J.AWRANCES WITH ]^]^]iCEDEN'rS JilGHTH EDITJON S. R. WIJJJAMS THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW ^^^T ■■■5' LAWRANCE'S DEEDS OF ARRANGEMENT AND STATUTORY COMPOSITIONS AND SCHEMES WITH PRECEDENTS ^..iJ^H EIGHTH EDITION^ EMBODYING THE RULES OF 1914 SYDNEY EDWARD WILLIAMS OF LINCOLN'S INN, BARKISTEK-AT-LAW Author of" Legal Representatives," etc. Editor of " Coote on Martgages," " Kerr on Fraud," etc. LONDON : STEVENS AND SONS, LIMITED, 119 & 120, CHANCEEY LANE, 1914 r w\4 PRINTED BY WILLIAM CLOWES ASD SONS, LIMITED, LONDON AND BECfLKS. PKEFACE TO THE EIGHTH EDITION. The Bankruptcy and Deeds of Arrangement Act, 1913, and the Rules of 1914 issued thereunder, have necessitated many important alterations in the present edition. The Act is in some respects not very clear, and it is not always easy to say exactly how far the old law is affected by the new Act, though the Rules have to some extent removed the difficulties. It is hoped that the present edition will be found a useful guide to the law as it now stands. S. E. AV. 4, New Squaee, Lincoln's Inn, May, 1914. TABLE OF CONTENTS. INTRODUCTORY CHAPTERS. Chap. I. — Deeds of Arrangement Generally . II. — Assignments for Benefit of Creditors III.— Composition with Creditors lY. — Inspectorship Deeds .... Y. — Statutory Composition or Arrangement PAGE 1 13 41 53 61 PRECEDENTS. Prec. 1. Deed of ccniveyance and assignment by one debtor for benefit of his creditors, with immediate release of debts ........ 75 2. Deed of conveyance and assignment by one debtor for benefit of his creditors in consideration of covenants by the creditors not to sue, and of release on certificate of trustee and committee of creditors ........ 85 3. Deed of conveyance and assignment by partners for the benefit of tlieir joint and separate creditors . 87 4. Deed of assignment of personal estate by one debtor for benefit of his creditors. A short form . . 96 5. Deed of inspectorship between partners and their joint and separate creditors where the business is to be carried on . . . . . . .90 6. Deed of inspectorship between one debtor and his creditors where the business is to be wound up . H-'* 7. Deed of composition between partners and their joint creditors, with covenant not to sue . . 1-1 8. Deed of composition, with assignment to secure same, and release of debts . . . . .124 VI REC. Tahle of Contents. 9. Deed of composition where payment secured by surety and by covenants on the part of certain creditors to postpone payments of their debts . 128 10. Deed of composition by debtor and sureties to pay a composition to a trustee for creditors . .132 11. Short form of agreement for composition . . 134 12. Deed of conveyance and assignment for benefit of creditors, with proviso for carrying on the debtor's business . . . . • • • .130 13. Letter of licence, with covenant not to sue . .138 14. Assent to deed of assignment 140 15. Assent to deed of composition . . . .141 16. Deed of inspectorship to carry out resolution for statutory scheme of arrangement . . .142 17. Proposal for statutory composition . . . 14G 18. Proposal for statutory scheme . . . .148 STATUTES, RULES, FORMS, AND ORDERS. Deeds op Arrangement Act, 1887 (annotated) . 149 Deeds op Arrangement Act Rules, 1888 . . 1G9 Order as to Fees for Registration . . . .176 Deeds op Arrangement Amendment Act, 1890 . 179 Bankruptcy Act, 1890, s. 25 183 Deeds op Arrangement Rules, 1890 . . .185 Order as to Fees under Bankruptcy Act, 1890, s. 25 193 Land Charges Registration and Searches Act, 1888 194 Bankruptcy Act, 1890, ss. 3 and 6 . . . .195 Bankruptcy Act, 1883, ss. 18, 19, 23, 99, 105, 150, 167 199 Rules relating to Statutory Arrangements . .201 List of Forms relating to Statutory Arrange- '^05 MENTS -^'J Bankruptcy and Deeds op Arrangement Act, 1913 207 Deeds op Arrangement Act Rules, 1914 . . 218 TABLE OF CASES. A. PAGE Acton v. Woodgate 14, 15, 16 Adamson, Re, Viney, Ex parte 32, 38 Adnitt V. Hands 13 Alexander v. Wellington (Duke) 33 AUix, Be 3 Alton V. Harrison 20 Amos, Ex parte 51 Andrews, Re, Barrow, Ex parte 51 Arbuthnot v. Norton 33 Ashford v. Tuite 31 Aylmer, Re, Bischoffsheim, Ex parte (No. 1) 64, 68 Aylmer, Re, Bischoffsheim, Ex parte Q^Q. 2) G9 B. Bacon, Ex parte 72 Bagley, Re 3, 165 Bailey c. Bowen 55 Barlow, Re 64 Barrow, Ex parte, Andrews, Re 51 Batten, Re, IMilne, Ex parte 155, 157, 161 Beer, Re 61, 67 Benham u. Broadhurst 48 Benoist, Re 72 Bentley's Yorkshire Breweries Co., Ex parte, Waite, Re ... 44 Birks V. Clarke 25 Biron z;. Mount 25 PAGE Bischoffsheim, Ex parte, Aylmer, Re (No. 1) 64, 68 Bischoffsheim, Ex parte, Aylmer, Re (No. 2) 69 Bissell V. Jones 50 Blackstone v. Wilson 49 Board of Trade, Ex parte, Burr, Re 62, 63, 67, 202 Board of Trade, Ex parte. Freeman, iJe 30,184 Board of Trade, Ex parte, Norman, Re 183 Boldero v. London and West- minster Discount Co 30 Bond, Re 72 Bottomley, Ex parte and Re 63, 68 Boultbee v. Stubbs 46 Bo wker v. Burdikin 54 Boyd V. Hind 49 Bradley u. Gregory 49 Brady y. Shiel 49 Brandling v. Plummer 25 Brindley, Re 23, 37 Broadbent i». Thornton 21 Brown, Ex parte 28 Browne and Wingrove, Re ... 64 Burr, Re, Board of Trade, Ex parte 62, 63, 67, 202 Burrill, Ex parte 50 Butler V. Rhodes 49 C. Campekll, Ex parte, Wal- lace, Re 63, 64, 68 Vlll Table of Cases. I'AGK . 50 Carey v. Barrett Garr, lie - 22,23 Carter v. Warne 33 Chambers, Re, Jerrard, Ex parte 21,155 Chaplin v. Daly 156 V. Young 29, 57 Christie, Be "^2 Clark, Ec, Clark, Ex parte... 65 Clough V. Samuel ^^ Coates v. Perry 159 Cocks, Expartc 28 Coles V. Turner VI Collins t". Eeece 25 Cook, Be 26 Cook V. Lister 42 Cooling u Noyes 49 Couldery v. Bartrum 42 Cox t;. Hickman 36 Crauley v. Hillary 49 Cranmer, Bo 1^5 Crook V. Morley 43 Croom, Be, England v. Pro- vincial Assets Co 32, 67 23 Crow, Be Cullingworth v. Loyd 46 Cumber V. Wane 42 Daniel u. Saunders 24, 39 Dauglishi;. Tennent 20, 48 Davis V. Marlborough (Duke) 33 - i7. Petric 26 Day, Be FiKLD V. Donoughmore 25 Fitz-Gcorge, Be 144 Fleming, Ec 43 Flew, Be 63, 73 Flint t". Barnard 70 Foakesv. Beer 42 Foley, Ex parte, Spackman, Be 18,19,53 V. Hoare 48 Forbes i;. Limond 23 Forster, Be, Rawlings, Ex parte 27 Foster, Be, Official Receiver, Ex parte 27 Freeman, Be, Board of Trade, Exparte 30, 184 Friedlander, Be, Oastler, Ex 23 Dulaney v. Merry 150 Durham, Be, ]\Ierchant Bank- ing Co. of London, Ex parte 68 E. E. A. B., Be 63, 66 Easterbrook t;. Barker 36, 142 Edis, Be 24 Ellis V. Wilmot 144 England v. Provincial Assets Co., Croom, Ee 32, 67 Entwistle, Be, Turner, Ex parte 43 Evans v. Jones 19 44 parte Fuller V. Redman 52 G. Gallant, Be 184 Gardnor t;. Shaw 157 Garrard v. Lauderdale (Lord) 14, 16 General Furnishing Co. v. Venn. 30 Genese,Ee,Kearsley,J5xpa?-ic 28 Gibson, Ex p&rte, Lamb, Be... 44 G:i?Loxd., Ex parte 46 Gillet V. Witmarsh 42 Glegg-y. Gibley 144 .- -?;. Rees 13 Glendinning, Ex parte, Renton, Be 46 Greener v. Kahn 28 Greenwood v. Lidbetter 49 Griffith V. Ricketts 15 H. Hadley v. Beedom 24, 30 Harland 'U. Binks 17 Tiil>h- of C(i-'arte, Milner, Re 22, 48, 49 Mirams, Re, Official Receiver, Ex parte ^3 Moon, Ex parte TS Morter, Re 2- Myers, Re 40 N. Nepean, Re 69 Nevill's Case 40, 46 New's Trustee v. Hunting ... 14 Nicholls, Ex parte 22, 44 NichoUs V. Knapmau 36, 57 Nichols tJ. Norris 46 Nicholson, Ex parte 50 V. Tutin 25 X Taldc vf Ca-^es. I'AGK Ni(-koll, Eximrte, Walker, Re 44 Konuan, Re, Board of Trade, Kx parte 1*^3 u. Thompson 42 O. Oastlkr, Ex parte, Fried- lander, Ec ** Official Receiver, i^a; parte, Mirams, Re 33 Official Receiver, Ex parte, Stephenson, Re 35, 40 Owen u. Homan ^^ Palmeu -y. Bate 33 Parke, Re ^^^ Pfleger v. Browne 42 Phillips, -Ea; par^c 34,40 Re 18,44,152 Piercy, Re 32 Pickstock t;. Lyster 19 Pilling, Re, Ogle, Ex parte ... 32 Re, Board of Trade, Ex parte ^'-^^^'^ Pinnel's Case ^^ Postlethwaite, Re, Ledger, Ex parte G3, G8 Price V. Barker 4G Priestley v. Ellis 14 Prigoshen, Re 2G R. Ramchund, Ex parte G9 Rawlings, Ex parte, Forster, lie 27 Kaworth v. Parker 25 Rayment, Re 18 Reay v. Richardson 49 Redpath V. Wigg 142 Reed, Ec 63,64,68 Me\^,Re,C\ovig\x, Exparte ... 44 Renton, Re, Glendinning, Ex parte 4G Richards, Re 27 PAGE Riddeough, Re, Vaughan, Ex parte 26 Ridgway, He 28 Rileys.ifc 150,152 Roberts v. Jones 13 Robinson, Re ^0 Rogers, Re G3, G6 Runtz V. Longbourne 13 S. Sadler and Jackson, Ex parte 48 Salaman, Exparte 3, 152 Samson and Schreiber's Con- tract, Re.. 153 Sanders' Trusts, Ee 14 Sansomi;. Sansom 38 Saumarez, i?e 3,152 Saunders, Re 34 Seaton v. Deerlmrst 70 Sharp, Re ^^ i S\i?i\\, Ex parte 27 Siggers u. Evans 13, 15 i Slater, I?.e, Slater, iJ-x-par^e... 162 Smith, -Ex j)ar;c, Staniar, Re G4 1 Re 28 u. Cooke 39 V. Dresser 25, 27 v. Hurst 20 - r. Keating 1* i;. Winter 46 Snow i;. Bolton 33 Spackman, Re, Foley, Ex parte 18,19,53 Spears, Exparte, Johns, Re.. Spottiswoode v. Stockdale .. Springett v. Dashwood 24, 29 Stammers v. IMargrett 154 Staniar, Re, Smith, Ex parte G4 Steele -u. Low 1^2 V. Murphy 1* Stein V. Pope 32 Steinman v. Magnus 42 Stephenson, Re, Official Re- ceiver, Ex parte 35, 40 Stock, Ee 51 Stone V. Lidderdale 33 Stray, Re and Exparte 22 43 25 Tilhle of CdSrs-. XI I'AOK T. Tanenberg, Rc 22 Tetley v. Wanless 34 Thornher, Ex 2Xirte 04 Tresidder, Be 17 Trevor v. Hutchings 52 Tunstall, i?t' 18 Turner, Ex parte, Entwistlc, Be 43 Turner, lie. West Riding Union Banking Co., Ex parte 47 V. Vaughan,. Ex parti', Kid- deough. Re 2G Vine u. j\Iilchell 48 Viney, Ex parte, Adamson, Re 32,38 W. Waite, Re, Bentlcy's York- I'AGE shire Breweries Co., Ex parte 44 Walker, Re, Nickoll, Ex parte 4 \ Wallace, Rc, Campbell, Ex parte 63, 68 Walsh, Rc 44 Walwyn v. Coutts 14 Warden r. Jackson 57 Watson V. Knight 25, 31 Wenham r. Fowle 48 West Riding Union Banking Co., Ex parte. Turner, ^e 47 White, Ex piurte -21 r. Hunt .33 Whitmore v. Turquand 17, 22, 25 Willcock t;. Terrill 33 Williams 1;. Burgess 1,55 Wolstenbolme, Ex parte and P^e 43 Wood V. Barker 48 • r. Roberts 49 Woodroff, Rc 22 ARRANGEMENTS WITH CREDITORS. y" CHAPTER I. DEEDS OF ARRANGEMENT GENERALLY. The object of au arrangement witli creditors, object of whether it takes the form of assignment, com- ^^ " position or inspectorship, is to avoid bankruptcy and at the same time to secure equal distribution among all the creditors. The particular form of the arrangement must depend on the circumstances of each case, that is, upon the state of the assets, the character of the debtor and the nature of the business. A deed of arrangement as defined by the Deeds Defini- of Arrangement Act, 1887 (a), includes any of the following instruments, whether under seal or not, made by, for or in respect of the affairs of a debtor for the benefit of his creditors generally, namely, an assignment of property, an agreement for composition, a deed of inspectorship, and a letter of licence ao^reement or instrument authorizino- the CD O (a) S. 4, post, p. 150. D.A. -!— I 2 Deeds of Arrangement Generally. Chap. I. debtor or any other person to manage or realize " ~ the debtor's business with a view to the payment of debts. This definition has been extended by the Bank- ruptcy and Deeds of Arrangement Act, 1913, s. 37, to any instrument of the classes above mentioned made by an insolvent debtor for the benefit of any three or more creditors (joint creditors being treated as a single creditor) ; but no such instrument, unless it is in fact for the benefit of creditors generally, shall be deemed to be a deed of arrangement within the Act of 1913, except for the purpose of imposing penalties on trustees for failure to transmit accounts. Eegistra- A deed of arrangement is void unless registered under the Act of 1887, within seven clear days after execution with a further time when it is executed abroad {h), subject to the time being extended by the Court (c), and unless it is properly stamped ((/). The registration is effected by filing a copy of the deed at the Central Office in like manner as a bill of sale is filed, together with an affidavit verifying the time of execution and containing a description of the debtor and an affidavit by the debtor as to his property and liabilities, the com- position payable, and the names and addresses of his creditors {e). The deed must be stamped with {b) 50 & 51 Vict. c. 57, s. 5, ((/) Ibid. s. 5, post, p. 154 post, p. 154. (0 Ihid. s. 6, post, p. 155. (c) Ibid. s. d,p)ost,\), 160. tion. Deeds of Arrangement Generally. 3 an ordinary deed stamp and also an ad valorem chap- 1- stamp (/). An assignment of property for the benefit of creditors cannot be re2:istered unless it is executed or signed by the trustee or assignee {g). A deed of arrangement affecting land is void as against a purchaser for value of the land unless it is registered under the Land Charges Registration and Searches Act, 1888 (h). A deed of arransrement for the benefit of certain named creditors and not for the benefit of creditors generally did not require registration under the Act of 1887 (/). The Court has power in a proper case to extend the time for registration or to rectify the register {k). The fees payable on registration are fixed by Order of 17th December, 1887 (/). Any person is entitled to have office copies or extracts of the registered deed and to inspect the register on payment of the prescribed fees (m). The affidavits required to be filed with the deed for the purpose of registration must not be sworn before the solicitor of any of the parties, otherwise the deed will be void (n). A deed of arrangement is void unless, before or Assent of creditors. (/) 50 & 51 Vict. c. 57, s. 6, 14 Mans. 170 ; but see Be AUix, post, p. 155. 58 S. J. 250, and s. 37 of the (g) Deeds of Arrangement Act of 1913, o/iie, p. 2. Rules, 1888, r. 5 A. (k) Act of 1887, s. 9, post, p. 160. (h) See post, p. 194. (I) See post, p. 177. (i) Be Saamarez, Ex parte {m) 50 & 51 Vict. c. 57, ss. Salaman, [1907] 2 K. B. 170 ; 76 10, 11. L. J. K. B. 828 ; 97 L. T. 121 ; (n) Be Bagleij, [1911] 1 K. B. 4 Deeds of Arrangement Generally. Chap. I. within twenty-one days after registration or within such extended time as tlie Court may allow, it has received the assent of a majority in number and value of the creditors of the debtor {(>). The assent of a creditor for this purpose is established by his executing the deed or sending to the trustee his assent in writing attested by a witness, but not otherwise {p). The trustee must file with the Eegistrar of Bills of Sale at the time of registration, or in case of a deed assented to after registration within twenty- eight days after registration or within such extended time as the Court may allow, a statutory declaration by the trustee that the requisite majority of creditors have assented, which declaration is, in favour of a purchaser for value, conclusive evidence, and in other cases 2?7'ima facie evidence of the fact declared (q). In calculating a majority of creditors a creditor holding security is reckoned as a creditor only in respect of the balance due to him after deducting the value of the security, and creditors whose debts amount to sums not exceeding £10 are to be reckoned in the majority in value, but not in number (r). The list of creditors annexed to the affidavit filed on registration of the deed is prm^ facie evidence of the names of the creditors and the amounts of their claims (v). 317 ; 80 L. J. K. B. 168 ; 103 (^) 3 & 4 Geo. 5, c. 34, s. 28. L. T. 470. See Rule 7 and Form 3. (o) 3 & 4 Geo. 5, c. 34, s. 28, (r) Ibul. ;k).s/, p. 207. (s) If'i''- (p) Ibid. See Rules, Form 2. Deeds of Arrangement Generally. 5 The trustee under a deed of arrangement must, Cha p. i. within seven days from the date on which the Security •' by trustee statutory declaration certifyino- the assent of the of deed of '' _ . . . arrange- creditors is filed, give security in the prescribed ment. manner to the Registrar of the Court having juris- diction in bankruptcy in the district in which the debtor resided or carried on business at the date of the execution of the deed, or, if he then resided or carried on business in the London bankruptcy district, to the senior bankruptcy registrar of the High Court, in a sum equal to the estimated assets available for distribution amongst the unsecured creditors as shown by the affidavit filed on regis- tration, to administer the deed properly and account fully for the assets which come to his hands, unless a majority in number and value of the assigning debtor's creditors, either by reso- lution passed at a meeting convened by notice to all the creditors, or by writing addressed to the trustee, dispense with his giving such security ; but if such dispensation is given, the trustee must forthwith make and file with the Eegistrar of Bills of Sale a statutory declaration to that effect, which declaration will, in favour of a purchaser for value, be conclusive evidence, and in other cases be prima facie evidence of the facts declared {t). If a trustee fails to comply with the above requirements, the Court having jurisdiction in bankruptcy in the district in which the debtor resided or carried on business at the date of the (0 3 & -4 Geo. 5, c. 34, s. 29. See Rules 9-12 and Forms 4-8. 6 Deeds of Arrangement Generally. Chap. I. execution of the deed, or, if he then resided or carried on business in the London bankruptcy district, the High Court, on the application of any creditor and after hearing such persons as it may think fit, may dechare the deed of arrangement to be void or may make an order appointing another trustee in the place of the trustee appointed l)y the deed of arrangement {u). A certificate that the security has been given b}' a trustee, signed by the Registrar to whom it was given and filed with the Registrar of Bills of Sale, is conclusive evidence of the fact {x). All moneys received by a trustee under a deed of arrangement shall be banked by him to an account to be opened in the name of the debtor's estate. Effect of If the trustee serves in the prescribed manner creditors ou any Creditor of the debtor notice in writing of arrange- the cxccution of tlic dccd and of the filing of the certificate of creditors' assents, with an intimation that the creditor will not, after the expiration of one month from the service of the notice, be entitled to present a bankruptcy petition against the debtor founded on the execution of the deed, or on any other act committed by him in the course or for the purpose of the proceedings preliminary to the execution of the deed, as an act of bankruptcy, that creditor will not, after the expiration of that period (unless the deed becomes void), be entitled to present a bankruptcy petition against the debtor (h) 3 & 4 Geo. 5, c. 34, s. 29. {x) Bad. See Rule 12 and See Riiles 7, 10, 12, and Form 8. Form 7. of deed of arrau ment Deeds of Arrangement Generally. 7 founded ou the execution of the deed, or on any act ^^^p- ^' so committed by him, as an act of bankruptcy {y). Where a deed of arrangement has become void by virtue of the Act of 1887, or the Act of 1913, the fact that a creditor has assented to the deed will not disentitle him to present a bankruptcy petition founded on the execution of the deed of arrangement as an act of bankruptcy {z). Where in the course of the administration of the Audit and /.IT 1 , 1 T 1 f> accounts, estate of a debtor who has executed a deed of arrangement, or within twelve months from the date when the final accounts of the estate were rendered, an application in writing is made to the Board of Trade by a majority in number and value of the creditors who have assented to the deed for an official audit of the trustee's accounts, the Board may cause the trustee's accounts to be audited, and in such case all the provisions of the Bankruptcy Act, 1883, relating to the institution and enforce- ment of an audit of the accounts of a trustee in bankruptcy (including the provisions as to fees) shall, with necessary modifications, apply to the audit of the trustee's accounts, and the Board has power on the audit to require production of a certificate for the taxed costs of any solicitor whose costs have been paid or charged by the trustee, and to disallow the whole or any part of any costs in respect of which no certificate is produced (a). (y) 3 & 4 Geo. 5, c. 34, s. 31. («) Ibid. s. 32. See Rules See Rule l«and Form 9. 16. 17. l5ar (z) Ibid. 8 Deeds of Arrangement Generally. Chap. I. The Board of Trade may determine bow and by what parties the costs, charges, and expenses of and incidental to the audit (including any pre- scribed fees chargeable in respect thereof) are to be borne, whether by the applicants or by the trustee or out of the estate, and may, before granting an application for an audit, require the applicants to give security for the costs of the audit {b). Every trustee under a deed of arrangement must, at the expiration of six months from the date of the registration of the deed, and thereafter at the expiration of every subsequent period of six months until the estate has been finally wound up, send to each creditor who has assented to the deed a statement in the prescribed form of the trustee's accounts and of the proceedings under the deed down to the date of the statement, and must, in his affidavit verifying his accounts transmitted to the Board of Trade, state whether or not he has duly sent such statements, and the dates on which the statements were sent ; and, if a trustee fails to comply with any of the provisions of this subsection, the High Court may, for the purpose of enforcing those provisions, exercise on the application of the Board of Trade all the powers conferred on the Court by subsection (5) of section one hundred and two of the Bankruptcy Act, 1883, in cases of bankruptcy (c). At any time after the expiration of two years (b) 3 & 4 Geo. 5, c. 34, s. 32. ing trustee- For form of state- (c) Ibid. The Bankruptcy ment, see Rules of March 30, Act, 1883, s. 102 (5), empowers 1914, No. 10. the Court to commit a default- Deeds of Arrangement Generally. 9 from the date of the registration of a deed of chap^ arrangement, the Court having jurisdiction in bankruptcy in the district in which the debtor resided or carried on business at the date of the execution of the deed, or, if he then resided or carried on business in the Loudon bankruptcy district, the High Court, may, on the application of the trustee or a creditor, or on the application of the debtor, order that all moneys representing unclaimed divi- dends and undistributed funds then in the hands of the trustee or under his control be paid into court (c/). If a trustee under a deed of arrangement fails to Penalty on transmit the accounts of his receipts and payments trustees for failure as such trustee, in accordance with the require- totraus- ments of paragraph {h) of subsection (2) oi section counts. twenty-five of the Bankruptcy Act, 1890, as amended by the Act of 1913, sch. 2, he will on summary conviction be liable to a fine not exceed- ing five pounds for each day during which the default continues, without prejudice, however, to the exercise by a judge of the High Court of the powers conferred by that paragraph for the purpose of enforcing the provisions thereof {e). If a trustee under a deed of arrangement pays to Prefcr- j ential pay- any creditor out of the debtor s property a sum ment to , . , creditor larger in proportion to the creditors claim than an offence, that paid to other creditors entitled to the benefit of the deed, then, unless the deed authorizes him (d) 3 & 4 Geo. 5, c. 34, s. 32. the Bankruptcy Act, 1890, see See Riile 7. posi, p. 183. (0 Ibid. s. 33. For s. 25 of 10 Deeds of Arrangement Generally. Chap. I. Courts in which a]3plica- tions for enforce- ment of trusts to be made. Power to bank- ruptcy courts to appoint new trustee of deed. to do so, or unless such payments are either made to a creditor entitled to enforce his claim by distress or are such as would be lawful in a bankruptcy, he will be guilty of a misdemeanour (f). Any application by the trustee under a deed of arrangement, or by the debtor, or by any creditor entitled to the benefit of a deed of arrangement, for the enforcement of the trusts or the determina- tion of questions under it, must be made to the Court having jurisdiction in bankruptcy in the district in which the debtor resided or carried on business at the date of the registration of the deed, or, if he then resided or carried on business in the London bankruptcy district, to the High Court : But any question as to whether any person claiming to be a creditor entitled to the benefit of a deed of arrangement is so entitled, may, subject to rules made under the Deeds of Arrangement Act, 1887, be decided either by the Court having such jurisdiction as aforesaid or by the High Court (g). The power to appoint a new trustee or new trustees under section twenty-five of the Trustee Act, 1893, may, in the case of a deed of arrange- ment, be exercised either by the High Court or by the Court having jurisdiction in bankruptcy in the district in which the debtor resided or carried on business, and the provisions of that section shall apply accordingly (li). (f) 3&4 Geo. 5, c. 34, s. 34 ; rr. 3-6, 8. see post, pp. 20, 48. (h) Ibid. s. 36. See Rules 7, (^) 3 & 4 Geo. 5, c. 34, s. 35. 14, and Form 8. See Rules of March 30, 1914, Deeds of Arrangement Generally. 11 If a trustee acts under a deed of arrangement chap. i. after it has to his knowledoe become void or after Penalty . . . on trustee he has failed to give security, he will be liable on acting when deed summary conviction to a fine not exceeding five void, pounds for every day between the date on which the deed became void or the expiration of the time within which security should have been given, as the case may be, and the last day on which he is proved to have acted as trustee, unless he satisfies the Court before which he is accused that his contravention of the law was due to inadvertence, or that his action has been confined to taking such steps as were necessary for the protection of the estate (i). AVhere a deed of arranorement is void by reason Provisions • • p T / for the that the requisite majority of creditors have not protection assented thereto, or, in the case of a deed for the under void benefit of three or more creditors, by reason that the debtor was insolvent at the time of the execution of the deed and that the deed was not registered as required by this Act, but is not void for any other reason, and a receiving order is made against the debtor upon a petition presented after the lapse of three months from the execution of the deed, the trustee under the deed will not be liable to account to the trustee in the bankruptcy for any dealings with or payments made out of the debtor's property which would have been proper if the deed had been valid, if he proves that at the time of such dealings or payments he did not know, (0 3 & 4 Geo. 5, c. 34, s. 30. 