sale Office under the Deeds of Arrangement Act, 1914, in accordance with the regulations contained in the Act.

A deed of arrangement made for the benefit of creditors generally is void unless assented to by a majority in number and value of the creditors within twenty-one days of registration. By such a deed the property of the debtor is conveyed to a trustee or trustees, in order that it may be realized and distributed amongst the creditors, with a view of avoiding the publicity of bankruptcy proceedings. Such an arrangement binds only those creditors who assent thereto, and in that respect differs from a composition under the Bankruptcy Acts, with which it has no connection.

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