12 Deeds of Arrangement Generally. Chap. I. Notice to creditors of avoid- ance of deed. Payment of ex- penses in- curred by trustees. and had no reason to suspect, that the deed was void (j). When a deed of arrangement is void by reason of the Act of 1913, the trustee must, as soon as practicable after lie has become aware that the deed is void, give notice in writing thereof to each creditor whose name and address he knows, and file a copy of the notice with the Registrar of Bills of Sale, and, if he fails to do so, he will be liable, on summary conviction, to a fine not exceeding- twenty pounds [k). Where a deed of arrangement is avoided by reason of the bankruptcy of the debtor, any ex- penses properly incurred by the trustee under the deed in the performance of any of the duties imposed on him by the Act of 1913 will be allowed or paid him by the trustee in the bankruptcy as a first charge on the estate {I). Notwithstanding that Part II. of the Act of 1913 is to be construed with the Deeds of Arrangement Act, 1887, no part of the former Act extends to Ireland {m). U) 3 & 4 Geo. 5, c. 34, s. 38. Qi) Ibid. s. 39. {I) Ibid. s. 40. (iiO Ibid. s. 42. CHAPTER II. ASSIGNMENTS FOR BENEFIT OF CREDITOES. The method of arrangement between a debtor General di . Ti 1 n • . f operation nis creditors by means oi an assignment oi of an property to a trustee in trust for the creditors of meut? the debtor (technically called a ces.no honorum), has an advantage over an ordinary composition or inspectorship deed in that it defeats the execution creditor whether by ji. fa. or attach- ment (a), and is consequently often used with the object of preventing a creditor who has obtained a judgment from issuing execution upon the debtor's property, and therel)y receiving payment of his debt in full, leaving little or nothing for the other creditors. This object may be attained by the operation of the assignment in vesting the property in the trustee (/>), and giving him a right to sue to recover such property and to take and hold possession thereof to the extent of the debtor's interest, although the deed may be subsequently upset as an act of bankruptcy, or may be revoked {a) Siggers v. Evans, infra ; the trustee must show that it is Boberts \. Jones, (1892) 61 Ij. J. irrevocable: Adnitt v. Hands, K. B. 523 ; m L. T. 617 ; lluntz (1887) 57 L. T. 370. V. Longbounie, 8 T. L. R. 568. {h) Glegg v. Bees, (1871) L. R. The deed is not fraudulent under 7 Ch. 71 ; 41 L. J. Ch. 213; 25 13 EUz. c. 5 {post, p. 19), but L. T. 612; W. R. 193. 14 Assignments for Benefit of Creditors. Chap. II. by the debtor as a voluntary assignment executed for bis own benefit, and not creating a trust in favour of creditors. Deed A deed of assionnient may be revocable or void- when re- . vocable, able or void under certain circumstances, which we propose now to consider. If a person by deed assigns property to another in trust thereout to pay all or some of the assignor's creditors, no creditor being named as a party to the deed or being aware of its existence, the deed operates merely as a revocable trust and is to be regarded simply as a power of attorney or mandate directing the trustee how to settle the affairs of the assignor, and revocable at the latter's pleasure (c), and creates no lien in favour of the creditors {d). And, even if any creditors are named as parties to the deed, yet if they do not execute it and it is not communicated to them, it will be equally revocable [(') by the debtor or his executors (/). In neither of these cases can the creditors establish their rights as cestuis que trust under the deed, or have a decree for execution of the trusts. (c) Walunjn\. Coutts, (1815) 3 Moore, P. C. 445. 3 Sim. 14 ; 3 Mer. 707 ; 17 R. R. (c) Garrard v. LaiuhnlaU 173 ; Acton, V. Woodgate, (1833) (Lord), (1831) 2 Russ. & M. 451 ; 2 Myl. & K. 492 ; 3 L. J. Cli. 83 ; but see News Truatee v. Hunt- Johns V. James, (1878) 8 Ch. D. ing, (1897) 2 Q. B. 19 ; 66 744 ; 47 L. J. Ch. 853 ; 39 L. T. L. J. Q. B. 554 ; 76 L. T. 742. 54; 26 W. R. 821; Smith v. (f) Be Sanders' Trusts, (187S) Keating, (1848) 6 C. B. 136. 47 L. J. Ch. 667; but see Unclerhill on Trusts, 7th ed. Priestley v. Ellis, (1897) 1 Ch. p. 36. 489 ; 66 L. J. Ch. 240 ; 76 L. T. (d) Steele V. Murphy, (1841) 187. Assignments for Benefit of Creditors. 15 The doctrine, however, does not apply where chap. ii. the trustee is himself a creditor < )r takes a beneficial When ir- rcvocciblc interest under the deed {g). And if the deed has been executed by (A), or communicated to, any of the creditors, it cannot be revoked as regards them, though the assignor may still, it seems, exclude those creditors to whom no such com- munication has been made, by directing the trustee not to pay their debts. This was actually done in the case of Acton v. Woodgate, (1833) (l), and approved in Johns v. James, (1878) (k). It should be noticed, however, that in the latter case no creditor was made a party to any of the deeds which were the subject of discussion, and there did not appear to be any reason why the creditors should know of the deeds until payment of a dividend ; but in the ordinary case of a deed of assignment for the benefit of the creditors whose names and seals are in the schedule to the deed, and who are to give a release in consideration of the assignment, the debtor has every reason for speedily communicating the deed to the creditors, and usually does so at a meeting or otherwise, so that the debtor's power to revoke the deed will ((/) Siggers v. Evans, (1855) L. J. Ch. 49. 5 El. & Bl. 367, 380 ; 3 C. L. R. (0 2 Myl. & K. 492 ; 3 L. J. 1209 ; 24 L. J. Q. B. 305 ; 1 Ch. 83. Jur. (N. S.) 851 ; Hobson v. (^•) 8 Ch. D. 744 ; 47 L. J. Ch. Thelluson, (1867) L. R. 2 Q. B. 853 ; 39 L. T. 54 ; 26 W. R. 821 ; 642; 36 L. J. Q. B. 302; 16 but see Griffith v. liicJceffs, L. T. 837. (1849) 7 Hare, 307 ; 19 L. J. Ch. (h) MacTiinnon v. Stewart, 100; 14 Jur. 166. (1850) 1 Sim. (N. S.) 76; 20 16 Assignments for Benefit of Creditors. Chap. II. probably be rarely exercised. It does, however, Assign- occasionally happen that a deed of assignment is followed executed (so to speak) on the spur of the moment by com- . \ r / r position, m order to defeat an execution, and before the debtor's advisers have had time to consider any other mode of arrangement, or the creditors have been called together. In such a case it is better to have the deed executed by no one except the debtor and trustee, and not to communicate it to any creditors ; and then, if it be desired to enter into a composition arrangement, the debtor can, if personal estate alone be comprised in the deed, cancel the deed and have the chattels re- delivered to him, and execute a fresh deed embody- ing the new arrangement ; or he can, if real estate or chattels real have been conveyed by the deed (in which case the legal estate cannot, except under some special power, be divested from the trustee by revocation), by the new deed revoke the directions contained in the first deed as to the manner of applying the proceeds of the estate, and direct the trustee to apply the same in pay- ment of the composition. A somewhat similar direction was contained in the second of the two deeds which formed the subject of the decision in Acton V. Woodgate, (1833) {I). In the cases before referred to, of which Garrard V. Lauderdale (Lord), (1831) (m) and Johns v. James, (1878) (n) are prominent types, the Court (Z) 2 Myl. & K. 492 ; 3 L. J. (m) 2 Russ. & M. 451. Ch. 83. 00 8 Ch. Div. 744; 47 L. J. Assi(jnmeiits /(>/■ licnejit of Credifo/:^. 17 had not to consider how far the deed, although chap. ii. revoked or cancelled, had taken eSect as an act of bankruptcy. But in the case of Lees v. Wliiteley, (186G) ((>) Vice-Chancellor Kindersley decided that a deed of assignment for the benefit of creditors, which had been executed by the debtor and trustees, but not executed or assented to by any creditor, and had ]jeen actually destroyed, was nevertheless an act of bankruptcy, and not a mere nullity, as appears to have been thought by the Lord Chancellor in Re Tresidder (j?). If any creditors have executed the deed, or Reconvey- acceded thereto in such a manner as to become where cestids que tru.'^t thereunder (y), and a composition meut be determined on, it will prol)ably be necessary seded by for the trustee, with the consent of such creditors and of the del)tor, to reconvey the trust estate to the debtor discharged from the trusts. The writer has thouQjht it better not to insert a Precedent of such a deed of revocation or variation of trusts as has been here discussed, because in every such case the nature of the property, and the extent to which the first deed may have been acted on or become known, and the other surrounding cir- cumstances will have to be carefully considered. Ch. 853 ; 39 L. T. 54; 26 W. R. qiiancL (1861) 3 De G. F. & J. 821. 107 ; 30 L. J. Ch. 345 ; 7 Jur. (o) L. R. 2 Eq. 143 ; 35 L. J. (N. S.) 377 ; 4 L. T. 38 ; 9 Ch. 412 ; 14 L. T. 472 ; 14 W. R. W. R. 488 ; Harlam} v. Bink,. 534; andseepo.9/. p. 154, n. (>•). (1850) 15 Q. B. (N. S.) 713; (p) (1865) L. R. 1 Ch. 21. 24. 20 L . J. Q. B. 126 ; 14 Jur. 971*. (y) See Whitviorc v. Tur- D.A. 9 composi- tion. 18 Assiyiiiiienfs for Beiicjif of Creditors. Chap. II. so that a precedent might be more misleading than useful. Act of A deed of assignment is ipso fdcto an act of ruptcy. bankruptcy under s. 4 (l) (a) of the Bankruptcy Act, 1883, provided it is an assignment of the whole or substantially the whole of the debtor's property (r), and is mjide for the benefit of creditors generally (v). But a conveyance for the benefit of a class, ('.(j. trade creditors, is not an act of bankruptcy under clause {a), though it may be under clause {!>) or (r) of the sub-section [t). The deed, however, will only remain an act of bank- ruptcy for three months from the date of its execution [n), or for one month after service of notice under s. 31 of the Act of 1913 [v). It follows that the trustee of such a deed oug-ht not as a general rule to part with the assets until three months from the date of the deed or one month after service of such notice, when it will cease to be an act of bankruptcy on which a petition can be presented (c?') or to which the bankruptcy, if grounded on any other act of bankruptcy, can relate back (y). But if the trustee is satisfied that all the creditors have (/•) ]ii' tt C. oM5 ; 10 Mor. 91 ; »!2 L. J. Q. B. 4-23 ; 34 L. J. Ex. 2.") ; Janes v. :358 ; 68 L. T. &19. Whithrewl. (1851) 11 C. B. 4(1(1 ; (Ij) PtckHtocl- V. Lijxfer.ilSU) -JO L. J. C. P. -117. 20 A.'^sir/nmrnfs for Bcnrfif of Creditor.'^. Chap. II. has not 1)een communicated to any creditor, and is therefore revocahle by the debtor, it may be set aside as fraudulent against creditors under the same statute (i>'.l {18), and a creditor may repudiate the deed if there is any secret arrangement between the debtor and another creditor (7). But unless he assents he has no remedy against the trustee for failure of duty {r). The assent of creditors is important for two reasons : first, because it makes the deed binding on the creditor, and secondly, because it prevents him from relying on the deed as an act of bank- ruptcy (s). What amounts to assent cannot be strictly defined, but it is more readily inferred in the latter than in the former case. It has been said that there is no duty on a creditor to express dissent and that attendance at a meeting of creditors does not amount to approval (t), and it has also been held that the creditor must have done some overt act denotinej his willinoness to come in {(/). But a creditor may, without assent- ing to the deed, so acquiesce in it as to estop him from relying on it as an act of bankruptcy (./). (o) Mr Mortrr, Ex padr (.>) Br Stray, (1867) L, R. i! Nicholls, (1897) 45 W. R. 593. Ch. 374 ; 36 L. J. Bk. 7 ; 16 (p) B<: Tcmenheni, (1880) G L. T. 250 ; 15 W. R. 600. Mor. 49; 60 L. T. 270. {t) Be Can; (1902) 85 L. T. (g) Be Milnei\ (1885) 15 552 ; 50 W. R. 336. Q. B.D. 605;54L. J. Q.B. 425; {u) Wliitmore v. Tirrquai,,!. 53 L. T. 652 ; 2 Mor. 190. (1861) 4 D. F. .1- J. 107 ; 30 L. J. (v) Johns V. James, (1878) 8 Ch. 345. Ch. D. 744 ; 47 L. J. Ch. 853 ; 39 (x) Be Woodroff, (1897) 76 L. T. 54 : 26 W. R. 821. L. T. 502 ; 4 Man.s. 46. Assi11 ; 389 ; 75 L. J. K. B. 217 ; 94 L. 94 L. T. 116; 13 Mans. 1; but T. 41 ; 13 Maus. 9. see Re Croiv, (1907) 97 L. T. (h) Forbes v. Limond, (1854) 140. 4 D. M. & G. 298 ; 2 W. R. mi. (z) R<- Carr, (190-2) 85 L. T. (c) See s. 60 of Baukniptcy 552; Re Dinj. (1902) 8(! L. T. Act. 1883. 238. 24 Asslgtimciits for Baiejlt of Creditors. Chap. II. Revoca- tion of assent. Time limit for assent. iiDil the trustee cannot, except in case of fraud refuse to pay such dividends as may be declared (cZ). He is also bound, upon the reasonable application of a creditor, to give him full information with respect to his receipts and payments under the deed [c). It is no defence, to an action by a creditor against a trustee for dividends, to say that the creditor did not set the amount of his debt opposite his name iu a schedule to the deed according to a recital ; the trustee is liable if he had notice of the creditor's claim (/). A creditor may revoke his assent to a proposed deed of assignment at any time before the deed is actually executed, and his having so assented will not preclude him from founding a petition on the acts of bankruptcy which led to the proposed deed (g). A time limit for assent is sometimes imposed, l)ut though such a limit is valid as not preventing the deed from being for the Ijenefit of creditors generally (//), it is not a desirable clause since it may tend to defeat the chief object of the deed, viz. a settlement with all the creditors. If, how^- ever, a time is limited a creditor sliould be careful (t^) Lancaster v. Elce, (1862) 31 Beav. 325 ; 31 L. J. Ch. 789 ; 8 Jur. (N. S.) 1167; 7 L. T. 123 ; 10 y^. R. 824. (e) Ex parte TF/«Ye. (1865) 13 L. T. 24; Be Edis, (1865) 13 W. R. 1068; Spriiu/ett v. Dashwood, (1860) 2 Gift". 521 ; 7 Jur. (N. S.) !»3 ; 3 L. T. 542. (/) Daniely. Saunders (1789) 2 Chit. Rep. 564. (g) Be Jones Brothers, [1912] 3 K. B. 234; 81 L. J. K. B. 1178 ; 107 L. T. 236. (//) Uadley y. Beedoni, [1895] 1 Q. B. ()4() ; 64 L. J. Q. B. 240 ; 72 L. T. 493 ; 2 Maus. 47. Assignments for Benefit of Creditors. 25 to signify his assent within the period uamecl, or Chap. ii. otherwise he may not, in the absence of special circnmstances, be allowed to do so after its expira- tion (/). The Court will, liowever, relieve against an accidental omission to comply with the time limit (k). On the other hand, creditors will not be held bound by an agreement to accept a com- position unless the deed is executed within a reasonable time after such agreement (l). Gene- rally, the Court, before it permits a creditor who has not executed to claim the benefit of a deed, will see that he has performed all the fair con- ditions of the deed ; and if he has taken any step inconsistent therewith, he will be deprived of all advantage therefrom (m). The position of the trustee, if the deed is super- Position seded by bankruptcy, and if he has acted in the execution of the trusts, is an awkward one, for he may find himself in the position of a trespasser and not in fact a trustee at all (n). (0 Collins V. Beecr, (1845) 1 L. R. 5 Ex. 11*7 ; 39 L. J. Ex. CoU. 675 ; and see Biron v. 166 ; 23 L. T. 162 ; 18 W. R. Moimt, (1857)24 Beav. 642 ; 27 814. L. J. Ch. 191 ; Nichohon v. (m) Field v. Donouglimore, Tuthu (1855) 2 K. & J. 18 ; (1841) 1 Dr. & Warr. 227 ; 2 Dr- Whitmare v. Turquoiul (1861) A; Wal. 630 ; Johnson v. Ker- 3 D. F. & J. 1 07 ; 30 L. J. Ch. shau\ (1847) 1 De G. & Sm. 260 ; 345. 11 Jiu". 553, 795. See also (fe) Watson V. Knight, (1854) Brandling v. Plummer, (1857) 19Beav. 369; Raworthv. Parker, 27 L. J. Ch. 188; (5 W. R. (1855) 2 K. & J. 163 ; 25 L. J. 117. Ch.ll7 ; 4W. R.273; Spottis- (n) Smith v. Dresser, (1866) tvoode V. StocMale, (1815) Coop. L. R. 1 Eq. 651 ; 35 L. J. Ch- t. Broug-ham. 102. 385 ; 14 L. T. 120 ; 14 W. R. {l)BirJcs V. Clarke, (1870) 469. 26 Assignments for Benefit of Ci^editors. Chap. II. In the first place, he is liable for all the property he has received, though he may liave handed it back to the debtor on tlje bankruptcy {(>), and the trustee in bankruptcy may treat him either as an agent, in which case he will be entitled to an inquiry as to the profits he has made or ought to have made, or as a trespasser, when he can have an account of the value of the property at the time when he took possession ( /)). On the other hand, a payment to him is a good discharge if made before the actual date on which the receiving- order is made and without notice of the presenta- tion of a bankruptcy petitiou, and is made in the ordinary course of business or is otherwise bona fide (q). But where the deed is void because the requisite majority of creditors have not assented to it or because beino: a deed for the benefit of three or more creditors it is not registered, then the trustee of the deed is not lia])le to account to the trustee in bankruptcy if he proves that he did not know and had no reason to suspect that the deed was void (r). With regard to costs the law is not very clear, but it seems that the costs and expenses of the trustee as distinct from payments to be allowed to him on the footing of being an agent cannot be (o) Re Cook, (1909) 53 Sol. Jo. 14 Q. B. D. 'Jo ; 1 Mor. 258 ; 33 359 ; Be Prigoshen, [1912] 2 W. R. 151. K. B. 294 ; 81 L. J. K. B. 1199 ; (q) 3 & 4 Geo. 5, c. 34, s. 10. 106 L. T. 814 ; 19 Mans. 323. (r) 3 & 4 Geo. 5, c. 34, s. 38, (p) Ex parte Vatiifhan, (ISS4) avte. p. 11. Assi(piiaenfs for Bt'iicjlt of Ct'edUors. 27 claimed by him (s), noi- can the costs connected chap. ii. with the deed or meetings of creditors {(), and where a trustee liad paid his solicitor the costs in connection with tlie deed he was ordered to pay them again to the trustee in bankruptcy (k). On the other hand, the Court allowed expenses incurred with the honest purpose of benefiting the creditors though no l)enefit could be shown to have actually accrued (.r). But under the recent Act (//) any expenses properly incurred by the trustee of the deed in the performance of any of the duties imposed upon him by the Act will be allowed him 1)y the trustee in bankruptcy as a first charge on tlie estate. Reasonable remuneration was allowed to a trustee for his trouble where the Court thought that the estate of the debtor had benefited by the action of the trustee under a deed of assignment, thouo;li the ofiicial receiver had in Ins discretion refused to do so (:), but in a later case commission was disallowed subject to all just allowances (a). The trustee should act strictly in accordance ^^uties of •^ trustee. with the deed, and in case of difticulty refer to the committee of inspection or summon a meeting of (.s) Sniith V. Dresser, supra ; De G. 24"2. Be Bichards, (1884) 1 Mor. 242 ; (i/) 3 & 4 Geo. 5, c. ;54. s. 40. ;?2 W. R. 1001. rt>i/e, p. 12. (f ) 21 Q. B. D. at p. ;}5 ; Be (•.) Br Forster. E.v partf Forsfer, Ex parte BaidiiKjs, Otfic/al B('ceiver,{'lS9o)~-Ij.T. (1887) 56 L. T. 114 ; 3H W. R. 364 ; 43 W. R. 428. 144; 4 Mor. 292. (a) Be Hobbins, Ex parte ((() Be Forster, supra. Offirnil Beceirer, (1899) 6 Mau.';. (x) Ex parte Shaii: (184(i) 1 212. 28 Assigninciits for Bcnejit of Creditors. Chap. II. creditors. But he is entitled to use liis own dis- cretion, and lie is not bound to act on the instruc- tions of the committee of inspection or a resolution of creditors, and a provision making the trustee subject to such instruction will not make it obliga- tory on him to institute legal proceedings which may render him personally liable for costs (A). Nor, on the other hand, will the fact that he acted under the directions of the committee of inspection exempt him from having to pay personally the costs of unsuccessful litigation (c). In declining to act on directions to institute proceedings of which he disapproves the trustee will not incur any personal liability, and the creditors would have to apply for leave to use his name on condition of giving him an indemnity against costs ((/). If Ijeing insolvent he brings an action as trustee he must give security for costs {e). Remune- The trustcc can only claim such remuneration as is provided jjy the deed, and where he is entitled to such remuneration as the creditors may vote him, he can claim none until it is actually voted. If he retires and is released before any remunera- tion is voted, it is open to the creditors not to vote him any remuneration, and he would not be entitled to claim any part of any remuneration (6) See Ex parte Cockn, Be (il) See Ex parte Kearsley, Poole, (1882) 21 Ch. D. 397 ; 52 (1886) 17 Q. B. D. 1; 55 L. J. L. J. Ch. 63 ; 47 L. T. 490 ; lie Q. B. 225 ; 3 Mor. 57. liiih/euwj, (1SS9) ^ Mow 277. (e) Gnen.er v. Kahn, [1906] ((■) Ex parte Brown, Mc 2 K. B. 374; 75 L. J. K. B. Smith, (188()) 17 Q. B. D. 488 : 660 ; iC) L. T. 481. 3 Mor. 202. ration. Assigniiienfs for /Jei/cjit of Cri'(I/fo/;) (o) See Bills of Sale Act, 1878. 5 Ex. D. 47; 42 L. T. :>() ; :2S s. 4. W. R. 154. {p) Giueral FarniiihuHj Co. ((/) Hadleij v. Bccdom, [1895] V. Vnm, (186:5) 2 H. i C. 153 ; 1 Q. B. 646 ; 64 L. J. Q. B. •.VI L. J. Ex. 22(» ; !> Jnr. (N. S.) 240 ; 15 R. 183 ; 72 L. T. 493 ; AsslgmiieiLts for BcitPjlt of (/rcditors. 31 for distribution among the creditors whose luinies chap. ii. and seals are in the schedule, or who othcrwisii in writinu,- accede to the deed. I'nder these words no creditor can be excluded, but any creditor can insist on executing or assenting to th<' Aqq<\ (r), if he has not acted in opposition thereto {■-<). It seems better to make the creditors parties in Dcscnp- this manner, than by the plan of simply rlescribing creditors. them as " the creditors," without reference to a schedule or to their execution of tlie deed, l)ccause accession by conduct, even if it is allowable {t), is not always easy to prove, and frequently (,'reditors are induced to sign by seeing the signatures of other creditors in the schedule, or in some form of assent. The next (jucstion to be considered is tlie nature What pro- of tlie property to be assigned, and the exceptions assigned, (if any) to be made from the assignment ; and for this purpose it will be assumed that the deed will be one e^omprising all the debtor's property, but, of course, it is competent for the creditors to allow the debtor to retain anything they please, and it is usual to except wearing apparel and othei- like articles of a domestic kind, and not unfrequently the debtor is allowed to continue to reside in his private house and to have the use of his furniture and other personal and household effects. But if 4:; W. R. 1*18; :2 Maus. 47; 19 Beav. :>(>}>; Johnson v. K.r- A>ihford V. Tni'fr, (Ts:,7) 7 Ir. .s7u»u\ (1847) 1 De G. & Sm. JCd ; C. L. R. 91. 11 Jiir. 553, 7J».>. (r) See 2 H. & C. IHl. (0 See anh: p. :^1. (,.v) ]Vni('jtf of Ci'i'ditors. 33 thouo-li he thinks it likclv to l»e injurious to the Chap. ii. creditors {h). It is to Ite observed that (certain species of pro- Pensions •IT T • ^^^ party are, on grounds of pul)lic policy, uuassign- salaries. able. Thus, peusions and sahiries payal»h' to acting public officers, whether legal, municipal, or military, cannot be assigned (<). Where, how- ever, no particular service is to be rendered to the public, or the salary is payable out of local and not national funds, an assignment of an interest or pension is valid. Thus, prize-money was held assignable {(I), and the stipend of a workhouse chaplain {c), and so, also, a pension for past services ( / ), a sum payal)le to a judge's repre- sentatives contingently on his dying in office {g), and civil service pensions generally (A). But a pension, even if inalienable, may be dealt {b) \Mntv V. Hunt. (1870) L. R. 6 Ex. o-J ; 40 L. J. Ex. li:? ; 23 L. T. 559; Hon- v. Knuirtt, (1835) 3 A. & E. 659 ; 5 N. & M. 1 ; 1 H. & W. 391 ; 4 L. J. K. B. 220; imijuprning- Carter V. Wanu; (1830) M. & M. 479; 4 Car. & P. 191. (c) Arbntlniot v. Norton, (1846) 5 Moore. P. C. 219 ; 3 Moore, Ind. App. 435 ; 10 Jur. 145; Palmer v. Bate, (1821) 6 Moore, 28 ; 2 Br. & B. 673 ; 23 R. R. 535 ; Stone v. Lidder- dale, (1795) 2 Anst. 533; 3 R. R. 622. ((/) Alexander v. Wellington (Diihe), (1831) 2 Russ. & m! 35 ; 9 L. J. (0. S.) Ch. 36. D.A. ('■) Be Mi rams, Ex parte Official Receiver, [1891] 1 Q. B. 594 ; 60 L. J. Q. B. 397 ; 64 L. T. 117; 39 W. R. 464; 8 Mor. 59. (/) Davis V. Ma rlhorouijh (Duke). (1818) 1 Swanst. 74 ;' 2 Wils. Ch. 130; Willcocky. Ter- rill, (1878) 3 Ex. D. 323; 39 L. T. 84. See Snoiv v. Bolton, (1881) 17 Ch. D. 433 ; 50 L. J. Ch. 743 ; 44 L. T. 571 ; 29 W. R. 583. (j/) Arhuthnot v, Norton, (1845) 5 Moore. P. C. 219; 3 Moore, Incl. App. 435 ; 10 Jur. 145. (h) Sansom v. Sansom. (1879) 4 P. D. 69; 48 L. J. P. 25; 39 L. T. 642 ; 27 AV. R. (592. 34 Ass'upiiHi'nts for Benefit of Creditors. Chap. II. with under s. 53 of tlie Bankruptcy Act, 1883 (i). Book An assignment of book debts must be registered as a l)ill of sale, but this does not affect any assignment of book debts included in an assignment of assets for the Ijenefit of creditors generally {k). Copy- With resrard to the mode of dealino- with any holds. ° . Q J copyholds belonging to the debtor, the reader is referred to the first Precedent and to the footnote therein on the suljject. Trusts. The ordinary trust and provisions of a deed of assignment do not call for special remark ; they ought to be ample enough to enable the trustee to wind up with fticility, and yet not so full as to provoke an objection by any creditor that the deed gives too much power to the trustee. Keiease. A release is usually general in form, all debts being comprised in it, and such a release is not limited by a reference to scheduled creditors (/). As aoainst a creditor wlio has assented to the deed ])ut has entered into a secret bargain by which he is to get a preference, the release is absolute, though the bargain is void (///). If bankruptcy supervenes the release does not prevent the creditors from proving in the l)ankruptcy for the balance of their (0 Seei^e SV/h^xZ-as, [IH^t.')] 2 L. R. 2 Ex. 21; 36 L. J. Ex. Q. B. 424 ; t>4 L. J. Q. B. 7:]H ; 2."i : 15 L. T. 2.55 ; 15 W. R. 356. 73 L. T. 172 ; 2 Mans. 361. (//;) Ex parte Phillips, Re (k) 3 & 4 Geo. 5, c. 34. s. 11. Hurveij, (1888) 36 W. R. 567, (I) Tetlcy V. Wanh.^x, (1866) followed [1908] 1 K. B. 941. Afisignineiits Jor Utiicjii of Creditors, 35 debts (>/). Thcjugb it is usual for the creditors to Chap. ii. give an iiuinediate release in consideration (jf the assignment, it may be that some of the principal creditors object to do this, and prefer to leave in the hands of a committee of creditors a discretion to grant a release by certificate, thus holding out an inducement to the debtor to expedite the winding-up of his estate, and give all information and assistance in his power to the trustee in reference thereto. Where the release is so postponed, the creditors covenant will covenant not to sue while the deed remams sue. in force, and the covenant will provide that on such certificate being given the deed shall operate as a release ("). Among the special provisions contained in the special . . powers. first Precedent will be noticed a power to call meetings of creditors, and also a power to remove a trustee, and to settle w^ith dissentient creditors ; the reasons for the last two of these powers are ofiven in tlje footnotes to the Precedent ; the first power will not generally be wanted in small cases, but is often useful in winding up an estate the assets of wliich are difficult to realize or collect, owino- either to their being situate abroad, or to their being embarked in pending contracts, or subject to disputed claims. It may well be that in such a case the trustee would not feel safe without a special resolution of the creditors, (».) i2(> Steijhruson. (188b<) liO 4ol ; 58 L. T. o8;>; :> Mor. 44. Q. B. D. 540; 127 L. J. Q. B. (o) See Precedent II. 36 Assignments for Benefit (f Creditors. Chap. II. altliouffh the deed iniojlit contain full o;eneral O o o powers of settling questions. Carrying It sometimes liap])ens that, althouiih the creditors onbusi- . ^} ' o ness. wish to have an assiguuient of the estate to trustees, they do not want the debtor's business to be sold at once, but are willing to allow the trustees, with the assistance of the debtor, to carry it on with a view to gradually winding it up. A form of this kind of assignment will be found in the Precedents (/>). The law is clear that in such a case the creditors will not, by accepting dividends out of the profits earned by the carrying on of the business, become liable as partners for any debts thereby incurred (y) ; 1)ut the trustees must l)e careful (in order to avoid all risk of personal liability) to enter into no contracts or engage- ments for the purposes of the business in their own names alone, or without making it clear that they are acting as trustees. The safest and most practical course will generally be to make such contracts in the debtor's name. The trustee however is only liable where the business is assigned to him ; he will therefore avoid liability if he abstains from becoming owner of the business and accepts only the duty of supervision as under an inspectorship deed (r). (p) See Precedent XII. R. T-')!. (q) Cox V. Hickman, (ISiM)) (r) Eastcrhrovk v. Barhcr. S H. L. Cas. 268 ; 9 C. B. (N. S.) L. R. 6 C. P. at p. 12 ; Nicholh ±7 ; 30 L. J. C. P. 125 ; 7 Jiir. v. Kmqmian, 101 L. T. 746 ; 102 (N. S.) 105 ; ;] L. T. 185 ; 8 W. L. T. 306. A-ssignmi'iits for Hi'iieflt of Creditors-. 37 Notwithstanding the recent judicial censure (^•) chap, ii.^ of the common practice of inserting power for the Povver to trustee to settle with dissentient creditors, the withdis- rp, sentient practice is hardly likely to be discontinued. ihe creditors. clause is so useful, and in many cases so essential to the very existence of the deed that nothing short of a decision that the (dause is actually invalid is likely to suppress it. In the absence of such a clause the trustee could not settle with a dissentient creditor, however desirable it might be to do so, with the result that the very object of the deed miglit be defeated ])y the bankruptcy of the debtor brought about by the dissentient creditor. At present there is only a dictum that the clause is improper — a theoretical condemna- tion which seems to ignore the great practical advantages of the power. There is, of course, the obvious objection to the clause that it may induce other creditors to stand out in the hope of getting payment in full. But on the whole, that is the lesser evil of the two, and there seems little impropriety in allowing a trustee and a committee of creditors to say whether a creditor sliall l)e paid in full or whether the deed shall be wrecked and the estate administered in bankruptcy. There may, however, be a question whether, if the deed is for the equal benefit of the creditors, a power to pay dissentient creditors in full would (.s) lie Bi-iadhij, E.c partr :J77 ; 75 L. J. K. B. HI ; iti Taylor .l- Co., [1906] 1 K. B. L. T. 116 ; 13 Mans. 1. 38 Af^syjnment-^ for Bmrfif of Creditors. Chap. II. ]]ot be snch a new term as to prevent the deed binding the other creditors (t). Preferen- It is usual to provide for the payment of claims. preferential claims in priority to the claims of ordinary creditors, though there seems to be no authority for saying that this is obligatory. The Preferential Payments in Bankruptcy Act, 1888, provides that in the distribution of the property of a bankrupt there shall be paid in priority to all other debts : — (n) All parochial or other rates due at the date of the receiving order and payable within twelve months before that time (u) and all taxes not exceeding one year's assess- ment. {1>) All wages or salary of any clerk or servant for services during four months before the receiving order not exceeding £50. (c) All wages of any labourer or workman not exceeding £25 for services rendered during two months before the receiving order. x4.ll the foregoing debts rank equally among themselves. By the AVorkmen's Compensation Act, 1906, s. 5 (3), the compensation under the Act, not exceeding £100, is included in the above preferential pay- ments. So are contributions under the National Insurance Act, 1911, see s. 110. (t) Be Adamson, Ex imrte Mdnnegmann Tube Co., [1901] Viney, (1894) 71 L. T. 579; 2 2 Ch. 93; 70 L. J. Ch. 565 ; 84 Mans. 153 ; 43 W. R. 192. L. T. 579 ; S Minis. 300. (i(.) As to water rates, see Re Assignments for Bcn<'/lf of Creditors. 39 In ordinary cases it is sufficient to make the chap. ii. bankruptcy rules as to divideuds apply (see ss. Divi- 58-63 of the Bankruptcy Act, 1883), though express provisions as to reservation of dividends, &c., are sometimes inserted. Where a business is to be carried on, a wider discretion as to the declara- tion of dividends may be given, and in some cases it may be advisable to give a full discretion subject only to a direction that when the trustee has a sufficient balance in hand he shall distribute it forthwith. No action for a dividend lies against a trustee in bankruptcy (x), and the same may probably be said of a trustee under a deed of assignment (y). If a creditor wishes to compel the trustee to carry out the trusts of the assign- ment, he should proceed under s. 35 of the Act of 1913 and the Rules of March 30, 1914, rr. 3-6, 8. There is a resulting trust for the debtor of any Surplus. surplus remaining after payment of the creditors in full with interest, but such resulting trust may be rebutted by the terms of the assignment (z). It is obvious, therefore, that provision should be made for any surplus. Subject to the payment of principal, interest and costs, the trustee is trustee of the surplus for the debtor, and after two years from registration the Court may order all unclaimed dividends and undistributed funds to be paid into Court {a). (x) B. Act. 1883. s. 63. See (~) Smith v. Cooke, [1891] B. Act, 1890. s. 3 (15). A. C. 297 ; 60 L. J. Ch. 607 ; {y) But see Duiuel v. Suuh- tio L. T. 1 : -Kt W. R. 67. (lers, ant(',Y>. 2i. (n) See Bankruptcy aud Deeds 40 Assignments for Benefit of Creditors Chap. II- Secured creditors Proof in subse- quent bank- ruptcy. A deed of assignment, though it contains a release, does not })reclude creditors from suing sureties {h), but it is usual and certainly desirable to insert an express reservation of rights against sureties. It is also usual to insert a provision reserving to secured creditors their rights under their securities, subject, however, to a stipula- tion that the rules in bankruptcy {c) as to proof by secured creditors shall apply. This subject will be further considered in a subsequent chapter (r/). Creditors who released their debts under a deed of assignment, which became void under a subse- quent bankruptcy, were held entitled, in spite of the release, to prove in the bankruptcy, on the ground that the release was only intended to take effect in case the deed should be acted on and was not effectual in case of bankruptcy (c). It is therefore desirable to insert a clause to that effect (/). But creditors cannot prove in a sul.)sequent bankruptcy when the deed of arrangement has been set aside on the ground of their misconduct, though the deed provided that the release should be void if the composition was not paid (7). of Arraug-ement Act. IDlo, s. (7. 32, ante, p. 9. (?.) Kearsley v. Cole, (1846) 16 M. Si W. 128. 135 ; 16 L. J. Ex. 115; NeviU's case, (1870) L. R. 6 Ch. 43, 47 ; 40 L. J. Ch. 1; 23 L. T. 577; 19 W. R. 36. (<■) See B. Act, 1883, Sehed. 2, rr. 9-17. CHArTER III. CaMl'OSlTKtX WITH CIIEDITORS. Thp: rules of English common law in regard to Parol *^ _ _ agreement the acceptance by a creditor of a compositi(m upon to accept his debt are somewhat curious. From early times debt for whole, to the present day it has been held that a creditor void. cannot legally agree ])y parol, or by writing not under seal, to accept a part of a sum due to him in discharge of the whole debt, because such an agreement is iiadiini pactum^ there being no con- sideration for the relinquishment of the Ijalance of the debt ('/). But if the same agreement be embodied in a deed, it is valid and binding by reason of the solemnity supposed to l)e attached to the sealing of a deed, which imports or supplies the place of a consideration (J)). Another rule, or rather an exception to the first Sccus, if the terms rule, is that such payment of a smaller sum will be are other- wise valid if the debtor at the same time gives to the varied. creditor any chattel or article (which may lie, as was quaintly said by the late Sir George Jessel, OO See Pinners case, (1604) (b) Williams, R. P. (18th eel.), .') Rep. 117 a ; Lynn v. Bruce, pp. l-iS, 149 ; Plowdeu. :J<>8 ; 2 (1794) 2 H. Bl. 317 ; :? R. R. 381. Fonblanque on Equity. 2(1. 42 Conipo.^ition irifli Cri'dltors. Chap. III . M.R., in Coulderj/ v. Bartniia, (1881) (r), "a cjuinrv or a tomtit " ), or even if the debtor confers or agrees to confer on the creditor any benefit (d), such as payment at an earlier date than payment is due, or providing the security of a third party {('). It is clear from the decision in the House of Lords in Fonh'SY. />Vt^r (1884) (/), that the doctrine that ;i del)tor (jannot himself discharge the debt by pavment of a smaller sum is there recognized as law of such long standing tliat it cannot now be challenged (//). Rule not But the abovc rule does not apply to the case of applicable ^ to compo- a composition arrangement between a debtor and with all or several of his creditors (A), because the mutual agreement between the creditors to take less than their debts supplies the requisite con- sideration as between the debtor and each creditor (/), and because otherwise fraud would be com- mitted against the rest of the creditors (/). This is the class of composition arrangement which the (f) !!• Ch.Div. ;)94 ; 51 L. J. {g) Hirachaud Pnnamcluind Cli. 2t).'> ; V> L. T. 689 ; 30 W. R. v. Temph, [1911] 2 K. B. 330 ; 141. 80 L. J. K. B. 1155. (f/) See note to Climber v. (/<) Pfle(jer v. Browne, (I860) W'uic. (1719) (1 Str. 426), in 28 Bear. 391 ; Norman v. Smitli"s L. C. (lOth ed.), vol. i. Thompson, (1850) 4 Ex. 755 ; p. 325. 19 L. J. Ex. 193. {(') Gillett X. Whitmarsh, (i) Couldenj v. Bartrum. (1846) 8 Q. B. 966; 15 L. J. (1881) 19 Cli. Div. 394 ; 51 L.J. Q. B. 291 ; 10 Jur. 904 ; Stdn- Ch. 265 ; 45 L. T. 689 ; 30 W. R. inmi V. Magnus, (1809)11 East, 141, seejjer Jessel, M.R. 390 ; 2 Camp, 124. (Jt) Cook v. Uster. (1863) 13 (/) 9 App. Cas. 605 ; 54 L. J. C. B. (N. S.) 543 ; 32 L. J. C. P. Q. B. 130; 51 L. T. 833; 33 121. approved in Hirachand W. R. 23;). Puinnnchand v. Temple, supra. Compofiif'ion ir'ifh Creditors. 43 present work chiefly deals with. The nature of chap. in. such arrangement of course varies according to the circumstances of each case, sometimes being a mere money composition (/) represented partly by cash and partly by negotiable instruments to which the debtor and (in most cases) a surety (ni) is a party, and sometimes being a composition secured by an assignment (//) of the debtor's property to trustees, upon trust, on default in payment of the composition, to realize the property and there- with pay the composition, with an interim and an ultimate trust in favour of the debtor. This latter kind of composition arrangement is fi^Jf^X^ open to the objection that it is a clear act of bank- J^^^jf*"^ ruptcy {o) (which a simple composition deed is only n^ptcy. if it amounts to a notice of suspension of payment under sub-s. (1) (h) of s. 4 of the Bankruptcy Act, 1883) (jo); but it is frequently used in cases where the creditors doubt the ability or willingness of the debtor or his friends to pay the composition as agreed, and wish for some security other than a merely personal one. There have been many cases as to what amounts to notice of suspension of payment (q) which are (I) See Precedent VII., pust. cases there cited, note (q). p. 121. {q) Crook V. Morley, [1891] (m) See Precedent IX.. jw.sf. A. C. 316; HI L. J. Q. B. 97; p. 128. H.^ L. T. 389; 8 Mor. 227; Ex ((I,) See Precedent VIII.. />"•-■<. P'K-tr Turner. Re Entwi>ith\ p. 124. (1891) »>.') L. T. 34.9 ; Be WoUteu- (o) Bankruptcy Act, 1883. holme. (1885) 2 Mor. 213 ; E.v s. 4, sub-s. 1 (a). parte Speant, Be John.-<. (1893) (p) As to this, see infm, and 10 Mor. 190; Be Fleming, (1888) 44 Coinposttion iritli Creditors. Chap. III. not always easy to reconcile, but it seems that a deed which clearly implies that the debtor meaus to pay nobody in full and that he intends to deal with his creditors in a body is a notice of sus- pension (;■). It seems to follow, therefore, that a simple composition deed is an act of bankruptcy. At all events it seems to be so if suspension of payment is the only alternative ofifered to the com- position (.v). There must, however, according to Ch>U(/h V. Sdiu'iei (t), be a notice of intention to suspend payment ; a mere declaration of inability to pay is not enough (v;), nor is it sufficient for the debtor to show that his circumstances are such that suspension of payment is one of the courses open to him (,r). In the most recent case (y) it was held that a circular inviting creditors to attend a meeting to discuss the position of affairs and the methods of continuing the business was a notice of intention to suspend payment, and so also was an arrangement by which creditors were to be paid in full by small instalments partly in cash and partly in shares. CO L. T. 1.54 ; Jlr ]V<(Mi, (1885) 7:? L. J. K. B. 929 ; 91 L. T. 592. 52 L. T. 694; 2 Mor. 112; E.c (.s) Ee Lamb, Ex parte Gih- parte Oastler, Be Friedlander, son, (1S87) 4' Mor. 25 ; Be Watte. (1884) 13 Q.B. D. 471: 54 L.J. Ex parte Bentley's Breweries, Q. B. 23; 51 L. T. :;i>!»; 3:5 (1894) 71 L. T. 778 ; 43 W. R. W. R. 12G ; 1 Mor. 207 ; E.r, 208. imrtc Nickoll. lie Walker, (1884) (0 [19U5] A. C. 442 ; 71 L. J. 13 Q. B. D. 469; 1 Mor. 188; K. B. 918 ; 93 L. T. 491. Re Plt/llips. i\Xi)7) 7*! L. T. (n) i6zU, _pe)-Lorrl Halslnuy. 531. (.«•) J/u'fZ.,^er Lord Robertson. (r) L'e Reis.E.r parte Cloiu/h, (ij) Be Midcjley, (1913) lOS [1904] 2 K. B. at pp. 77(5, 779 ; L. T. 45 ; 57 S. J. 247. Coinposif/'on irith Cred'ifors. 45 The ordinary provisions of ;i composition deed chap. in. are few and simple; generally, l)ills of exchange Usual pro- , . . . . visions of or promissory notes are given in payment, in composi- which case there must not be a covenant to pay '''^^ ^^ ' them at maturity, because, a covenant having a higher legal operation than a simple contract, the creditors accepting the covenant merge or extin- guish their lesser remedy on the bills or notes (c) ; a recital that the negotiable instruments have been or are about to be given will be sufficient to show a consideration for the release by the creditors of their debts. The alternative course is to insert a covenant 1)y the debtor with the creditors or with a trustee to pay the composition Then follows either a release by the creditors of their debts, or a covenant by them that they will not sue for their debts unless default be made in payment of the composition and that the deed shall operate as a release if the composition be duly paid, accompanied by a proviso, putting an end to the deed if default l)e made in payment of the composition, or if bankruptcy proceedings take effect against the debtor ; and finally a reservation by the creditors of their rights against any persons who are liable jointly with or as sureties for the debtor, and of their remedies upon securities held for their debts or any part thereof. With regard to the release, it sometimes happens Release that creditors, while not objecting to entering into naurnot to sue. (z) Owen V. Roman, (ISol) 314 ; lo Jur. 339. 3 Mac. & G. 378 ; 20 L. J. Ch. 4() Composition icith Creditors. Chap. III. .^i co\enaiit binding them not to sue for their debts, hesitate to give an immediate release, even if (_[ualitied by the above reservation of rights against sureties, under an erroneous impression that they will tliereljy lose tlieir rights against third parties. It is well settled, however, that a release so qualified is in effect a covenant not to sue, and does not prevent the creditors from suing any surety for the debtor {a), and this although the surety is not a party to the deed {})) ; but of course if before the deed is drawn the solicitor who is in charge of the matter becomes aware that any important creditors object to the release, he should insert the (covenant not to sue, which will be as efiectual as a release, though somewhat longer. Keseiva- lu accordaucc with the principle that no creditor rights as who is a party to a composition arrangement may obtain or reserve any secret advantage or prefer- ence, if it is intended that secured creditors should be entitled to retain their securities, this must be expressed in the deed, or at least be otherwise clearly made known to the creditors generally (c). («) FrU-r V. Barhr. (1S:)5~) 4 (i Ves. 80o ; (> R. R. o3 ; Boidt- EU. & Bl. im ; ;} C. L. R. !>27 ; hr. v. Stuhhn, (1811) 18 Ves. 20 ; 24 L. J. ii. B. 130 ; 1 Jur. (N. S.) 11 R. R. 141 ; Ex parte Glen- 775 ; NevilVa case, (1870) L. R. dinning. Be Benton, (1819) 6 Ch. 43; 40 L. J. Ch. 1 ; 23 Buck, 517; Nichols v. Norris, L. T. 577 ; 1!> W. R. 36. see p r (18:31) 3 B. & Ad. 41 ; Smith v. MeUish. L.J. Winter. (1838) 4 M. & W. 454 ; (h) Keardey v. Cole. (184(5) ,S L. J. Ex. 34. 16 Mee. c*^ W. 128 : 16 L. J. Ex. (c) Gidlingimrth v. Loyd, 115; Ex iKirtr Giffurd, (18U2) (1840) 2 Beav. 385; 9 L. J. Ch. to secu- rities. Compos if ion fcifh Creditors. 47 The clause reserving the rights of creditors in chap. in. respect of securities for their debts should he \^^^^}'' framed in accordance with the rule in bankrui)tcy, yuptcy ^ to be which does not require a creditor on proving his toiiowed. debt to value or give credit for any security which he holds upon property not belonging to the debtor; and for this purpose, in a composition arrangement between partners and their creditors, a creditor of the firm who holds a security upon the separate estate of one of the partners is entitled to receive the composition from the joint estate without giving credit for his security ; and on the same principle a separate creditor of one partner who holds a security upon the joint estate is not required to deduct the value of such security from the debt upon which he claims the composition (d). It may be possible in some cases to induce a creditor to forego this right, and if so a clause could be inserted tliat the creditor should only receive a dividend out of the joint estate on condition of dealing with his security as if it were a security against the joint estate. Composition arrangements between partners and ^jq^^""^^" their joint and separate creditors are not very partners. common, because on failure of a firm the creditors of the firm are chiefly to be reckoned with, and the private or separate creditors of each partner are generally settled with outside the arrangement ; :218; I- .Till-. '2S4-; Mnivson v. Union Biuil/'iiy Co.. lii Tunur, Stork, (isol) t) Ves. 300, see In re, (1881) U» Ch. Div. 105; ,ndr. ].. 4. 4.". L. T. 54(i ; 30 W. R. •J3i», {()HLtu)n WLth Crcd'itur-<. 49 secret benefit is at the expense of a third person, chap. iii. provided the arrangement was made with the debtor's kncnvlcdge. Thus, in a case ( /) where a creditor, wlio liad signed a composition (rt) See Heihr" v. Pnstu.K B. & S. 884 ; L. R. 4 Q. B. 49 ; (1899) 80 L. T. 847. :58 L. J. Q. B. 2 ; 19 L. T. 262 ; (o) Precedent IX. ,jw.s/. p. 12S. 17 W. R. 49; Be Nu-holsou. (p) See post, p. 63. (1870) L. R. 5 Cli. 332 ; 22 L. T. Iq) Bo Mc Henry. Ex parfr 28(); 18 W. R. 411. McDr.nnott, (1888)"21 Q. B. D. (0 Comj v. BarMf. (1S79) 4 580. 584, 587 ; 36 W. R. 725. C. P. D. 379. (r) Ex parte. BurrelJ. Be (ii) Jalcenuin v. CooTc, (1878) Com jitisit lull ii'ifh ( ' lU'il ihifs. 51 It must l)c understood that all deeds of arrange- ^^p ^^i- ment (whether made by wav of composition or Asscuting ^ ^ ^ J. creditors. otherwise) which arc not arrangements under the Bankruptcy Acts {x) will only hind those creditors who execute them, or assent to them either in any form which the deed provides for or by some actor acts of acquiescence or concurrence which the law holds to amount to accession. The (question what amounts to assent has already been considered {y). The trustee or other person appointed to dis- Account by trustee. tribute a composition under any deed of arrange- ment must transmit to the Board of Trade an account of his receipts and payments (j) in manner already descril)ed {d). The accounts so transmitted will be open to inspection by any creditor on pay- ment of the prescribed fee. The rules relating to such accounts will be found at the end of this work (/>). On default made by the debtor in a payment statute of . . -^ ^ -^ Limita- of the composition under the deed the ( ^ourt tions. implies a fresh promise to pay the original debts, and the Statute of Limitations does not commence to run until such default has been made (c). But 4 Ex. D. -it) ; 48 L. J. Ex. 165 ; Baukruptcy Act. 1883. s. li 27 W. R. 171, distinguislunfi- (after arljudication). Hrathn- v. WMk (187»i) 2 (y) Antr, p. 21. C. P. D. 1 ; 46 L. J. C. P. 89 ; (^) B. Act, 1890, s. 25. 25 W. R. 25:> ; &\ii\».ee. Ex parte {a) See ante, p. 29. Barrow, B< Andrcn-!^. (1881) 18 (6) See po> s. 3 (before adj\ulication\ and Mans. :>24 ; M'Doini'U v. tion 52 Composition ii'ifl Creditors. Chap. III. tliis lulc (Iocs not apply to other deeds of arrange- ment even tliouoji there is a covenant not to sue (c/). Rcgistra- A composition agreement which purports to be made for the 1)euefit of creditors generally {e) must be registered under the Deeds of Arrangement Act, 1887, otherwise it will be void. The subject of registration has already been considered (y). Brodcrick, [1896] 2 Iv. R. l:M> ; (1859) 26 Beav. 614. and see Trevor \. Hufrli/iKjs. {<■) As to " creditoi-s pfeue- 76 L. T. 183, 636. rally," see post, p. l.")2. {(I) Fitnerv.Jieihnan (No. 2), (/) See mite, p. 2. CHAPTER [\'. INSPECTORSHIP DEEDS. Cases not unfreqiicntly arise in whicL it is con- ^ppJJ^; sidered to ho for the interest both of debtor and creditors that the l)usincss and estate of the former should be gradually wound up by himself under proper supervision and control, instead of being absolutely assigned to trustees. Amonir other reasons, the desire to avoid an inspector. act of bankruptcy is sometimes promment. it being not au act clear that an inspectorship deed is not of itself mptcy. an act of l)ankruptcy ; for although it usually provides for distribution of the estate of the debtor among his creditors, and contains a covenant by him to assign it in certain events, it is not techni- cally an assignment within sub-s. 1 (a) of s. 4 ot the Bankruptcy A(;t (a) : but probably the chief reason will be found in the hopes of the creditors, that by a careful nursing of the del)tor's business they will obtain in the end a larger dividend than if they allowed it to be broken up. («) Be Sjxtchnan. E.i- purtr lOU ; lie ifjfy/(c.s, [181>:5] 1 Q. B. Foley, (1890) 24 Q. B. D. 728 ; 595 ; 62 L. J. Q. B. 358 ; 4 R. 59 L. J. Q. B. :i()(; ; 62 L. T. 368 : 68 L. T. 629 ; 41 W. R. 849; 38 W. R. 497: 7 Mor. 466: 10 Mor. 91. 54 Ins2Jectorsliii) J)('t;d-<. Chap. IV. Sometimes instead of a covenaiil to assigu, the i.strow. expedient is adopted of having a supplemental deed of assignment, w^hidi the deljtor delivers as an escrow only to take effect on tlie iletermination of the deed of inspectorship. Siicli a deed is not an act of bankruptcy (/>). Business There are two kinds oi' inspection ; one where it may be , , continued is intended to carry on the delator's business and pay ally dividends from time to time out of the net profits, the other wliere the business is to be gradually wound up, without buying fresh stock-in-trade, or enterino- into new contracts ; the latter is the more usual, the former being only suited to cases where the business is large and fairly sound, and the o-ood-will valuable ; in each case there is the same risk that the debtor nia\' prove negligent or speculative, or untrustworthy, and thus eause the arrangement to fail, or may incur fresh debts involving execution against his property, or even bankruptcy, or may become lunatic, or die. utility of But apart from these risks, and a certain amount tinuing of delay wliich cie L. ,1. mI p. ".17. deed I nsperfi)rf<]iili D<'i'(1s. 55 called " a letter of licence," wliereby tlie creditois chap. iv. grunt leave to tbe debtoi- to cuiTy on his business Letter of , . . c y • •.IP licence. under supervision 01 the inspectors, eitner tor a fixed period or (in general terms) until tbe debts shall 1)e paid, or the arraugenient sliall for any other reason come to an end. This is followed covenant by a covenant on the part of the creditors that they will not sue tlie del)tor during the con- tinuance of the letter of licence, and then come Debtors covenants by the debtor Ijinding him to carry on to^anage or wind up (as the case may be) his business and ^^^^'"^ collect and realize his estate under the control of the inspectors, and provisions as to the employ- General ment of assistants in the business, and payment visions, of wao-es or remuneration to them and to the o debtor, and as to application of the moneys to be realized under the deed in payment of necessary or proper costs and charges, and then in payment of dividend (c). Next in order will come clauses giving to the inspec- inspectors powers analogous to those given to powers, trustees in a deed of assio-nment in reference to the bringing or defence or compromise of actions, the settlement of disputes, verification of debts or claims, the sale of any parts of the estate, and other like powers ; but it will of course l)e remem- bered that, as the debtor remains the legal owner of his estate, his concurrence will l)e necessary for the transfer of property to a purchaser, tlie ((•) Bailcij y. BoiO'N. (ISCS) (il ; 17 L. T. 470; It) W. R. L. R. :{ Q. B. 13:5 ; 37 L. J. Q. B. 3W. 56 T inspect or Sill iji Deedf^. Employ- ment of account- ant. Chap. IV. iii.spectors directing ;md controlling the sale, and receiving or joining in receipt of the purchase- money ; and also that all actions to recover debts due to the estate must be broucrht in the name of the debtor, the inspectors, however, having power to use his name for this purpose under a power of attorney in the deed. Sometimes special power is given to the in- spectors to employ a professional accountant for the purpose of assisting in carrying on or winding up the business, the inspectors (who are generally the principal creditors) not having time to attend to all necessary details. It has been decided that an accountant so employed is the agent of the debtor, and not of the inspectors, Avho are, there- fore, not liable for the misfeasance of such ac- Liabiiity couutaut (cl) ; and probably the same rule will tors. emeut of the business, and cannot be removed by the inspectors, they will only Ije liable for moneys actually paid to them or their agent (A). Reference has been made in a previous page Covenant £. .,. ^ to assign to the risk of an inspectorship arrano;ement failing when , , ... p enforced. by reason of the debtor's conduct ; lailure may, oi course, also arise from pure misfortune or accident, and it will generally be foreseen by the inspectors or some of the creditors. This will l)e the time to give effect to the deed held as an escrow or to o enforce the debtor's covenant (very usual in inspectorship deeds) to assign his estate to the inspectors or some trustee named by them upon trust for speedy realization and division among the creditors ; and it will be convenient tliat the general power of attorney given l)y the debtor (/) WardeJl v. Jarksnu. W. R. ti(K». (1859) 1 F. & F. 452. (/') See Nicholh v. Kiiapnuiu, (g) Chaplin y. Yoini;/, (IStU) lOlL.T.74t>; 102 L. T.r>00, and :?;J Beav. 330; 11 L. T. 10; 3 rases cited. j.o..7. p. UJ. 58 Chap. IV. i'onii of release. Determi- nation of arrange- ment on execution issued or receiving order made. I iispi'cfoi'sli tji Deeds. to the iDs})ectoi\s should specially authorize them to execute any ^ucli deed of assignment in the name of the debt(jr, to guard against his possible refusal to execute it. The release in a deed of inspectorship) is never immediate, liccause the debtor does not part with complete control of his property, and the creditors cannot be ex})ected to give ;i release in exchange for mere personal covenants. The usual provision foi- release takes the form of a covenant by the creditors that the deed shall operate as a release on the inspectors certifying — (l) that the winding up and realization has been concluded as far as prac'ticable by collection and disposal of every available asset, or (2) that the debtor has assigned his estate in pursuance of his covenant in the deed in that behalf. It will l)e obvious from the very nature of an inspectorship deed, that it may be necessary under certain circumstan(;es to provide for the speedy and absolute determination of the arrangement, and to leave the law to take its course with the debtor and his assets and debts. For instance, even assuming that all the creditors who are such at the date of the deed have become bound thereby, a creditor whose debt lias been incurred since the deed nuiy get judgment against the debtor, and issue execution against his property (which not- withstanding the deed will legally belong to tlie debtor), or may procure a receiving order to be made against the delator. In either of these cases Inspectorship Deeds. 5*.) tlie creditors who are Ijound ])y the (hied ought to chap. iv. he at once unbound, and l)e free to niter vene in any proceedings taken by the outside creditor, whether by proving their debts under any bank- ruptcy, or filing a bankruptcy petition against the debtor as a countermove to the execution ; and, accordingly, the inspectors must have power at once by writing to declare the deed to l)e at an end, without prejudice to acts previously done under it. A similar reason for determining the deed J^^J'^'f™^^" sometimes exists where the debtor has l)y wilful anange- ment on l)reach of his covenants in the deed so injured his breach of covenant business and offended his creditors, that they by debtor. prefer to send the estate into bankruptcy instead of calling for an assioiiment of it and releasing the debtor. In this case, however, the power of the inspectors to put an end to the deed ouo-ht not as a general rule to be left to their sole discretion, but should be dependent upon the vote of a meeting of creditors to be called by the inspectors for the purpose of considering the <|uestion. The remaining clauses of an ordinary deed of inspectorship do not call for special remark. Such inspectorship deeds as we ha^'e been Registra- considering are within the deeds of Arrange- ment Act, 1887, which requires expressly the registration of a deed of inspectorship or a letter of licence in cases where creditors of a delator obtain any control over his property or business {i). (/) See^5o,s^ p. LjI. f>0 Inspect or sliip Deed-'i. Chap. IV. A (Iced, moreover, or a letter of licence, which does not contain an assignment of property for the benefit of creditors generally, but gives con- trol over the property or business, may possibly not be exempted from the necessity of registration under the Bills of Sale Acts. And further, such a deed or letter could scarcely be framed in accord- ance with the statutory form in the Act of 1882, and might on that ground be held void. No decision, however, seems to have been obtained on these points, and the Precedents have been retained as likely to be still resorted to, and practically useful notwithstanding the fact that some risk may 1)6 run by adopting them. CHAPTER V. STATUTORY COMPOSITION OU ARRANGEMENT. The Bankruptcy Acts, 1883 and 181)0, provide Two j^ modes of two modes by which an insolvent debtor can efteet an-ange- a composition or scheme of arrangement {<() with under the . . Ill 1 Bank- his creditors after a receivmg order has been made, ruptcy one before he has been adjudged bankrupt, the other after ; in each case there is the same amount of notoriety, as the debtor has to undergo a public examination, and the arrangement has to be approved by the ( 'ourt ; the main difference appears to be, that wliere there has Ijeen an adjudi- cation, the Court on approving the arrangement may (and generally will if the interest of the public and commercial morality permit (b)), make an order annulling the adjudication (c), and vesting the estate in the debtor or otherwise so as to give effect to the arrangement, whereas if there has been no adjudication the Court will simply («) As to the tUstiuctiou b.-- (/>) Me Brer. [1903] 1 K. B. tweeu a composition and a 628 ; 72 L. J. K. B. 366 ; 88 scheme, see 3 Mor. Ill; and L. T. 334; 1(» Mans. 136. as to its importance, see 21 (c) Bankruptcy Act. 1883, s. Q. B. D. r,88. 23. subs. 2. Hi* Stilt ufory Coiiqios'ifion or Arrtanii'inenf. Chap. V. discharge the receiving order ('/). The Bankruptcy Act, 1890, s. 3, which has taken the place of s. 18 of the Act of 1883, has introduced certain changes of procedure which will be hereafter noticed. Statutory At the end of this work will be found the various require- ments, sections of l)oth Acts, and also the rules, which relate to or regulate this subject, from which it will be seen that there must have been a meeting' of creditors before the matter comes before the Court, and the proposed arrangement must have })een sanctioned by a majority in number and three-fourths in value of all the creditors who have proved their debts. Discretion The Court has a very wide discretion as to of the . '' Court. whether it will ;i[)prove or not. It mail refuse its approval in all cases (e). It must refuse if the proposals are not reasonable or not calculated to benefit the general body of creditors, or if in case of bankruptcy it would l)e bound to refuse a dis- charge (f). It must also refuse where the Court could not orant an immediate unconditional dis- charge unless the proposal provides reasonable security for payment of not less than five shillings in the pound on all the unsecured debts provable against the estate (//). If that condition is fulfilled ((Z) E,ule:]OoftlieBaiikniptcy 61 L. J. Q. B. 591; m L. T. Rules, 1890 (Rule 208 of the 553; 9 Mor. 133. Bankruptcy Rules. 1886) ; see (/) B. Act, 1890, s. 3, sub-ss. pod, p. 203. (8), (9), (10). (e) Be Burr, Ex parte Board ((/) Ibid, sub-s. (i)); 3 ^ 4 of Trade, [1892] 2 Q. B. 467 ; Geo. 5, c. .34, s. 7. Statutorij Ctinijxisiflon or Ar)'ini(i<'iiu'iit. 03 it may or may uot approve the schejue (h). chap^v. ^ Reasonable security means not such as a prudent man would invest in, l)ut a reasonable commercial probability that the amount will 1)0 realized (/). The security must only provide for payment of the composition on debts provable at the time the scheme comes on for approval, and not debts provable at the date of the receiving order which have since been withdrawn (/). But such releases must be absolute and not conditional on the scheme going through (/), and it would seem that the releases must not have been procured by or with the privity of the debtor (??i). 'Wc Court will not consider a scheme under which the debtor proposes to carry on building speculations, similar to those which led to his bankruptcy, as providing " reason- able security " even though all the creditors are in favour of the scheme {n). The Court in formino- this oinnion must exercise How its own independent judgment (o), but will bear in mind that the creditors are mainly interested in this question of reasonableness ( />) ; and if the (/() Be Burr, supra. (n) Re Flcir. [litor,] 1 K. B. (0 Be Bottomley, (1893) lU 278; 74 L. J. K. B. 280; 92 Mor. 262. L. T. 333; 12 Mans. 1. (k) Be E. A. B.. [1902] 1 K. B. (o) Be Becd. (188(i) 17 Q. B. D. 457 : 71 L. J. K. B. 356 ; 85 244 ; 55 L. J. Q. B. 2-W ; 34 L. T. 773; 50 W. R. 229; M W. R. 493: :) Mor. 9(»; Ex Mans. 105. j)^'^'^'' Lnh/ir, Br PostJetliwaite, {I) Be Pilling, Ex parte (1886) 3 Mor. 169; Export,: Boanl of Trade,' [1903] 2 K. B. Campbell, Be Wallaee, (1885) 50; 72 L. J. K. B. 392; 51 15 Q. B. D. 213; 54 L. J. W. R. 465. Q. B. 382 ; 53 L. T. 208 ; 2 (hi) Ibid. ; but see [1905] 1 Mor. 167. K. B. at p. 284. (p) Be Bo(t'r><. (1884) 13 Q. 64 Statatori/ Conijx'sitioii or Arramjement. Chap. V. J^casou- ableness of arrange- ment. otticial i'ec(3iver's report he favourable, and the objcctioDS (if au\') of the creditors have no weight with the Court, and the requisite statutory majority of creditors has sanctioned the arrangement, the Court will rarely refuse its sanction on the ground of u]ireasona])leness. The Court, however, is not bound, and nmst not be governed, l)y the opinion of the (-reditors (y). It must consider on the one side the conduct of the debtor, and on the other the interest of the creditors, and must exercise its discretion both in regard to its duty to the public and its duty to the creditors (r). The Court will not approve of a scheme which gives the creditors no greater benefit than tliey would get in a bankruptcy (.s'). In a (-ase, where a scheme of arrangement which was apparently in other respects reasonable, and not opposed by any creditor, contained a provision that the debtors should be discharged when the committee (^f inspection should so resolve, the Court considered such a provision unreasonable, as being a delegation to third })arties of a question which the creditors ought, according to the scheme B. D. 4:}« ; 33 W. 11. ;'m4 : 1 Mor. ir)J». {fl) lie Reed, nupra ; Exjiaite Coiiijihcll, Kupra ; B< Hester. (1889) 2-1 Q. B. D. (;:{-2. (/•) Be Barlow. E.r. inirte Thornher, (1886) :5 Mor. 304; 56 L.J. lt)8. (.s) B( Broiriie (tiiil W/iHjrorr. (1890) W. N. p. 1:51 : AV 2>"'-f'' l}/s<']iof.t]ifiiii. Be Alijmer, (No. 1 ) (18S7) 1!> Q. B. D. 33 ; ')(> L. J. q. B. 4(iO; r,{^ L. T. 801; 3."> W. R. 532 ; 4 Mor. 152. And see also, as to tlxe principles in- fluencing the apjiroval of the Court, Be Staniar, Ex parte Smith, (1888) 20 Q. B. D. 544; 58 L. T. 884 ; 3() W. R. 008 ; 5 Mor. (>7. effected. Stataturij Conipo^ition or Arni/i//i:incjit. G5 of the Act, to decide for themselves on passing chap. v. the resolution (f). This was the one point to be decided, but the Court intimated an opinion that a resolution, providing for a discharge in some definite event fixed by the resolution, would not be unreasonable. If, for instance, a resolution for a (composition Keieaae, provided that the debtor should be released from and how his de])ts on the certificate of the official receiver or trustee that he had sufficient money in hand to pay the composition and the costs of the pro- ceedings, or that he was in possession of promissory notes or bills of exchange representing the com- position, there can be little doubt that such a pro- vision ought not to be held unreasonable, for it merely indicates a convenient mode of proving matters which would l)e otherwise troublesome, to prove. If, however, the resolutions embody a scheme of arrangement for administering the estate of the debtor either under inspection or otherwise, it is by no means clear what the "definite event" should be in which the debtor is to be released, if it be not one in some measure depending on the discretion of the inspectors, viz. their certifying that the estate has been as fully wound up as is in their opinion practicable, which is a familiar form of granting the discharge in such a case. The alternative appears to be that the order of the Court approving the scheme, or the (0 Ee Clark, (1884) 13 Q. B. L. T. 584; Jl W. K. 775; 1 D. 426 ; 53 L. J. Ch. 1063 ; 51 Mor. 143. D.A. 5 66 Statutory Composition or Arrange incnt. Chap. V. attaching the Court's seal to the deed (B. A. 1890, s. 3, sub-s. 11), will operate as a discharge; but this (in cases of winding up as distinct from composition) is most unsatisfactory, for, when the debtor has oljtained his discharge, he will generally take but a languid interest in the estate, and give small assistance to the inspectors or trustees, and the only remedy of the creditors will be to induce the Court to adjudge him bankrupt under sub-s. 15 of s. 3, on the ground that the scheme cannot " pro- ceed without injustice or undue delay to the creditors." Nor will a scheme be approved if a large number of the debts mentioned in the statement of affairs have not been proved or if the Court thinks that tlie proofs require investiga- tion {u). Miscon- The Court will not refuse to approve a scheme debtor. on the grouud of a debtor's misconduct except in cases of a gross character. The mere fact that he has contributed to his bankruptcy by rash and hazardous speculations within the meaning of the Bankruptcy Act, 1890, s. 8, su])-s. 3, is not a sufficient reason for refusing to approve a scheme wliich complies witli the conditions of s. 3, sub-s. 9 (a). On the other hand, the Court will not approve a scheme conditional on the annul- ment of bankruptcy if the ])ankrupt's conduct has («) lio Bilfji'rx. initv. 1). ().'l U) Be E. A. B., ante, p. t;;5. Statatorij Composition or ArraiKjeiiwiit. 07 beeu sucli that the bankruptcy ought not to be Chap. v. annulled (;/). It has been held, under ,s. 18 of the Act of I880, what that, the approval of the Court being equivalent to included, au order of discharge, a scheme of arrangement operates only to convey to the trustees such property as the debtor is entitled to at the date of the approval of the scheme. It does not, without express stipulation, include property coming to the debtor after that date (2). It will be observed that sub-s, 8 of s. 3 of the Obligation to rpfiisp Bankruptcy Act, 1890, is imperative, and compels approval. the Court to refuse its approval to a composition or scheme in the events there mentioned [a). By sub-s. 9, if on the application for its approval facts are proved which, if the application were for dis- charge of the debtor, would technically justify the Court in refusing, qualifying, or suspending the discharge {h), the Court must refuse to aj)prove unless the proposal provides " reasonable security " for the payment of five shillings in the pound on all the provable unsecured debts (c). Even if the scheme does provide reasonable security, it is still in the discretion of the Court, upon (*on- sideratioii of all the circumstances, to reject the scheme ((/). ((/) R< Beer, [H»Uoj 1 K. B. (b) See E. A. 18!tU, s. 8. 628, ante, p. 61. (c) As to wliat is reasonable (z) Re Croont, England v. security, see ante, p. 63. Frocinchd A><.^ets Co., [1891] (d) Re Burr, [1892] 2 Q. B. 1 Ch. 69o; 60 L. J. Ch. ;373; 467 ; 61 L. J. Q. B. 591 ; (Hi 64 L. T. o3; 39 W. R. 286. L. T. 553; 9 Mor. 133. ((') See ante, p. 62. 68 Sfafufory Coiiii>o.vfion or Arrroigemcnf. Chap. V. The Court of Appeal will not review the discre- tion of the reiristrar, unless it is clear that he has exercised it wrongly (e). The report of the official receiver under sub-s. 5 of s. 18 (now B. A. 181)0, s. 3, sub-s. 7) must be taken to be prima facie evidence of the truth of any statements therein contained as to the "facts" referred to in the latter part of sub-s. G (/), Where the report of the official receiver disclosed a long course of reck- less trading on the part of the debtor, although no creditor opposed the application, and several creditors supported it, the registrar and the Court of Appeal refused to approve tlie composition. This decision is in accordance with the principles laid down by the Court of Appeal in reference to the approval of schemes of settlement under s. 28 of the Bankruptcy Act, I860 (g). Sub-s. 16 of s. 3 of the Bankruptcy Act, 1890, provides that s. 27 of the principal Act of 1883, which gives powers for the discovery of the debtor's property, shall apply to schemes and compositions where a trustee is appointed. This renders obsolete a previous decision which had laid down the contrary (A). (e) Be Beed, (1886) 17 Q. B. -VJ. L. J. Q. B. 382 ; oS L. T. D. 244 ; 55 L. J. Q. B. '244 ; 34 2(>8 ; 2 Mor. 167 ; Be Bottotnlry, W. R. 493 ; 3 Mor. 90 ; Ex parte (1893) 1 Mor. 262. Le(Irfer,B^ePostlethwaUe,{lSS()) (;/) Ex parte Merchant '^M.ov.X'o'i); Ex parte CampI till. BanhitKj Compainj of London. Be Wallace, (1885) 15 Q. B. D. Be Durham. (1881) 16 Ch. D. 213 ; 54 L. J. Q. B. 382 ; 53 L. T. 623 ; 50 L. J. Cli. 606 : 44 L. T. 208 ; 2 Mor. 167. 358 ; 29 W. R. 363. (/■) Ex parte Camphdl, Be Qi) Ex parte Biaehoff^'heimr IFaHacc, (1885) 15 Q.B.D. 213; Be Aylmer, (No. 1), (1887) 1{> S>fiH./>os/f/<>)i nr Arrnngciiienf. 09 A scliciuc cannot providi.' for judguieut l>eiug chap. v. cntcrtid up against the debtor in the manner enacted, in cases of discharge, 1)\- the Bankruptcy Act, 1890, s. 8, sub-s. 2 (iv.) (/). But the opera- tion of s. 'i:) of that Act as to interest over 5 per cent, may be excluded {k). To secure tlie approval of the Court it is necessary that the creditors should accept tlie scheme in the form agreed to by the debtor, since the Court cannot amend the scheme in sub- stance (/), though it may correct a formal slip {m). The Court is also compelled to refuse to approve a composition whicli fails to provide for the prior payment of what are generally called preferential debts {)(), such as the rates, taxes, and wages mentioned in s. 40 of the Act, and also for payment of all proper costs, charges and expenses of the proceedings, and all fees and percentages payable to the (jfhcial receiver and Board of Trade (o) ; provision, therefore, must always be made in the resolutions for these payments. By s. :>, sub-s. I'Z of the B. A. 1890, a com- Effect of , . accept- positiun or scheme accepted antl approved m auce and /• 1 • • • 1 • T n j-1 api^roval pursuance ot tJiis section is binding on all tlie of com- positiou Q. B. D. :}:{; .".ti L. J. Q. B. ll L. J. K. B. 407; 88 L. T. '^^■^'^^^^'^• 460 ; 56 L. T. 801 ; 35 W. R. 477 ; 10 Mans. 156. .532; 4Mor. 152. (0 See i-ule 207; Lucas v. (i) Ex parte JBlschoffshcim, Alartin, QSSS) 37 CL. D. 597; Re Aijlmet: (No. 2), (1887) 20 57 L. J. Ch. 261 ; .58 L. T. 862 ; Q. B. D. 258 ; 57 L. J. Q. B. 36 W. R. 627. ] 68 ; 36 W. R. 231. {m) See rule 207, fost, p. 203. (fc) Be Nepeaii. E.r, parte (n) B. A. 1890, s. 3, sub-s. 18. liamchiuul, [1903] 1 K. B. 794 ; (u) See rule 20o, 2)ost, p. 202. 70 Statufon/ Composition or Arrangomnif. Chap. V. Bank- ruptcy Act, 1880, s. 3, SUb-SR. IG, 17. Bank- ruptcy Act, 1883, Part III. creditors so far as relates to any debts (with certain exceptions therein mentioned) due to them from tlie debtor and proval)le in the bankruptcy. This includes all debts and liabilities which would Ije released by an order of discharge in bank- ruptcy (|?). 8ul)-ss. IG and 17 of s. 3 of B. A. 1890, require careful consideration by persons contemplating a composition or scheme, for sub-s. IG provides that, where a trustee is appointed to administer the debtor's property or manage his business, Part y. (q) of the principal Act (the Act of 1883) shall apply to the trustee as if he were trustee in a bankruptcy, while sub-s. 17 provides for the incorporation of Part III. (r) of the principal Act into the scheme. It will be observed, however, that in the latt(U' case the sub-section contains the qualifying words "so far as the nature of the case and th<' terms of the composition or scheme admit," which will allow of the introduction into the scheme, or any deed which may be required to carry out the same, of such modifications as may be desired, and as are not inconsistent with the statute. For instance, those portions of Part III. (ss. 37 to 57 inclusive) which relate to proof of debts, to {'p) Flint V. Banianl (1888) 22 Q. B. D. 90 ; 58 L. J. Q. B. 53 ; 37 W. R. 185 ; Seaton v. Deerlmrst, [1895] 1 Q. B. 853 ; (;4 L. J. Q. B. 43(1 ; 72 L. T. 453 ; 2 Mans. 355. (q) Part V. relates to trustees in bankruptcy, their remunera- tion, costs, accounts, release, appointment and removal, etc. (>•) Part III. deals with ad- ministration of property. Sfntiitoii/ ('omposiitioii or Arraiifjemrnt. 71 distribution of property, to avoidance of settle- cbap. v. ments and preferences, and to disclaiming oi- otherwise dealing with particular kinds of pro- perty, must, it would seem, be adopted without any attempt to modify them in the scheme, though probably if the scheme does not provide for a committee of inspection it should expressly confer the powers of s. 57, or some of them, upon the trustee. On the other hand, it is probably desirable that the scheme should give to the trustee a oeueral discretion as to time and mode of payment of dividends (s), instead of binding him to the provisions of s. 58. With resrard to the application of Part V. of Control of ° ^ ^ Court and the Act to a trustee appointed under a scheme, Board of . . Trade the words of the Act are imperative, and the necessary. scheme cannot modify or interfere with the control of the Court and the Board of Trade over the trustee. It may therefore sometimes be advisable for peed of the creditors and debtor to consider whether a tion. scheme for winding-up or carrying on the debtor's preferable business under a deed of inspection {t) will not be preferable to administration of the estate by a trustee, for there can be no doubt, it is sub- mitted, that an inspector is not a trustee within the meanins: of sub-ss. 16 and 17 of s. .S of the Bankruptcy Act, 1890. (s) Jacohsoti V. La Mert, 12 Jur. (N. S.) 688 ; W. R. (1867) L. R. 2 Ex. 394; 36 4U2. L. J. Ex. 221; 16 L. T. 56it ; (0 See Precedent XVI., ^jos^ Coles V. Turner, (1866) L. R. 1 p. 142. C. P. 373 ; 35 L. J. C. P. 169 ; 72 St<(tutory Conipo.ntion or Arrangement. Chap. V. Payment into local banks. Expung- ing proof. Remune- ration of trustee. Default. Where tlie official receiver is acting as trustee or a trustee is actino- without a (committee of in- spectiou, the Board of Trade may, if for special reasons they think fit, upon the application of the official receiver or otlier trustee, authorize the trustee to make his payments into and out of such local bank as the Board of Trade may direct. The account must be opened and kept by the trustee in the name of the debtor's estate, and any interest receivable in respect of the account will be part of the assets of the estate (u). Except under special circumstances tlie debtor cannot move to expunge a proof unless the scheme or composition has been accepted by the creditors and is pending before the Court (.r), though it would seem that an application to reduce a proof could be made after confirmation of a scheme (ij). The trustee has no right to any remuneration if none is voted, Ijut he is entitled to his proper expenses out of the assets (:). The i-emuneration is a percentage partly on the amount realized by the trustee (a) and partly on the amount dis- tributed in dividend, which seems to mean dis- tributed out of assets realized by the trustee (h). If default is made in payment of the composi- tion the Court may adjudge the debtor bankrupt (tt) 3 & 4 Geo. o, c. ;}4. s. 2U. («) Re Benoist, [1909] 2 K. B. 784; 78 L. J. K. B. 1105; 101 L. T. 432. (?/) Exfarte Bacon. Be Boiuh (1881) 17 Cli. D. 447; 44 L. T. S34 ; 29 W. R. 574. (v) B. Act, 189<>. s. ir,. (ii) Ihid. {}>) Be Christie, [1900] 1 Q. B. :. : 09 L. J. Q. B. 31 ; 81 L. T. ")28 ; 7 Mans. 1. Stdtutiu'i/ Coih position or Ari-o/ii/i'/uniL 73 ami iiiinul the sclieme on the api»licatioii of the chap. v. official receiver, the trustee or a creditor (c), but no action lies to enforce su(;h payment (d). It seems tliat the effect of default is not to enable a creditor to sue for his original debt, at all events not without the leave of the Court (c). The Court will only adiudge the debtor a bank- Adjudica- r. . tion. rupt where there is a probabilit}' that the creditors will gain by an adjudication (/') ; and if the Court refuses a scheme proposed l)y the debtor an im- mediate adjudication will only l)e made in the most exceptional circumstances (//). A scheme or composition is annulled without Anmii- 1 • T p 1 • 11 1 ment of prejudice to the validity oi anything duly done scheme. under it (//). On annulment the property of the ). (fl) As to stamp, see Deeds of (b) If preferred, a covenant not Arrangement Act, 1887, s. G (2), to sue as in the next precedent 2X)st, p. 158. As to registration see may be substituted for the ante, p. 2, and as to fees, see xwst, release. p. 177. 7G Precedents. Prec. I. and accept- ance. Convey- ance and assign- ment of real and personal estate (with ex- ceptions) to trustee. upon trust to realize. L'ower to postpone conver- sion. And wiiKiiKAs u niiijorily in iiuinl)i;r ami value of the cicditor.s have agreed that .such pi-oposal sliall 1)6 accepted and carried out by these presents in manner hereinafter contained ('-•), and the jiarties hereto of the third part have consented to act as a committee oi' inspection for the ])urposes hereinafter appearing, and they are hereinafter referred to as " the committee." NOW THIS INDEN- TURE WITNESSETH as follows :— 1. In pursuance of the said agreement and for the considerations aforesaid the debtor as beneficial owner hereby conveys and assigns to the said C. 1), All the real and personal estate wliatsoever and wheresoever of or lielonging or due or owing to the debtor (except property of a leasehold tenure {d), and tlie debtor's tools oi" trade (if any) and the necessary wearing apparel and bedding of himself and his family), To ii.WE AND TO HOLD the said real and personal estate unto the said C. D., as to real estate to the use of the said C. D. in foe simple {c), and as to the personal estate to the said C. J), absolutely and as to all the estate and ])remises upon the trusts and subject to the proxisions and iigreements hereinafter agreed and declared. 2. The said C. D. or other the trustee for the time Iteing of thes(! presents (each of whom is hereinafter referred to as " the trustee "), shall in such way or manner as to him may seem best, call in, collect and receive the said personal estate, and sell the said real estate and all the saleable part of the said personal estate, with power nevertheless for the trustee, in his discretion, tn postpone tlie sale of all or any part of the (c) The assents may l)e given within 21 days of registration {ante, p. H), but of course it would 1)0 better to obtain them before the execution of the deed. {(l) If the debtor be possessed of shares in public companies on which calls are likely to be made, it may be desirable to except them also from the assignment : in that case the deed will also contain a declaration of trust of them as well as of the leaseholds ; see below, p. 80. ((•) If any land is comprised in the deed, it nmst be also registered under the Land Charges, etc.. Act, 1888, post, p. 194. .Di'<'r. 8:1 represented at the meeting, shall hind all the jmrlies to Prec. i. these presents. 18. A majority in iiunihtT representing- three-fourths To re- in value of the creditors present or represented at any trustee meeting called for the purpose by one-sixth in value of the creditors, by such circular letter as aforesaid, may by resolution remove (/) any trustee of these pre- sents from office for any cause which may seem to them sufficient, and may by deed executed at or after such meeting appoint a new trustee in substitution for such removed trustee, and the costs of and incidental to such meeting and appointment shall be paid out of the trust estate. 19. The acts of the majority of the committee shall Majority for all purposes of these presents, except where it is mittee to otherwise provided, be deemed to be the acts of the pi"evail. whole, and if any of them shall die or go to reside abroad, or desire to be discharged, or refuse or become incapable or unfit to act as a member of the com- mittee, then it shall be lawful for a majority in Power to number representing three-fourths in value of the uef\°mem- creditors, whose respective debts amount to 10/. ^'ci'^ of 11 •. • • ..1 com- er upwards, by any writing, to appoint one ot the mittee. creditors to act as a member of the committee, who shall thereupon occupy the same position and have the same powers as if he had originally been one of the committee. 20. If the trustee and the committee shall unanimously To settle be of opinion and certify that it is expedient to pay in seutieut' full or otherwise than by dividends under these presents creditors, any creditor or creditors who shall decline to execute or assent to these presents, the trustee shall pay or settle (I) It will sometimes happeu stitute their own nominee. Or that the debtor has assigned the they may (through the committee) estate to a trustee who is not ac- appoint a trustee to act with the ceptable to the creditors, in which debtor's nominee, case they ought to be able to sub- 84 Prec. I. witli such Creditor or creditors in accordance with such certificate (m). In witness, &c. Schedule of Creditors. (m) As to the propriety of this clause, see ante, p. 37. In the absence of such a clause, the trustee could not settle with a dissentient creditor, however de- sirable it might be to do so. On the other hand, the presence of the clause might induce creditors to remain outside the deed in hopes of full payment. Upon the whole, the lesser evil seems to be to leave it to the judgment of the trustee and committee of creditors to decide whether to settle with dissentient creditors or to take the risk of their hostility. Deed of Conveyance and Assu/mnenf by one D>htuf. 85 II. Deed of Coxveyance and Assignment hij one Debtor for benefit of Im Creditors in consideration of Covenants by the Creditors not to sue, and of Release on Certificate of Trustee and Committee of Creditors. [This indenture vnll be the same as Precedent I. (vjith the exception that the first recital will say " in considera- tion of the covenants " instead of " in consideration of the release ") as far as the beginning of Ckmsc 12.] 12. In further pursuance of the said agreement in this Covenant behalf, and in consideration ot the conveyance and tors not to assignment hereinbefore contained, the creditors hereby ^jjgi[.°fg^^tg respectively covenant with the debtor that they the while deed creditors respectively will not, so long as these presents '^ '" ^°''''^- shall remain in force, sue, arrest, attach or molest the debtor or his estate for or on account of their respective debts, and that these presents may be pleaded or given in evidence as a defence and answer to any action or other proceeding which may be brought, instituted or taken by or on behalf of any of the creditors against the debtor or his estate in breach of this covenant. 13. If the trustee and the committee shall certify (as Debtor to they shall be at liberty to do at any time hereafter) that ^l^^^^ ^^ the debtor ousht in their opinion to be discharged from certificate , . , . T j_ 1 of trustee the debts due to the creditors, then immediately upon andcom- such certificate being given the debtor shall be absolutely "iittce. released and discharged from the said debts due from him to the creditors respectively, and these presents may accordingly theieafter bo pleaded or given in evidence as 8G Preci'deiits. Piec. II. a (lei'cnce aud auswer to any action or other proceeding which the creditors respectively shall have at any time theretofore brought, instituted or taken, or might at any time thereafter liring, institute or take against the debtor or his estate for or on account of such respective debts. [Proviso as to sureties and securities, omitting the words " and the release hereinbefore contained " — -"power to appoint new trustees or an additional trustee — call meetings — remove trustee — 'proviso as to majority — poioer to appoint new co7nmittcc-men — settle loith dissentient creditors, as in Precedent /.] In witness, &a Schedule of Ciieuitors. Dacd of Conveyance and As.^'njnmoU Inj Partners. 87 III. Deed of Conveyance and Assignment hy Partners for the heiiefit of their joint and separate Creditors. THIS INDENTUIIE made the day of , Between A. B., C. D. and E. F., all of &c., trading in Parties, partnership under the style or firm of A. B. & Co., here- inafter called " the debtors," of the first part, G. H. of &c., 1. K. of &c. and L. M. of &c. [trustees'] of the second part N. 0. of &c., P. Q. of &c. and K. S. of &c. [committer of inspection] of the third part, and the several persons, firms and companies (being creditors of the debtors, or of some or one of them) whose names and seals are set and afftxed in the schedule hereto, or who shall otherwise in writing assent to these presents, and who are hereinafter called " the creditors," of the fourth part. WiiEiiEAS the debtors or some one of them being liecitai of indebted to the creditors respectively in divers sums ^arrange- which cannot at once be paid in full have proposed to meut, convey all tlieir and each of their real and personal estate (except as hereinafter mentioned) to the said parties hereto of the second part, as trustees for all the creditors, in consideration of the covenants on the part of the creditors hereinafter contained. And WHEREAS a majority in number and value of and the creditors have agreed that such proposal shall be ^^^^^^ ' accepted and carried out by these presents in manner hereinafter appearing (w), and the parties hereto of the third part have agreed to act as a committee of inspection for the purposes hereinafter mentioned, and they are hereinafter referred to as " the committee." (n) A)itc. p. TG u. ((■). 88 Precpderifs. Prec. III. Convey- ance and assign- ment of real and personal estate both joint and sepa- rate (with excep- tions) to trustees, upon trust to realize. !Mode of sale. XOW THIS INDENTUKK WITNESSETH as follows : — 1. In pursuance of the saitl agreement and for the considerations aforesaid the debtors and each of them as benehcial owners or beneficial owner do or doth hereby convey and assign unto the said [tru^ieoi] (according to the nature and tenure thereof), All the real and personal estate of or to whicli the debtors or any of them are or is seised, possesseil or entitled (except property of a lease- liold tenure shares in companies or other property which by reason of its subjecting the holder to the performance of any onerous covenant or obligation which the trustees may within three montlis from the executicm of these presents disclaim, and except the debtor's tools of trade (if any), and the necessary wearing apparel and bedding of the debtors respectively, and their respective families). To HAVE AND TO HOLD the saiuc premises unto the said [trustees], as to tlie real estate (o) to the nse of the said [trustees] in fee simple, and as to the personal estate to the said [trustees] alisolutely, and as to all the premises upon the trusts and subject to the provisoes and agree- ments hereinafter agreed and declared. 2. The said [trustees'] or other the trustees or trustee for the time being of these presents (all and each of whom are and is hereinafter referred to as " the trustees or trustee ") sliall, as soon as may be, and in such a way or manner as to them or him may seem best, call in, collect and receive the said personal estate, effects and premises, and sell the said real estate and all the saleable part of the said personal estate, and to make any such sale either by public auction or private contract, or parti}- in either mode, and subject to such conditions, upon such terms, and generally in such manner as they or he may think fit; and as to any policy of insurance, either by way of surrender to the office which granted the same or (o) As to registration under pAs/, p. VM. Land Charges, &c.. Act, 1888, see Deed of Coiiveyanoi^ ((ud AsffuiniiK'iif h;/ Pitrtnn-s. 8!) otherwise ; and as to any property in mortgage, either P'-ec ni. subject to or discharged from sucli mortgage, and with power to concur with any mortgagee in any sale thereof, and also with power to buy in the property or any part thereof at any sale by auction, and to alter or rescind any contract for sale and re-sell without being responsible for any consequent loss. 3. It shall be lawful for the trustees or trustee in their ^°ll^'J^^^ or his discretion to postpone the sale and conversion of any part of the trust property for such period as they or he shall think fit (|>), and until such sale and conversion to manage, lease, repair, let on hire, insure or otherwise deal with the same as they or he may deem best, and in the meantime, but solely for the purpose of realizing the joint estate to the best advantage, carry on and manage the business of the debtors. 4. The trustees or trustee shall stand possessed of the To lioid . , net pro- net moneys to arise by any of the ways or means atoresaicl, ceeds ou Upon trust thereout in the first place to pay all costs, J^'^y tosts charges and expenses of and incidental to the investi- und ex- • , ■ 4.1 • penses, gation of the affairs of the debtors with a view to tins arrangement, and of and incidental to the preparation of these presents and procuring the signatures or assents ot the creditors thereto, And in the next place to pay all rates, taxes, wages, and other similar claims (if any) and taxes ° . . . , , and wages, which would be payable in full or in priority in bank- ruptcy ; And subject as aforesaid, and to the payment of all costs, charges, expenses and sums of money which may for the time being be incurred or payable in the course of carrying out the trusts and provisions of these l)rcseiits, ui)on trust thereout to pay rateably according and divide to the law of bankruptcy (. ]Jj/ l^drtmr.^. i)3 of them are or is now possessed or entitled upon trust Prec. ill. for the trustees or trustee, and to assign and dispose of the same in such manner as the trustees or trustee shall from time to time direct for the purposes of these presents, and that the net proceeds of every such dis- position, and the interim income of the said property shall be paid to the trustees or trustee, and held and applied by them or him upon the same trusts as the other trust moneys arising under these presents. 14. For the considerations aforesaid the debtors Power of , p ^1 11 attorney. hereby jointly appoint, and each ot them liereU} separately appoints, the trustees or trustee to be the attorneys and attorney of the debtors and each of them in their and each of their names or name, and on their and each of their behalf, to execute and sign any deed or document which the trustees or trustee may think necessary or expedient for carrying into effect the trusts and purposes of these presents or any of them. 15. In further pursuance {v) of the said agreement in Covenant this 1)ehalf, and in consideration of the conveyance and tors not to assi'-nment hereinbefore contained, the creditors hereby ™«.fo^\, . , , , , ^ ^ L' i.\ then- debts respectively covenant with the debtors and each ot them ^yhiie deed that they the creditors respectively will not so long as "^ force. these presents shall remain in force sue, arrest, attach or molest the debtors or any of them, or their or any of their estates, for or on account of the debts due to the creditors respectively from the debtors or any of them ; and that these presents may be pleaded or given in evidence as a defence and answer to any action or other proceeding which may be brought, instituted or taken by or on behalf of any of the creditors against the debtors or any of them, or their or any of their estates in breach of this covenant. 16. If the trustees or trustee and the committee shall Debtors to be released (n) See and adapt Precedent I. In that case, too, the first recital for form of release, if such is pre- will say "release" instead of ferrcd to a covenant not to sue. " covenants." 94 Precedent-^. Prec. III. on certifi- cate of trustees; and com- mittee. Reserva- tion of rights against sureties. Reserva- tion of rights of secured creditors. certify (as tliey shall be at liberty to do at any time here- after) that the debtors or any of them, cither as a firm or as individuals, ought in their opinion to be dis- charged (r) from the debts due to the creditors from the debtors, either jointly or separately, then immediately upon such certificate being given, the debtors and each or any of them (according to the terms of the certificate) shall be absolutely released and discharged from the debts due from them or him to the creditors respectively ; and these presents may accordingly thereafter be pleaded or given in evidence as a defence and answer to any action or other proceeding which the creditors respectively shall liave at any time heretobefore brought, instituted or taken, or might at any time thereafter bring, institute, or take, against the debtors or any of them, or their or any of their estates, for or on account of sucli respective debt.'^. 17. These presents shall not in anywise prejudice or affect the rights or remedies of any of the creditors against any surety or sureties, or any person or persons other than the debtors or their respective heirs, executors or administrators, and that for the sake of conformity alone the debtors or any of them may be joined in any actions or other proceedings to be brought, instituted, or taken by any of the creditors against such surety or sureties, or other person or persons. 18. These presents shall not prejudice or affect any security which any of the creditors may have or claim for his debt, but nevertheless, if such security lie of such a nature that the creditor holding or claiming the same would, by the law of bankruptcy, be bound to realize the same or deduct the value thereof before proving his debt in bankruptcy against the estate from or upon which the (r) There seems uo reason why, in a case of joint and separate administrations under a deed, there should not he distinct re- leases. See Meggy v. Itnjwi-ial Discount Company, (1878) 3 Q. B. D. 711 ; 48 L. J. Q. B. 54 ; 38 L. T. 309 ; 2C. W. R. 342. Deed <>f CoiiVi'i/ainu' mid Ass/f/niiimf A// Purhifrs. 0") security is hekl(.'), then and in that case such creditor Free. ill. (unless he shall give up his said security) shall be entitled to receive dividends under these presents out of such estate upon so much only of his said secured del)t as may remain after such security shall have l)een realized, or after credit shall liave been ^iven for the full value thereof, such value to be agreed upon between such secured creditor and the trustees or trustee, or in case of dispute to be ascertained by two impartial valuers (one . to be chosen by such secured creditor and the other by the trustees or trustee), or by an umpire to be named by such valuers before proceeding to the valuation. \Poiver to appoint new trustees, or an additional trustee, saying, " any of them the said G. H,, I. K. and L. M."/or " the said C. D." — call meetings of creditors, inserting the toords, " provided that such resolution do not contravene the law of bankruptcy or any rule for the time being in force thereunder relating to the administration of joint and separate estates " {y) after " lepresented at the meeting" — remove trustee — proviso as to major it jj — power In appoint new committee men, as in Precedent 7.] In WITNESS, &;c. SCHEDULE. Part 1. — Joint CnKDiToi;s. „ 2. — SErAHATK CUKniTOItS OF A. B. „ 3. — Sepakate Crkt)itoi;s of C. D. „ 4. — Separate Ciieihtoks of E. F. (.r) This clause draws attention partner as an unsecured creditor, to the rule in bankruptcy that a although holding security on the creditor of a firm may prove his joint estate, see ante, p. 47. whole debt against the joint estate [y) The object of these words is without giving credit for the value to prevent the possibility of the of any security which he holds joint creditors (who will generally upon the separate estate of any predominate at the meeting) pass- partner; and conversely a separate ing are solution prejudicial to the creditor of any partner may prove separate creditors, against the separate estate of such Of) Precedents. Parties. Assign- ment of personal estate to trustee, upon trust to realize and pay costs and expenses, and taxes and wages, IV. Deed of Assignment of Personal Estate hy one Debtor for Benefit of hh Creditors. {A sliort form.) THIS IXDEXTUEE made the day of , Between A. B. of kc (hereinafter called " the debtor ") of the first part, C. 1). of &c. of the second part, and the several persons, companies and partnership firms (being creditors of the debtor) whose names and seals are set and affixed in the scliedule hereto, or who shall otherwise in writing assent to these presents (hereinafter called " the creditors ") of the third part. WITNESSETH as follows :— 1. In consideration of the release on the part of the creditors hereinafter contained the debtor, as beneficial owner, liereby assigns unto the said C. D. All the personal estate of or belonging or due to the debtor (except (z) the debtor's tools of trade (if any) and the necessary wearing apparel and bedding of himself and his family), To HOLD the same unto the said C. D. (hereinafter referred to as " the trustee ") and subject to the trusts and conditions hereinafter contained. 2. The trustee shall as soon as conveniently collect, get in, and sell the same, and out of the net moneys to arise thereby in the first place pay all costs, charges, and expenses of and incidental to tlie investigation of the affairs of the debtor with a view to the arrangement intended by these presents, and of and incidental to the ])reparation of these presents and procuring the signa- tures or assents of the creditors thereto, and all rates, taxes, wages, and other similar claims (if any) which [z] If the debtor be possessed of shares in public companies on which calls are likely to be made, they may be excepted, see p. 76 n. {d). Deed <>f Assiiimiicni oj' ri'i'sanul l\si(it,'. 97 would be payable in full or iu priority in bankruptcy, Prec. IV. and subject as aforesaid, and to the payment of all costs, expenses, and sums of money -which may for the time being be incurred or payable iu the course of the carrying out the trusts and provisions of these presents, Upon trust to pay and discharge rateably according to and divide tlie law of bankruptcy {a) and without preference or credrtors priority and by sucli dividends as the trustee shall think fit, the debts due from the debtor to the creditors and to pay the surplus (if any) of the said moneys to the and pay debtor, his executors, administrators, or assigns. doMoT *° 3. [Proviso for verification of debts. 4. Poiver to compromise debts due to debtor and to arrange with mortgagees as in Precedent /.] 5. It shall be lawful for the trustee in his discretion Power to to employ any person or persons to assist him in winding ^^^ ^^-^ up the affairs of the debtor, and collecting, realizing, niunerate and distributing the trust estate under these presents, ^nd other and to pay out of the trust estate to such person or Persons. persons such salary or remuneration as he shall think fit, and to pay thereout to the debtor, either weekly or otherwise, sucli sum (not exceeding £ per week) as subsistence money for himself and family, and such further sum (not exceeding £ per week) in con- sideration of his services if engaged in winding up the estate, as tlie trustee shall from time to time think fit. 6. The said C. D., or any future trustee who may be Trustee an accountant, shall be entitled from time to time to accoSnt- be paid or retain out of the moneys in hand such sum ^^^ ^^'^y 1 n ,1 ■ n be paid for or sums by way of reasonable remuneration for any services, services rendered by him as an accountant in reference to the trust estate as according to the custom of the profession of public acc(»untants he would have been entitled to be paid had he not been a trustee {h). {a) See note on p. 77. used except where the trustee is (6) This clause must not be an accountant. D.A. 7 i)8 Precedents. Prec. IV. Power to bring or defend actions and settle disputes. lielease of debts. Power to settle with dis- sentient creditors. 7. It sliall l)e lawful for the trustee in his discretion to bring, prosecute, defend, compromise or ahandon any action or other proceeding in reference to the trust estate or any part thereof, and to settle and adjust all (juestions and disputes which now exist or may arise in reference to the said estate or any part thereof by arbitration or in any other mode which may be agreed upon between the trustee and such disputants or disputant (c). 8. \^Pov)cr of attornei/ ax in Precedent /.] 9. In consideration of the assignment hereinbefore contained the creditors do hereby respectively release and discharge the debtor from all debts due from him to the creditors respectively and from all actions, pro- ceedings, claims and demands in respect thereof. 10. [^Proriso as to sureties and securities. 11. Poiver to ajjpoint nexo trustees or an additional trustee (d). 12. Col/ meetings. 13. Remove trustee. ~\ 14. If the trustee and any one or more of the creditors whose debt or debts represents or represent at least one-sixth part of the entire indebtedness of the debtor shall be of opinion and certify that it is expedient to pay in full or otherwise than by dividends under these presents any creditor or creditors who shall decline to execute or assent to these presents, the trustee shall pay or settle with such creditor or creditors in accordance with such certificate (e). In AYitness, &g. Schedule. (c) If shares on which calls are liable to be made are excepted from the assignment, see note on p. 76, and insert trust accord- ingl\\ (d) See Precedent 1. ; but, there being no committee, the power to a|ii)()iut new trustees or an addi- tional trustee should bo made exerciseable by " a majority in number representing three-fourths in value of the creditors whose respective debts amount to 10/. or upwards." (c) As to the propriety of this clause, see ante, p. 37. Deed of I iispectorskip by Partner ■^. 99 V. Deed of Inspectorship hctiuecu Partners and their joint and separate Creditors where the husiness is to he carried on(f). THIS INDENTURE made the day of , Between A. B. aud C. D. both of merchants and Parties co-partners (hereinafter called " the debtors ") of the first part, E. F. of &c., G. H. of &c., and I. K. of &c., l_i/ispecfors] of the second part, and the several persons, tirms aud companies (being creditors of the debtors or of one of them) whose names and seals are set and affixed in the schedule hereto, or who shall otherwise in writing assent to these presents, and who are hereinafter called " the creditors," of the third part. Whereas the debtors have for some time past carried Recital of on the trade or business of merchants at ■ in of*in°^^ partnership, under the style or firm of , and, spector- having in the course of such business and otherwise l)ecome indebted in divers sums which cannot at once be paid in full, they liave proposed to provide for the gradual liquidation of their debts as far as possible by the carrying on (g) of their said business and the collection and realization of their joint and separate estates under the inspection and control of the parties hereto of the second part (who and the survivors and survivor of them, and the inspectors or inspector foi- the time being acting under these presents, aiv and is hereinafter called " the inspectors or inspector "). (j) As to stamp, scejws^ p. 15S. winding up, the words "winding (i\s////> by Parfi/ers. lUo papers, vouchers or writings in the custody or power of Prec. v. the debtors, or either of them, relating to the said trade or business or the said estate or any part thereof. 8. The debtors will not during the continuance of this Not to inspectorship either alone or in conjunction with any laew'busi- other person or persons become engaged in or undertake ^^^^^ ^^• any new trade or business, or become bound for or be bail or security for any person or persons, or revoke the power of attorney hereinafter contained, or do or execute or be party or privy to any act or deed by means whereof the objects of these presents shall or may be l\indered or obstructed, 9. It shall l»e lawful for the inspectors or inspector to Power for inspectors employ or authorize the employment ot any person or to employ persons to assist in the carrying on [or winding up] of assistants, the said business, or the collection, realization and liquidation hereby contemplated, and to pay out of the and pay , salaries said estate to any such person or persons as wages or ^nd allow- salary, and also to the debtors respectively, as a remu- ^"J^^^° neration for services rendered, or for subsistence money for themselves and their families, such sums of money as the inspectors or inspector shall from time to time think fit. 10. Any inspector who may be an accountant shall be inspector entitled I'rom time to time to be paid, or retain out of the ,^l^^l^^^. moneys in hand, such sum or sums by way of reasonable ant mav '' . 1111- be paid for remuneration for any services rendered by liim as an services. accountant in reference to the trust estate as according to the custom of the profession of public accountants he would have been entitled to l)e paid had he not been an inspector (/). 11. All the moneys which shall come to the hands or Appiica- under the control of the inspectors or inspector in the ^^^^°^^ course of the inspection shall be applied by or under the realized, direction of the inspectors or inspector in the first place (I) This clause must not be used except where an accountant is an inspector. 104 Precedents. Free. V. Rules ill bank- ruptcy to prevail. Moneys and secu- rities to 1)6 placed in bank. ill payment of all the current expenses necessarily incurred in the carrying on of the business, including therein all rents, rates, taxes, assessments, interest on mortgages and other necessary outgoings ; secondly, in payment of all expenses of and incidental to the carrying (nit of tliese presents and of the exercise of any of the powers thereof, including the out-of-pocket expenses of the inspectors and such sums by way of remuneration as the creditors may l)y resolution authorize; thirdly, in payment to the debtor weekly of such sum as the inspectors may think lit by way of maintenance for himself and family ; fourthly, in payment rateably to all the creditors of their respective debts with interest and without preference or priority at such times and in such manner as the inspectors shall determine ; and lastly, if there be any surplus in payment of such surplus to the debtors respectively, or their respective executors, administrators or assigns, according to their respective rights and interests. 12. In tlie administration and distribution of the joint and separate estates of the debtors under these presents the inspectors or inspector shall follow, and the creditors and the debtors shall liave the beneiit of, and be bound by, the rules, riglits and equities which prevail in the administration of joint and separate estates in bank- ruptcy, and that if any case should arise in the course of this inspection having reference to the said estate, or any part thereof, which shall appear to the inspectors or inspector not to be sufficiently provided for by these presents, the inspectors or inspector shall follow the law and practice of English l)ankruptcy in like cases. 13. The inspectors or inspector shall from time to time pay into and deposit in the Bank in their or his names or name to the account of " & Co., in liquidation," or to such other account as they or he sliall tliink fit, all moneys, Ijills, notes, cheques and other negoliaVilc instruments and securities for money Deed of I aspect or ship hij Partners. 105 (forming part of the said estate) which shall come to Prec v. the hands or under the control of the inspectors or inspector in the course of this inspection, and such account shall be drawn upon in such manner as the inspectors or inspector shall from tim.e to time direct. 14. The inspectors or inspector shall from time to Inspectors time, when and as often as the moneys in hand shall dividends, in their or his opinion be sufficient for the purpose (after allowing for current expenses), declare and pay- rateable dividends to the creditors respectively on account of their respective debts ; but the amount of every such dividend, and ihe mode and place of payment thereof, shall be in the discretion of the inspectors or inspector. 15. In case anv dividend or dividends as aforesaid shall and may 1- • 1 1 11 11 i"etaiu be declared before the amount of divulend payable to ail yu^ to the creditors on their respective debts shall have been Jg^J^^^^^ ascertained, the inspectors or inspector shall retain a ascer- sufficient sum or sums for the purpose of paying a like ^"^^"^ • rateable dividend to any creditor or creditors the amount of dividend payable on whose debt shall not have been ascertained, and shall afterwards pay such dividend to such creditor or creditors as soon as the amount of dividend payable on his or their debt shall have been ascertained ; or, in case no such retention shall have been made by the inspectors or inspector, they or he shall out of the moneys from time to time in hand (after deducting or allowing for current expenses) pay to such creditor or creditors as soon as the amount of dividend payable on his or their debt shall have been ascertained, a rateable dividend or dividends on the amount of such debt or debts before any further dividend shall be paid to the general body of creditors, but so as not to disturb any dividend or dividends which may previously have been paid to the general body of creditors {m). 16. It shall be lawful for the inspectors or inspector Power of , J , . nispectors to bring, prosecute, compromise or defend, or authorize to bring or defend (m) This proviso will probably not often be required. actions, JUG Precedents. Free V. to sell, to coin- pound debts and settle dis- putes. Verifica- tion of claims. tlic biiiigiun', pro-seciition, compromise or defence <»f any action or otlier proceeding in reference to the said trade or business, or to tlie said estate or any part thereof, or to these presents. 17. It shall be lawful for the inspectors or inspector to sell or authorize sales of the said estate or any part thereof to any person or persons, either by public auction or private contract, or partly in either mode, upon such terms and subject to such conditions, and generally in such manner as they or he shall think fit, and to buy in the property or any part thereof at any sale by auction, and to alter or rescind any contract for sale and resell without being responsible for any consequent loss. 18. it shall be lawful for the inspectois or inspector to give time for the payment of any debt or debts owing to the debtors or either of them, and to accept payment tliereof by instalments, composition, or otherwise, and to abandon any debt or debts which they or he the inspectors or inspector shall consider bad, and to settle any question or dispute which now exists or may arise in reference to the said trade or business or the said estate by arbitration, opinion of counsel, certificate of accountant, or by way of special case submitted for the opinion of any court of competent jurisdiction, or in such other way as mav be agreed upon between the inspectors or inspector and such disputant or disputants. 19. It shall be lawful for the inspectors or inspector to require any person or persons claiming to be a creditor or creditors of the debtors or either of them (notwith- standing that such person or persons may have executed or assented to these presents, and that the amount or supposed amount of his or their debt may be inserted in the schedule hereto) to verify the nature and amount of such debt or claim, with particulars sliowing the con- sideration for the same, by statutory declaration (but Deed of IitsfHU-lor.slitp hi/ J. 'miners. 107 nevertheless this power shall not be exercised unless the Prec. V. inspectors or inspector shall entertain reasonable donbt powcr to in respect of any debt), and also to make such arrange- ^^^Sort- ments as the inspectors or inspector may think expedient gagees. with any creditor or other person or persons holding any portion of the said estate by way of mortgage, pledge or lien, in order to redeem, discharge, or transfer such mortgage, pledge or lion, or to release the equity of redemption thereof, 20. These presents shall not prejudice or affect the Kcser%a- rights or remedies of any of the creditors against any eights surety or sureties or any person or persons other than ^^ainst^ the debtors respectively, or their respective heirs, execu- tors, or administrators ; and all such rights and remedies are hereby expressly reserved. 21. These presents shall not prejudice or atfect any ^J.^^^^^^^^^^^ security which any of the creditors may have or claim for his debt; but, nevertheless, if such security be of such a nature that the creditor holding or claiming the same would by the law of bankruptcy be bound to realize the same or deduct the value thereof before proving his debt in bankruptcy against the estate on which such security is held {n), then and in that case such creditor (unless he shall give up such security) shall be entitled to receive dividends out of such estate under these presents on so much only of his debt as may remain after such security shall have been realized or credit given for the full value thereof, such value to be agreed upon between the secured creditor and the inspectors or inspector, or in case of dispute to be ascertained by two impartial valuers (one to be chosen by the secured creditor and the other by the inspectors or inspector), or by an umpire to be named by sucli valuers, l^efore proceeding to the valuation. 22. The debtors herebv joiutlv and sevtnallv covenant Covenant • 1 , . ^ • ' ' 11/ » by debtors with the inspectors or inspector and also (as separate to assign (n) See p. 95, note (.)). 108 Prn-edents. Prec. V. covenants) witli the creditors respectively that, if at any estate it ^^"^^ during the continuance of this inspectorship the required, inspectors or inspector shall, in order to carry out more advantageously for the creditors the liquidation intended to be provided for by these presents, require the debtors by notice in writing, signed by the inspectors or inspector, and left at the place of business of the debtors or at their respective places of abode, to execute an assignment of all the said estate or of so much thereof as may remain undisposed of, then the debtors or their respective heirs, executors or administrators, will forthwith, at the expense of the estate 1)}" all proper assurances and acts, convey, assign, and deliver up to the inspectors or inspector, or to any trustees or trustee nominated by the inspectors or inspector, all the said estate (including all the stock- in-trade, fixtures and chattels which may then be belong- ing to and all debts wliich may then be owing to the said upon trust business and the goodwill thereof). Upon trust that the leaHzatTon same may, with as little delay as the circumstances will anddivi- admit, be got in and realized and the proceeds thereof among applied (after payment of all costs, charges, expenses, creditors. ^^^^ sums of money which may be properly payable under these presents and may be then unpaid) in or towards the payment of so much of the debts due to the creditors as shall then remain unpaid according to their respective rights and interests in manner aforesaid. And the deed or deeds of assignment to be executed in pursuance of such covenant as aforesaid shall contain all such covenants, powers and provisions as the in- spectors or inspector shall approve (o). Power of 23. In further pursuance of the said agreement ami attorney. ^^^ consideration of the premises the debtors do and each of them doth hereby appoint the inspectors or inspector, the attorneys and attorney of them the debtors, and each of them in their and eacli of their names or otherwise (o) As to delivering a deed of of having a covenant to assign assignment as an escrow instead see ante, p. 54. Deed of Jits/jerfors////i Ay Partners. 109 to ask, demand, sue for, recover, and receive all or Prec. V. any part of the said estate and to give effectual receipts and discharges for the same, and also in their and each of their names and as their and each of their act and deed or otherwise to execute (j)), sign, seal and deliver any such deed of assignment as aforesaid and all other necessary or proper deeds and documents for carrying into effect any of the powers, covenants and provisions of these presents, and for all or any of the purposes aforesaid from time to time to appoint any substitute or substitutes. 24. In further pursuance of the said agreement and Release in consideration of the premises the creditors hereby 0^^®^*°'^- respectively covenant with the debtors respectively that, if and when the inspectors or inspector shall by \vriting under their or his hands certify that (7) the debtors have made such assignment of the said estate as is hereinbefore mentioned (which certificate the inspectors or inspector shall be bound to give immediately on such assignment being made), then and in sucli case (r) and immediately upon such certificate being given the debtor and each of them, and their respective heirs, executors, and administrators, shall be thenceforth absolutely released and discharged from the said debts due from them or either of them to the creditors respectively, and these presents shall accordingly thereafter operate and be pleadable as a defence to any action or other proceeding which the creditors respectively, or their respective heirs, executors or administrators, shall have at any time theretofore brought, instituted, or taken, or might at any time thereafter bring, institute, or take, against the debtors {p) This will prevent a possible winding up, realization, and liqui- deadlock if the debtors should dation provided for by these pre- refuse to sign the deed of assign- sents has as far as possible been ment. concluded, or that." (2) Where the business is to he (/) Say " In either of such cases" carried on with a view only to if the clause in note (r;) is inserted. being wound up, insert here, " the Precedents. Free. V. i^owci' for inspec- tors, to determine licence on resolu- tion. or on bank- ruptcy o£ debtors or issue of execution. or eillier of them, or their respective heu'S, executors, or administrators, for or on account of such respective ae])ts. 25. If the inspectors or inspector shall at any time during the continuance of the inspection be dissatisfied with the conduct of the debtors or either of them in relation to these presents, they or he the inspectors or inspector may call a meeting of the creditors whose respective debts amount to £10 or upwards, by circular letter, stating the time, place and object of the meeting, and sent by post or otherwise to the last-known place of abode or business in l^iUgland of such creditors respectively, or their respective agents, in time to giv(^ to such creditors or agents seven clear days' notice of such meeting, and if at such meeting a majority in number representing three-fourths in value of the creditors present or represented thereat shall resolve that the debtors or eitlier of them have or has in their opinion wilfully broken or failed to comply with any of the covenants or agreements herein contained, and on their or his part to be observed and performed, and that such breach or failure will in the opinion of such majority materially interfere with the further progress of the inspection, or if during the continuance of this inspection the debtors or either of them shall be adjudicated bank- rupts, or a receiving order shall be made against them or either of them, or if during such continuance any execution or other jirocess of law shall be issued and enforced against the debtors or either of them, or their or either of their estate and effects, so as in the opinion of the inspectors or inspector to interfere materially with the arrangement hereby contemplated, then and in any of such cases it shall be lawful for the inspectors or inspector by writing under their or his hands to declare these presents at an end, and thereupon these presents shall cease and determine (but without prejudice to anything lawfully done hereunder), and the creditors Deal of Iiispn-fors//ii> />// Partiurs. Ill respectively shall tlienceibiLli be at liberty to sue for or ^'""J^- prcwe for the full amount of their respective debts or claims, except so far as they may have previously received tlie same under these presents or otherwise. 26 U the inspectors hereby constituted, or anv <>f I'owei.- to ^ . 1 • , " , appoint them, or any inspectors or inspector to be appointed as ,,ew in- hereinafter provided, shall die or go to reside abroad, ^pcctors. or desire to be discharged from, or refuse or Ijecome incapable or unfit to act in the execution of, the inspector- ship, then and in every such case it shall be lawful for the surviving or continuing inspectors or inspector for the time being (and for this pm-pose every retiring inspector shall, if competent and willing to act in the execution of this power, be considered a continuing inspector) by any deed, or, if the inspectors or inspector shall decline to exercise such power or if there shall be no inspector then living or capable of exercising and willing to exercise such power, then for a majority in number representing three-fourths in value of the creditors whose respective debts amount to £10 or upwards, by any deed, to appoint a new inspector or new inspectors in the place of the inspector or inspectors so dying, or going to reside abroad, or desiring to be dis- charged, or refusing or becoming incapable or unfit to act as aforesaid. And every such new inspector may act in the inspectorship as fully and effectually as if he had been hereby constituted an inspector. 27. If at any time while there shall be more than two Majority inspectors any dispute shall arise between them as to the "^ P"^®^'" exercise of any discretionary power hereby vested in them, the opinion of the majority shall prevail (.s). And the inspectors shall not be answerable for the acts or defaults of each other, or of the debtors or any of them, nor for any loss which may befall the estate under inspection, not arising from wilful default of the inspectors or inspector. {&) Or it may be provided that, summon a meeting of creditors to in case they differ, they shall decide between them. 1 1 -J Precedents. Free. V. Indem- nitv. Power to settle with dis- sentient creditois. 28. It shall he hiwful for the inspectors or inspector to reimburse themselves or himself out of the monies in hand all costs and expenses actually and properly in- curred by them or him in the course of the inspectorship. 29. If a majority in value of tlie creditors present or represented at a meeting called by the inspectors or inspector in manner aforesaid shall resolve that in their opinion it is expedient to pay in full or otherwise than by dividends under these presents any creditor or creditors who shall decline to execute or assent to these presents, the inspectors or inspector shall pay or settle with such creditor or creditors in accordance with the said resolution (f). In witness, &c. SCHEDULE. Part 1. — Joint Creditors. „ 2. — Separate Creditors of A. B. „ 3, — Separate Creditors of C. D. (i) See note, at end of Precedent T., on p. 84. Deed of Lin^pcrturslup hij one Dehtor. 113 VI. Deed of Inspectorship between one Debtor and his Creditors where the Business is to he wound up. THIS INDENTUKE made the day of Between A. B. of (hereinafter called " the debtor") Parties. of the first part, E. F. of &c., G. H. of &c. and I. K. of &c. [inspectors'] of the second part, and the several persons, firms and companies (being creditors of the debtor) whose names and seals are set and affixed in the schednle hereto, or who shall otherwise in writing assent to these presents, and who are hereinafter called " the creditors," of the third part. WiiEKEAS the debtor has for some time past carried Recital of on the trade or business of at and, having o[°i^spec. in the course of siich liusiness and otherwise become toi-ship, indebted in divers sums which cannot at once be paid in full, he has proposed to provide for the gradual liquida- tion of his debts as far as possible by the winding-up of his said business and the collection and realization of his estate under the inspection and control of the parties hereto of the second part (who and the survivors of them and the inspectors for the time being acting under these presents are hereinafter called " the inspectors "). And whereas the creditors have agreed to accept the and said proposal : NOW THIS INDENTURE WITNESSETH {u) as follows : — 1. In pursuance of the said agi-eement, and in con- Letter of sideration of the covenants and agreements hereinafter JrTditort'o contained, and on the part of the debtor to be observed debtor to and performed, The creditors hereby respectively grant business [n) Sec note (i), p. 100. D.A. R accept- aacf. 114 Precedentfi. Free. VI. ^mto the debtor free and absolute liberty and licence henceforth to conduct, manage and wind up his said trade or business, and to collect, get in, realize and dispose of all the real and personal estate of or to which he is now seised, possessed or entitled under the inspection, and subject to the approbation, direction and control of the inspectors (v), until the said debts shall have been fully paid or the debtor shall ha^'e obtained his release under these presents, or until these presents shall become void by virtue of the provisions hereinafter in that behalf contained. Creditors 2. In further pursuance of the said :igreement and for in°the ^^^ ^^^ considerations aforesaid the creditors hereby respec- mean- tively Covenant with the debtor tliat they the creditors respectively will not during the continuance of the said letter of licence sue, attach, impede or molest the debtor, his heirs, executors or administrators, estate or effects, for or in respect of any debt or demand provable or claimable under these presents, and that these presents may be pleaded or given in evidence as a defence and answer to any action or other proceeding which may be brought, instituted or taken by or on Ijelialf of any of the creditors against the del)tor or Ids estate in breach of this covenant. Covenants 3. In further pursuance ol' the said agreement, and in to wind up consideration of the letter of licence hereinbefore con- business tained and of the covenants on the part of the creditors and realize . • ^ y ^ ^ ^ ^ -11 estate herein contained, the debtor hereby covenants with the undercon- inspectors aiid also (as a separate covenant) with the spectors, creditors respectively thai he the debtor will at all times during the continuance of this inspectorship use and exert his best and utmost endeavours under and subject to the directions, control and advice of the inspectors to conduct, manage and wind up the said trade or business and to collect, get in, realize and dispose of all the real and personal estate of or to which he is now seised, {v) See note {k), p. 100. Deal of I nsp*ictorHiiip In/ one Dehtor. I 1 5 possessed, or entitled (hereinafter called " tliesaid estate ") Prec vi. witli a view to the payment of the creditors. And will for the purposes aforesaid or any of them, and at the expense of the said estate, bring, institute, take, adopt, defend, compromise or abandon all such actions, pro- ceedings or measures, and execute and sign all such deeds and documents as the inspectors may require, and moreover that the debtor will not at any time during the continuance of this inspectorship dispose of, pledge or incumber the said estate or any part thereof without the consent in writing of the inspectors, or give credit to any person whom the inspectors shall have forbidden him to trust, nor wilfully do or suffer to be done any act or deed by means whereof any of the creditors may obtain any undue preference or advantage over any othej- or others of them. 4. The debtor will, when required by the inspectors so and to to do, from time to time during the continuance of this ^^^"^ ° proper inspectorslii]) keep proper books of account relating to books of the said trade or liusiness and the said estate [add from '^*^'-'°^"*^- Precedent V. remainder of covenant as to keeping hooks — 5. To allow uispcctors to examine same. — 6. Not to ea.rnj on new business']. 7. It shall ])e lawful for the inspectors to employ or Power for authorize the employment of any person or persons to '"^pcctors assist in the winding-up of the said business or the assistants, collection, realization and liquidation] hereby contem- plated, and to pay out of the said estate to any such and pay person or persons as waives or salary and also to the '^'^^'"■^^s \ , si'ia allow- debtor as a remuneration for services rendered or for imcc to subsistence money for himself and his family, such sums '^^^'"^■'^• of money as the inspectors shall from time to time think fit. 8. All the moneys which shall vnma to the hands or :\ronoys under the control of the inspectors in the course of the Z'^uJ'^'^ inspection shall be applied by or under the direction of applied iu the inspectors in the first place in payment of the costs ofcost^ 1 1 r» Precedents. Free. VI. and expenses of and incidental to the investigation of tlu" and ex- affairs of the dehtor with a view to this arrangement, and penses, ^,f .^^^ incidental to the preparation of these presents, and pre- ^ ^ '■ ferontial and procuring the signatures or assents of the creditors claims, thereto, and all rates, taxes, wages and other similar and sub- claims (if any) which woukl he payable in full or in to in pay- priority in bankruptcy, and subject as aforesaid, and to ment of ^hc payment of all costs, charges, expenses and sums of money which may for the time being be incurred or payable in carrying out an}'" of the powers and provisions of these presents, in or towards payment rateably, according to the law of bankruptcy, and without pre- ference or priority, and by such dividend or dividends as the inspectors shall think fit, of all the debts due from the debtor to the creditors, and if there shall be any surplus of the said moneys, such surplus shall belong to the debtor, his executors, administrators or assigns. Moneys 9. The inspectors shall from time to time pay into and rities^to^'e deposit in the Bank in their names and to such placed in account as they shall think fit all moneys, bills, notes, cheques, and other negotiable instruments and securities for money (forming part of the said estate) which shall come to the hands or under the control of the inspectors in the course of this inspection, and such account shall be drawn upon in such manner as the inspectors shall from time to time direct. Powers of 10. It shall be lawful for the inspectors to bring, luppectors pjQsecute, compromise or defend, or authorize the bring- or defend ing, prosecution, compromise, or defence of any action ' ' or other proceeding in reference to the said trade or business or to the said estate or any part thereof, or to to sell, these presents, or to sell or authorize sales of the said estate or any part thereof to any person or persons, either by public auction or private contract or partly in either mode, upon such terms and subject to such con- ditions, and generally in such manner as they shall think fit, and to buy in the property or any part thereof at any Di'cd of LispCA-torshiij bj one Debtor. 117 sale by auction, and to alter or rescind any contract for Prec. VI. sale and resell without being responsible for any con- ^nd to sequent loss; and also to give time for the payment of IJ^^^P^^'JJJ^ any debt or debts owing to the debtor and to accept settle payment thereof by instalments, composition, or other- ^^^^ ^^" wise, and to abandon any debt or debts which they, the inspectors, shall consider bad, and to settle any question or dispute which now exists or may arise in reference to the said trade or Ijusiness or the said estate by arbitra- tion, opinion of counsel, certificate of accountant, or by way of special case submitted for the opinion of any court of competent jurisdiction, or in such other way as may be agreed upon Ijetween the inspectors and such disputant or disputants. 11. It shall be lawful for the inspectors to require any Verifica- person or persons claiming to be a creditor or creditors daim. of the debtor (notwithstanding that such person or persons may have executed or assented to these presents, and that the amount or supposed amount of his or their debt may be inserted in the schedule hereto) to verify the nature and amount of such debt or claim, with particulars showing the consideration for the same by statutory declaration (but nevertheless this power shall not be exercised unless the inspectors shall entertain reasonable doubt in respect of any debt), and also to Power to . airauge make such arrangements as they the inspectors may ^ith think expedient with any creditor or other person or ^°'^*' persons holding any portion of the said estate by way of mortgage, pledge, or lien, in order to redeem, discharge or transfer such mortgage, pledge or lien, or to release the equity of redemption thereof. 12. These presents shall not prejudice or affect the Reserva- rights or remedies of any of the creditors against any i-jghts surety or sureties or any person or persons other than against the debtor, his heirs, executors or administrators, and for the sake of conformity alone the debtor, his heirs, executors or administrators, may be joined in any action 118 Precedent f<. Free VI. Secured creditors Covenant by debtor to assign estate if required, upon trust for speedy realiza- tion aiKl division among creditors. or other proceedinr; to be broiiglit, instituted, or taken by any of the creditors against such surety or sureties or other person or persons. 13. These presents shall not prejudice or affect any security which any of the creditors may have or claim for his debt, but nevertheless, if such security be of such a nature that the creditor holding or claiming the same would, by the law of bankruptcy, be bound to realize the same or deduct the value thereof before proving his debt in bankruptcy against the said estate, then and in that case such creditor (unless he shall give up such security) shall be entitled to receive dividends under these presents on so much only of his debt as may remain after such security shall have been realized or credit given for the full value thereof, such value to be agreed upon between the secured creditor and the inspectors, or in case of dispute to be ascertained by two impartiiil valuers (one to be chosen by the secured creditor, and the other ])y the inspectors), or by an umpire to be named by such valuers before proceeding to the valuation. 14. For the consideration aforesaid the debtor hereby covenants with the inspectors that, if at any time during the continuance of this inspectorship the inspector shall, in order to carry out more advantageously for the creditors the liquidation intended to be provided for by these presents, require the debtor, by notice in writing signed by them, and left at the place of business or abode of the debtor, to execute an assignment of all the said estate, or of so much thereof as may remain undis- posed of, then the debtor will forthwith at the exj^ense of the estate by all proper assurances and acts convey, assign and deliver up to the inspectors, or to any trustee nominated by the inspectors for the purpose, all the said estate, upon trust that the same may, with as little delay as the circumstances will admit, be got in and realized and the proceeds thereof applied (after payment of all costs, charges, expenses and sums of money which may Uecd of [itsj)ect(>rsh'ij> Uij one Dehfu)-. • 110 be properly payable under these presents and may be- Prec. vi. then unpaid) in or towards the payment of so mucli of the debts due to the creditors as shall then remain unpaid accordin^^- to their respective rights and interests in manner aforesaid, And the deed of assignment to be executed in pursuance of such covenant as aforesaid shall contain all such covenants powers and provisions as tlie inspectors shall approve. 15. In further pursuance of the said agreement, and Power of in consideration of the premises, the debtor doth hereby constitute and appoint the inspectors and each of them the true and lawful attorneys and attorney of the debtor in his name or otherwise to ask, demand, sue for, recover and receive all or any part of the said estate and to give effectual receipts and discharges for the same, and also in his name and as his act and deed or otherwise to execute {w), sign, seal and deliver any such deed of assignment as aforesaid and all other necessary or proper deeds and documents for carrying into effect any of the powers, covenants and provisions of these presents, and for all or any of the purposes aforesaid from time to time to appoint any substitute or sub- stitutes. 16. In further pursuance of the said agreement, and Provisions in consideration of the premises, the creditors hereby o^debtor respectively covenant with the debtor that, if and when the inspectors shall by writing certify that the winding-up realization and liquidation provided for by these presents has as far as possible been concluded, or that the debtor has made such assignment of the said estate as is hereinbefore mentioned (which certiticate the inspectors shall be bound to give immediately on such assignment being made), then and in either of such cases, and immediately upon such certificate being given, the debtor shall be henceforth absolutely released and discharged from the said debts due from him to the creditors {w) .See note [p], on p. lUi). 120 Precedents, Prec. VI. respectively, and these presents shall accordingly thereafter operate and be pleadable as a defence and answer to any action or other proceeding which the creditors respectively or their respective heirs, executors or administrators shall have at any time theretofore brought, instituted or taken, or might at any time thereafter bring, institute or take against the debtor ior or on account of such respective debts. Power for l^. If the inspectors shall at any time during the iDspec- continuance of the inspection Ije dissatisfied with the determine conduct of the debtor in relation to these presents, they (leed if j-j^g^y gg^jj .^ meeting of the creditors whose respective by rcso- debts amount to 10/. or upwards by circular letter, and, cred'itors ^^ ^^ sucli meeting a majority in number representing at a meet- three-fourths in value of the creditors present or repre- ' sented thereat shall resolve that the debtor has in their opinion wilfully broken or failed to comply with any of the covenants or agreements herein contained and on his part to be observed and performed, and that such breach or failure will in the opinion of such majority or upon materially interfere with the further progress of the bank- inspection, or if during the continuance of this inspection ruptcy of 1 11 , 1- T • - debtor or the debtor shall be adjudicated bankrupt or a receiving order shall be made against him, or if during such continuance any execution or other process of law shall be issued and enforced against the debtor or his estate, so as in the opinion of the inspectors to interfere materially with the arrangement hereby contemplated, then and in any of such cases it shall be lawful [^rcmaindiir of clause determining the deed, and remain- ing clauses, adapted from Precedent F".]. In witness, &c. Schedule. i>sue of execution. Deal of Coiiipusltlon l>y PurtiKtrs. 121 VIL Deed of Composition hehoecn Partners and their Joint Creditors, vjifh Covenant not to sue (x). THIS INDENTURE made the day of Between A. B., C. D. and E. F. all of ^ , trading Parties. in partnership under the style or firm of A. B. & Co., and hereinafter called " the debtors," of the one part, and the several persons, firms and companies (being creditors of the debtors in respect of their said partnership) whose names and seals are set and affixed in the schedule hereto, or who shall otherwise in writing assent to these presents, and who are hereinafter called " the creditors," of the other part. "Whereas at a meeting of the creditors held on the Recital of day of last a resolution was passed to the for acJept- ^•ffect that the creditors should accept a composition ance of . composi- of five shillings in the pound upon the amount and in tion, full discharge of their respective debts due from the debtor and set out in the said schedule, such composition to be payable in two equal instalments at the respective periods of three calendar months and six calendar months from the day of . And whereas in pursuance of the said resolution the and of de- debtors have delivered to the creditors respectively upon promis" their respective execution of these presents the joint ^°''^j.g'^°'^®'' promissory notes of the debtors for payment of the tors. said composition to the creditors respectively by the instalments and at the times in the said resolution mentioned. NOW THIS INDENTURE WITNESSETH as follows : — (x) As to stamp, see post, p. 158. I 2l' Precedents. Prec. VII. 1. In I'Lirtliei' piu-siuince of the said resolution, and in Coveuant Consideration of the premises, the creditors hereby bycredi- i-espectivolv covenant witli tlie debtors that they the tors not to ^ , • '' sue unless creditors respectively will not, unless defaidt shall be madein uiade in meeting any of the said notes at maturity, meeting g^e, arrest, attach or molest the said del)tors or any of notes ; , , . ,. , • c them, or their or any ot tiien- estate, lor or on account of the said respective debts, and that these presents may be pleaded or given in evidence as a defence to an}' action or other proceeding which may be brought, insti- tuted or taken by or on behalf of any of the creditors against the debtors or any of them, or their or any of their estate, in breach of this covenant, debtors 2. If the said notes shall be paid at maturity, the to be re- t i p leased on debtors shall be absolutely released and discharged irom ofnotes!^ ^^1^ s^id debts due from them to the creditors respectively, and these presents may accordingly thereafter be pleaded or given in evidence as a del'cnco to any action or other proceeding which they the creditors respectfully shall have at any time theretofore brought, instituted (tr taken, or otherwise might at any time thereafter bring, institute or take against the debtors or any of them, or their or any of their estate, for or on account of such respective debts. Revival of 3. in case default shall be made in meeting any of the debts if j^.^^j notes at maturity, or in case before the said notes notes not '' met or shall bc fully paid to the creditors respectively as afore- ruptcy ^^^^ ^ receiving order shall be made against the debtors, ensues. or they shall present a bankrupcy petition, or shall suffer any process of execution, whether legal or equit- able, or sliall make an assignment of their estate for the lienelit of their creditors, or any arrangement with their creditors different from this present arrangement, then and in any of such cases the covenants on the part of the creditors herein c(»ntained shall be thence- turtli at an end and void, and the creditors shall respectively thenceforth be at liberty to sue for or Deed of Coniposit'uni l>i/ l^rf<. \ 2?> prove for tlie full araount of their respective debts, less the amount wliich may have been recei\-ed by them on account thereof under these presents or otherwise. 4. These presents shall not in auywise prejudice or affect the rights or remedies of any of the creditors against any surety or sureties or any person or persons other than the debtors or their respective heirs, executors or administrators, and sucli rights and remedies are hereby expressly reserved. 5. These presents shall not prejudice or affect any security which any of the creditors may have or claim for his debt, but nevertheless, if such security be of such a nature that the creditor holding or claiming the same would, by the law of bankruptcy, be bound to realize the same or deduct the value thereof before proving his debt in bankruptcy against the joint estate of the debtors, then and in that case such creditor (unless he shall give up his said security) shall be entitled to receive the said composition upon so much only of Ids said secured debt as may remain after such security shall have been realized, or after credit sliall have been given for the full value thereof. In witness, &c. Prec. VII. Kcsofva- tion of rights of creditors against sureties, and in respect of securities. Schedule. 124 Precedents. Parties. Recital of resolution for accept- ance of composi- tion. Covenant to pay composi- tion and costs. VIII. Deed 0/ Composition unth Assignment to secure same, and Release of Debts. THIS INDENTURE made the day of — Between A. B. of &c. (hereinafter called " the debtor ") of the first part, C. I), of &c. and E. F. of &c. (hereinafter called " tlie trustees ") of the second part, and the several persons, firms and companies (being creditors of the debtor) whose names and seals are set and alfixed in the schedule hereto, or who shall otherwise in writing assent to these presents, and who are hereinafter called " the creditors," of the third part : Whereas at a meeting of the creditors held on the day of — it was resolved to accept an offer made by or on l)elialf of the debtor for payment to the creditors respectively of a composition often shillings in the pound upon the amount and in full discharge of their respective debts due from the debtor, and set out in the said schedule, such composition to be paid in two equal instalments at three calendar mouths and six calendar months from the date of the said meeting, and to be secured by the assignment of the estate of the debtor to tlie trustees in manner hereinafter appearing. NOW THIS INDENTURE WITNESSETH as follows : — 1. In pursuance of the said resolution, and in considera- tion of the release on the part of the creditoi's hereinafter contained, the debtor hereby covenants with the trustees and also (as separate covenants) with the creditors respec- tively that he will on or before the expiration of the said periods of three calendar months and six calendar months pay or cause to bo paid to the ti'ustees sufficient money to Deed of Coiiijx'sifloii ir/'fJt Asshjn.ini'nt. 125 meet the respective instalments of composition ])ayable to Prec. viii. the creditors respectively as aforesaid, and will on demand by the trustees at any time after the date of these presents pay to them or as they shall direct all costs (//) and expenses of and incidental t(» the investigation of his affairs, with a view to this arrangement, and of and incidental to the preparation of these presents and obtaininji the signatures or assents of the creditors thereto, and the receipt and distribution of the said composition, And the trustees Trustees shall immediately upon receipt of the said instalments of butc tom- composition pay the same to the creditors respectively position. entitled thereto. 2. In further pursuance of the said resolution and for Assigu- • 1 1 11 1 xj • 1 iiicnt of the considerations aforesaid the debtor as beneficial personal owner hereby assigns to the trustees All the personal Property, estate of or belonging or due and owing to the debtor (except leaseholds {z), household furniture, wearing apparel and bedding) : To have and to receive the said un^i^i ^de- estate unto the trustees upon trust, in the meantime and allow until default shall be made by the debtor in payment ^Jf^'i^'J^ to the trustees of any of the said instalments of composi- same. tion according to the covenant in that behalf hereinbefore contained, to allow the debtor to use, employ, deal with and dispose of the same estate for the purposes of his business, or for such other purposes as the trustees sliall think proper, but subject to the control and supervision of the trustees ; and from and after such default upon trust f'^ default ' *■ to realize, to take possession of, collect, sell and realize the said estate aud apply or any part thereof, and to apply the net proceeds thereof 1'^°^'^'- (after payment of all costs and expenses payable under these presents which may be then unpaid) in or towards immediate payment to the creditors respectively of so {y) In many cases of composi- be, the declaration of trust at tion the costs are provided for p. 80 should be inserted. As to outside the deed. excepting shares on which calls (z) This Precedent is framed on are liable to be made, see note on the assumption that the leaseholds p. 7G. will not be required ; if they should 126 Precedents. Prec. VIII. 'J'fustecs not to in- terfere iu the busi- ness nor l)e ac- countable for loss. If credi- tors re- solve that business be wound up, trust estate to be forth- with realized and di- vided. ]lcleasc of debtor. much of the said conipositiou as shall be then unpaid, and to pay the suritlus (if any) of sucli proceeds, and assign or deliver the remainder of the trust estate, to the debtor, his executors, administrators or assigns. 3. The trustees shall not be bound to interfere witli the debtor in the conduct of his business or dealing with his estate further or otherwise than they shall think necessary or proper, and shall not be in anywise liable or accountable for any losses which the estate may sustain by reason of the acts or defaults of the debtor, but never- theless the debtor shall at all times during the continuance of these presents attend and conform to the suggestions and advice of the trustees. 4. If during the currency of either of the said periods of three months and six months the trustees shall be of opinion that, having regard to the condition and prospects of the business of the delator (whether arising from his mismanagement thereof or otherwise), it would Ite ex- pedient forthwith to wind up the same and realize and divide the estate, they shall call a meeting of the creditors by circular letter stating the time, place and object of the meeting, and sent by post or otherwise to the last known place of al)odc or business in iMigland of such creditors respectively, or their respective agents, in time to give i() such creditors or agents seven clear days' notice of such meeting, and if at such meeting a majority in number representing three-fourths in value of the creditors present or re])resented at the meeting shall resolve that the said l)usiness and estate be wound up and realized, then the trustees shall with all convenient speed proceed to wind up the said business, and to sell, collect and realize the said estate, and shall apply the net proceeds thereof in like manner as if the same had been moneys arising from the exercise of the trust for sale hereinbefore contained. 5. Jn consideration of the premises the creditors hereby respectively I'clease the debtor, his heirs, executors Dei'd of Coiit.pi>-sitioii icllh xis.'^ignnu'ut. 127 and administrators from the said deltts due to lliciu Prec. vili. respectively, and from all actions, proceedings, claims and demands in respect thereof. \Proi:Uo «.s' to sureties and securities, sajjinfi " either of them the said C. D. and E. Y" for " the said C. 1).," and " the said composition " nistcad. of " dividends under these presents " — as in Prccederit T. Poircr to appoint new trustees, suhstitutiiuj '' a majority in number representing three-fourths in value of the creditors whose respective debts amount to 10/. or up- wards " for " the committee " — as in Precedent I.\ In witness, «&c. scheduj.k. 128 Precedents. Parties. Recitals of proposal to pay composi- tion by tbi-ec in- stalments, and to secure same, and of de- livery of promis- sory note IX. Deed of Co.MPOSiriox vjlierc, iKiijnient secured hj Surety and hf Covenants on the 'part of certain Creditors to postpone Payments of their Debts. THIS INDENTURE made &c. Between A. B. of &c. (hereinafter called " tlie debtor ") of the first part, C. D. of &c. \sur(ty] of the second part, tlie several persons, firms and companies whose names and seals are set and affixed in the first schedule hereto of the third part, and the several persons whose names and seals are set and affixed in the second schedule hereto of the fourth part (a). "Whereas the debtor, being indebted to the parties hereto of the third and fourth parts respectively in sums which he is unable to pay in full, lately made a proposal to pay to them a composition of 7s. Qd. in the pound upon tlie amount and in full discharge of their respective debts, by throe equal instalments, at the respective periods of fourteen days, three calendar months and six calendar months from the day oi' . And it was part of such proposal that the said C. D. should secure the payment of the second and third instalments of the said composition to the parties hereto of the third part in manner hereinafter appearing, and that the parties hereto of the fourth part should enter into the covenant hereinafter on their parts contained. And whereas in pursuance of the said proposal the joint and several promissory notes of the debtor and (a) These will generally be tinguished from the ordinary trade private or family creditors, as dis- creditors. Deed of Coiiii>ositloii and Security. 1211 the said C. D. for payment to the respective parties Prec. ix. hereto of the third part of the second and third instal- to trade~ ments of the said composition at the respective periods creditors for second hereinbefore mentioned in that behalf have been delivered and third to the said parties hereto of the third part ui)on their ^^^'^'^y ^ ^ >- ments, respective execution of these presents. XOW THIS INDENTURE WITNESSETH as follows : — 1. In further pursuance of the said proposal, and in Covenant consideration of the release by the parties hereto of the to pav "'^ third part hereinafter contained, the debtor hereby instal- covenants with the parties hereto of the third part respectively that he will pay to them respectively immediately upon the expiration of the period of four- teen days from the day of the first instal- ment of the said composition on their said respective debts. And in further pursuance of the said proposal, and in consideration of the covenants by the parties hereto of the fourth part hereinafter contained, the debtor hereby covenants with the parties hereto of the fourth part respectively that he will pay to them respec- tively upon demand at any time after the expiration of the period of six calendar months from the day of the composition (h) of *ls. Gd. in the pound upon the amount and in full discharge of the debts due to them respectively from the debtor. 2. In further pursuance of the said proposal and for Covenant the considerations aforesaid the said parties hereto of cTedttoi/ the fourth part hereby respectively covenant with the ^o* *° ^ue debtor, and also (as separate covenants) with the said for six parties hereto of the third part respectively, that they the "^o^*^^' said covenantors respectively will not, until the expiration of the aforesaid period of six calendar months, sue, attach or molest the debtor or his estate for or on account of the debts due to them respectively from the debtor, or receive or attempt to procure payment (b) This payment will be made in one sum, and not by instalments. D.A. 9 mo Precedents, Piec. IX. on pay- ment of composi- tion to family creditors, debtor to be released from their debts. Release by trade creditors. Tf compo- sition not paid to trade creditors or bank- ruptcy proceed- ings en- sue, all the debts to revive. of their said debts or any part thereof by composition ( ir otherwise or take any security for the same. 3. Tf and when the said composition shall l)e duly paid to the said covenantors respectively, according to the covenant by the debtor in that behalf hereinbefore contained, then and immediately upon such payment l)eing made the debtor shall be absolutely released from the said debts due to the said c(wenantors respectively, and these presents shall accordingly thereafter operate and be pleadable as a defence and answer to any action or other proceeding which the said covenantors respec- tively or their respective heirs, executors or administrators shall have at any time theretofore brought, instituted or taken, or otherwise might at any time thereafter bring, institute or take against the debtor or his heirs, executors or administrators for or on account of such respective debts. 4. in further pursuance of tlie said proposal and in consideration of the premises the said parties hereto of the third part hereby respectively release and discharge the debtor, his heirs, executors and administrators from the said debts due to them respectively, and from all actions, proceedings, claims and demands in respect thereof. 5. If default shall be made in payment of the said first instalment of the said composition according to the covenant in that behalf hereinbefore contained or in meeting any of the said notes at maturity, or in case before the said instalment and notes shall be fully paid to the said parties hereto of the third part respectively as aforesaid a receiving order shall be made against the debtor, or he shall i)resent a bankru})tcy petition, or make an assignment of his estate for the benefit of his creditors, or any arrangement with his creditors different from this present arrangement, then and in any of such cases the release and covenants on the part of the creditors herein contained sliall 1)e tlienceforth Deed of Composition and Secwity. 131 at an end and void, and all the creditors parties Prec. IX. hereto (c) shall respectively thenceforth be at liberty to sue for or prove for the full amount of their respective debts, less the amount which may have been received by them on account thereof under these presents or otherwise, but nevertheless this clause shall not release liie last Dl'GCGCl- the said C. D. {d) from liis liability in respect f)f the i^g clause said notes. "°^ *^" release [Proy/.so an to sitreties and securities, omitting the words, surety. " and the release hereinbefore contained," and saying " the said composition " instead, of " dividends under these presents," a>i in Precedent I.] In witness, &c. First Sghedulp:. Second Schedule. (c) It seems right that, if the (tZ) This proviso is often inserted, composition is not paid to the to prevent collusion between the trade creditors, and their debts debtor and surety : but of course revive, the family creditors should there may be cases where the also be set free. surety will object to its insertion. 132 Precedents. X. Deeh of Composition hij IJchlor and Surc/ies fo paij a Composition to a Trustee for the Creditors {e). THIS INDENTURE made the day of , Parties. 19 — , Between A. 1>. of &c. (hereinafter called "the debtor ") of the first part, C. 1). of &c., and E. F. of &c. (hereinafter called "the sureties") of the second part, IJ. H. of &c. (hereinafter called " the trustee ")of the third part, and the several persons, firms and companies men- tioned in the Schedule hereto wlio accede to these presents of the fourth part. Whekp:as the debtor is indebted to the parties hereto of the fourth part in the sums set opposite to their names in the Schedule hereto. And wheheas it has been agreed between the debtor and his creditors that the creditors shall accept a com- position of ten shillings in the pound on their respective debts to be paid by instalments and to be secured by the joint and several covenants uf the debtor and sureties and that the trustee shall receive and distribute the composition. Covenant. NOW THIS INDENTUEE WITNESSETH as follows : — 1. In consideration of the release hereinafter contained, the debtor and the sureties hereby jointly and severally covenant with the trustee to pay to him by three equal instalments on the day of , the day of , and the day of — ■ ■, a sum of money Recital of debts. Agree- ment. (e) The intervention of a trustee secures a rateable distribution may be dispensed with as in the without preference or priority, last preceding precedent, but it Deed of Co/nj>o^ition hij JJchtvi-. 1:J3 sulficieiit to provide a composition of ten shillings iu the Prec. x. pound on all the debts owing from the debtor to his creditors (subject as regards secured debts to the provision hereinafter contained) to be applied by tlie trustee in the payment of such composition accordingly ; and also to pay to the trustee on demand a further sum of money sufficient to meet all costs and expenses incurred by the trustee in or about or in connection with this arrangement to be ai)plied by him accordingly. 2. In consideration of the foregoing covenant the Release parties hereto of the fourth part hereby release the debtor from all debts due to them respectively and from all claims and demands in respect thereof. 3. Xotliing herein contained shall prejudice any right without or remedy which any creditor may have against any to^secured person other than the debtor, nor prejudice or affect any creditors, mortgage, lien or security which any creditor may have on any property or effects of the debtor or of any other person ; but a creditor holding any mortgage, lien, or security on any property of the debtor shall be entitled to receive the composition hereby provided in respect only of the amount of the debt owing to him after realizing or giving credit for the value of such mortgage, lien or security in like manner as he would have had to realize or give credit for the same in order to obtain a dividend in case of bankruptcy. Ix witness, &c. Schedule. ] 34 Precedent-'^. XI. 8Hoirr FoKM of Agreement for Composition. An agreement made the day of- 19 Between A. B. (debtor) of &c. hereinafter called " the debtor " of the one part, and the creditors of the del)tor whose names and the amount of whose debts are set out in the schedule hereto of the other part. Whereas the debtor is indebted to the creditors in the amounts set out in the schedule hereto and has informed tlie creditors severally of his inability to pay the debts due to them in full, And whereas the creditors have consented to accept a coiuposition for such debts as hereinafter mentioned. Now the creditors do hereby severally agree with the debtor that in consideration of the pay- ment to each of them of a composition of shillings in the £ on the amount of their respective debts within days from the date of this agreement the creditors will severally accept the same in full satisfaction and discharge of the said debts due tn them respectively and will on receipt of the said composition give the debtor a release from the said debts. In witness, &c. Schedule. Assignment with Proviso for Carryimj i>n Business. V.')^ XIT. Deed of Conveyance and Assignment for benefit of Creditors, vnth proviso fur carri/inr/ on t/ic Dehtor's Business. THIS INDENTUEE made the d;iy of Between A. B. of &c. carrying on business under the Parties, style or firm of A. B. & Co. (hereinafter called " the debtor ") of the first part, C. D. of &c. and E. E. of &c. [trmtees] of the second part, and the several persons, &c. [description of creditors as in Precedent /.] of the third part. WITNESSETH as follows : — 1. In consideration of the release on the part of the Convey- creditors hereinafter contained, the debtor as beneficial aggign. owner herebv conveys and assigns to the said C. D. and ment of E. E. All the real and personal estate whatsoever and personal wheresoever of or belonging or due or owing to the ^q*^^\^^_ debtor (except property of a leasehold tenure (/), and the tees. necessary wearing apparel and bedding of himself and his family). To have and to hold the said real and ]3ersonal estate unto the said C. D. and E. E., as to real estate to the use of the said C. D. and E. E. in fee simple, and as to all the premises upon the trusts and subject to the agreements ;ind conditions hereinafter contained. 2. The said C. D. and E. E, or the survivor of them or other the trustees or trustee for the time being of these presents (all and each of whom are and is herein- after referred to as " the trustees or trustee ") \trust to realize ■{omittiny poivcr to postpotic conversion) — and (/) If the debtor be possessed of which calls are likely to be made, shares in public companies on see note on p. 7G. isn Precedenfii. Free. XII. Proviso for carry- ing on instead of selling, and em- ploying debtor and others at salaries or wages, and for purchase or hire of stock-in- trade and other chattels. While business carried on trustees to keep proper books, and pay outgoings and ex- penses, 3. divide net proceeds — and such incidental provisions as the case may require, includinf/ 4. poirer nf attorney, adapted from Precedent I. (9).] 5. Notwithstanding the trusts for sale hereinbefore contained it shall be lawful for the trustees or trustee in their or his discretion to carry on in the name of the debtor or otherwise and foi' sucli period as the trustees or trustee shall think lit the said l)usiness so carried on l)y him as aforesaid with a view to the gi'adual winding up of the same instead ol" immediately selling the same (A), and for the purpose of such carrying on and winding up to employ or authorize the employment of the debtor as manager of the said business and any other persons to assist therein as clerks, servants or otlierwise, and to pay out of the trust moneys to the debtor and to any other person who may be so employed such salary or wages or remuneration for services rendered as the trustees or trustee shall think fit. 6. For tlie })urpose of carrying on as aforesaid the said business it shall be lawful for the trustees or trustee from time t<> time at the expense of the trust estate to procure by purchase, hire or otherwise sucli stock-in- trade, fixtures, materials, chattels and articles as they or lie shall think fit. 7. During such carrying on of the said business the trustees shall make or cause to be made in proper books full and true entries of all moneys received or expended by them in the course of the said business and of all transactions and matters connected with the said business, and shall pay all rents, rates, taxes and outgoings (includ- ing the expenses of insurance and repairs) payable in respect of the business premises, and all losses, expenses and sums of money to l)e incurred or become payable in respect of the said lousiness out of any part of the trust (y) But, there being no com- dent IV. mittee, the power to employ and {h) As to the liability of the remunerate debtor and other per- trnsteos, see ante, p. 36. sons will be adapted from Precc- A.^^/qnmciif fifh Proviso for CarryiiKj on Jhi-sliii'ss. V:\i iiioueys wliicli may be availal)lc for the purpose, and sliall Prec. xii. apply the net moneys which shall be realized by the .^,jj ^ppiy carrvins: on of the said business in like manner as is net prohts •/ o as II same hereinbefore provided in reference to the trust moneys were the trusts whereof are hereinbefore declared. ^oduced \ Release of debts — prooiso as to sureties and secuiities — under . 77-. -7^^ 7 trust for poioer to ajjpomt ncv) tnistees or an aadttional trustee — ana gg^jg -sMc/t of the conc/udiufj classes of Precedent I. as may sidt /he case {i).\ In witness, &c. sciiedulk. (i) There being no committee, dent IV., see note ((/), p. 98, and the power to appoint new trustees the power to settle with dissentient or an additional trustee should creditors will be similarly modified he made exercisoable as in Prece- as in Precedent IV. 138 Precedents. Grant by creditors to debtor of liberty to trade for six months. Creditors agree not to sue during letter of licence. and that net moneys XTII. Lettee of Licence, with Covenant not to me (/.-). KNOW ALL MEN BY THESE PEESENTS that wc the several persons, companies and partnership firms, whose names and seals are set and affixed in the schedule liereto, being creditors of \debtor\ Do hereby respectively grant to the said [dcUor'] free and absolute liberty and licence for the period of six months from the date hereof to manage and carr}' on his trade or business of a merchant, and to collect, get in, realize and dispose of all the real and personal estate of or to which he is now seised, possessed or entitled with a view to the gradual payment of our debts, but subject nevertheless to the provisoes hereinafter contained. x\.nd we do hereby mutually agree with each other, and do hereby respec- tively covenant with the said [debtor'], that we respectively will not, during the continuance of the said letter of licence, sue or attach the said [(Icbtor'] or his estate for or on account of the debts set opposite to our respective names in the said schedule, and that these presents may be pleaded or given in evidence as a defence and answer to any action or other proceeding which may be brought, instituted or taken by us respectively against the said [(tehtor] or his estate in breach of this covenant. Provided ALWAYS and we do hereby mutually agree as follows : — 1. All moneys from time to time realized from the carrying on of the said business, or from the said estate (k) A deed of this nature ob- viously depends upon the good faith of the debtor, but where he is reliable, and the creditors wish to assist him, such an arrange- ment will be convenient as avoid- ing the act of bankruptcy created by s. 4, sub-s. (h), of the Bank- ruptcy Act, 1883. Letter of Licence. 139 (except so mucli as shall be actually required for current Prec.xiii. expenses of the business), shall be paid into the reaHzed^ Bank to the joint account of A. B. of &c. and C. D. of &c. frombusi- ' ricss slinll as a committee acting on behalf of the general body of be paid creditors, and shall be applied in payment of dividends *"*? ^'^"'^' on our said debts in such manner and at such times as plied in the committee shall think fit. IVS^i-^ 2. Nothing in these presents contained shall prejudice dends. or affect our rights against sureties, or against any ^^°^-T .°^ person except the said \dchtor\, or our rights or remedies against in respect of securities held by us for our said debts, or ^^^^ '^^' any part thereof, but all such rights and remedies, and spect of generally all our rights and claims, as creditors of the no*i"to*bT said \clcbtor\ shall have the same force and be subject to preju- the same rules and obligations (as nearly as may be) as if the estate of the said [debtor'] were being administered in bankruptcy. 3. If during the said period of six months a receiving Letter of order shall be made against the said \dcbtor\ or the ^i^®"°? ^o - _ L J' cease in committee shall certify that owing to the unsatisfactory certain condition and prospects of the said business, or for any ^^^" ^' other reastm, these presents ought to cease, then and in any of such cases the letter of licence and covenants on our part hereinbefore contained shall be thenceforth absolutely at an end and void (/), In witness, &c. Schedule of Creditors. (Z) If the creditors wish to description, giving to creditors no extend the letter of licence they control over the debtor's property should sign a memorandum de- or business, seems not to require daring such extension, and agree- registration. It assigns no interest ing that it is to take effect upon legal or equitable, and accordingly the same terms and conditions as is unaffected by the Bills of Sale the original deed. A deed of this Acts. 140 Precedents. XIV. Assent to Ueed of Assignment {m). I, the undersigned, being a creditor of A. B. of &c., hereby assent to and undertake to be bound by a deed dated the day of and expressed to be made between the said A. B. (therein called " the debtor ") of the first part, C. D. of &c. of the second part, E. F. of &c., G. H. of &c., and J. K. of &c. (being a committee of creditors) of the third part, and the creditors of the debtor who execute or in writing assent to the deed of the fourth part, whereby the debtor has conveyed all his estate (except as therein mentioned) to the said C. D. upon trust to collect, sell, and realize the same and divide the net proceeds (after payment of costs and expenses) among the said creditors in proportion to their respective debts ; and by the same deed the creditors release the debtor from their debts, without prejudice to their rights against sureties or in respect of securities for their debts. (Signed) (?«) This form cau be varied nature of the deed. Stamp, M. according to circumstances. The See Form 2 to Rules of March 30, chief object is to indicate to the 1914, ^ws^, p. 223. assenting creditor the general Assent to Di'ed <>f Coinjiosition. 141 XV. Assent to Deed of Composition {n). Re \(lehtoi'\. Be Proposal for Composition. I, the undersigned, being a creditor of [dehtor] carrying on business at for the amount hereunder written hereby agree to accept the proposal of the said [debtor'] for a composition contained in a notice to creditors dated the day of with such modifications as may be accepted by the creditors at a meeting to be held on the day of — or at any adjournment thereof. And I undertake to execute any deed of composition which may be entered into in pursuance of the acceptance of such proposal. {Signature of Creditor.) Who claims to be a creditor of the said [dehtor] for tlie sum of £ Dated this day of . (7i) Stamp, 6d. See Form 2 to Rules of March 30, 1914. 142 Precechmfs. Parties Recital of bank- ruptcy pe- tition and receiving order, and of proposal for scheme of arrange- ment and accept- ance thereof. XVI. Deed of Inspectorship to carry out ResoliLtioii for Statutory Scheme of Arrangement. {Bankruptcy Act, 1890, sect. 3.) THIS INDENTURE made the day of Between A. B. of &c. (liereinafter called " the debtor ") of the one part and C. D. of &c. and E. F. of &c. of the other part. Whereas a bankruptcy petition was filed against \or Ijy] the debtor in the High Court of Justice in Bank- ruptcy \or in the County Court of holden at ] on the day of -, and a receiving order was made under the said petition on the day of ■ -. And whereas the debtor has made and the statutory majority of creditors has resolved to entertain a proposal for a scheme of arrangement of the affairs of the debtor, to the effect that the business and estate of the debtor should be wound up and realized under the inspec- tion (o) of the said C. D. and E. F. with a view to the gradual payment of liis debts so far as possible, and that for this purpose a deed should be executed by the debtor and the inspectors, containing such covenants, powers (o) Inspectors are not, it is sub- mitted, trustees within the mean- ing of sub-ss. 16 and 17 of s. 3 of the Bankruptcy Act, 1890, and this may be a reason for preferring a deed of inspection to a deed of assignment. See also Redpnth v. Wigg, (18GG) 4 H. & C. 432 ; L. R. 1 Ex. 335 ; 35 L. J. Ex. 211 ; 12 Jur. (N. S.) 903 ; 14 L. T. 7G4 ; 14 W. R. 8GG; and Eastcrbrook v. Barker, (1870) L. R. G C. P. 1 ; 40 L. J. G. P. 17 ; 23 L. T. 535 ; 19 W. R. 208 ; Steele v. Lowe, (1862) 2 F. & F. 772 ; Hobson v. Jones, (1870) L. R. 9 Eq. 456 ; 39 L. J, Ch. 245 ; 22 L. T. 143 ; 18 W. R. 477. Di'ed of Inspectorship am lev Scheme. 1 4;{ and provisions as were contained in a draft deed produ(;e(l ^rec. xvi. at the meeting. XOW THIS INDENTURE WITNESSETH as Covenant (.11 by debtor follows:— (if scheme 1. In pursuance of the said resolution and iu coiisidera- approved) ,, 1 ■ 11111 ..to wind tion 01 tlie premises, tlie debtor hereby covenants with up under tlie said (J. I), and E. F. (hereinafter called "the '^^^v^^- tion. inspectors "), that if the said scheme shall be duly approved by the Court he will use his utmost endeavours under and subject to the directions, control and advice of the inspectors to wind up his business, and collect, get in, realize and dispose of all his real and personal estate with a view to the payment of the debts due from him at the date of the said petition, and will for the purpose aforesaid and at the expense of the estate bring, institute, take, adopt, defend, compromise or abandon all such actions, proceedings or measures, and execute ajid sign all such deeds and documents as the inspectors may require [^udd from I*reccAlc.nt VI. reinainder of eovenanf as to reaiizinr/ estate], 2-5. [Add provisions from Precedent VI. as to keeping books, and (dlowlng inspectors to examine, and as to not carrying on new business — poiver to employ assistants, and make allowance to debtor.] 6. All the moneys which shall come to the hands nr :\ioneys \mder the control of the inspectors in the course of the ^^q\^^'^ inspection shall be applied by or under the direction of applied in the inspectors in the first place in payment of all costs, of costs charges and expenses of and incidental to the tilins of of bank- o i^ o rupti'V the petition, and all proceedings tliereunder, and the proce'ed- preparation and passing of the said resolution and of the a"°^eueral resolution confirming the said scheme, and the approval expenses, of such scheme, and the preparation and execution of tliese presents, and all expenses incurred by or moneys payable to the official receiver for remuneration or other- wise, and all debts which would be payable in i)riority andofpre- if the estate of tlie debtor were being administered in cUdms' 144 Precedents. Prec.XVI. and sub- ject there- to in rateable payment of debts. Surplus to beJong to debtor. Provision for termi- nation of deed. Deed not to operate until scheme approved, and to bankruptcy, and subject as aforesaid, and to the payment of all costs, cliar<:,'es, expenses and sums of money which may for the time being be incurred or payable in the course of the carrying out the powers and provisions of these presents or any of them, in or towards payment rateal)ly according to the law of bankruptcy, and without preference or priority, and by such dividend or dividends as the inspectors shall think lit, of all the debts due from the debtor at the date of the said petition, and, if there shall be any surplus of the said moneys, the same shall belong to the debtor, his executors, administrators or assigns. 7. \Add from Precedent VI. clause as to bringing or de- fending actions, selling, and settling disputes, hut not the poiocr to require verification of dehts, or the clause as to sureties (j)). \ 8. If and when the inspectors shall be of opinion, and shall certify that the winding up, realization and liquidation ])rovi,'(:tor-^/i/,/> niulcr Sckciue. 145 annulled (/•) by the Court, then these presents sliall Prec xvi. thenceforth cease and determine. ppj^^c if In witness, &C. schemf annulled. (r) See Bankruptcy Act, 1890, validity of anything done under s. 3, sub-s. 15. It will be observed the scheme previously to annul- that this section preserves the ment. D.A. 10 -ialance due on Prec. his account as trustee and his i-emuneration as " hereinafter provided (x). (c) In payment to the unsecured creditors of the afore- said composition. (d) In payment of any surplus to the said [^i^erson providing the money'] or as he shall direct. 6. Tliat on the approval of the Court being given to this scheme the whole of my assets shall vest (y) in and become the absolute property of the said [^person providing moneg]. 7. That the trustee in my bankruptcy shall be trustee under this scheme at such remuneration payable out of the said sum of £ as shall be fixed by resolution of the creditors under section 72 of the Bankruptcy Act, 1S83. 8. That if this scheme shall not be approved by the Court the whole of the said sum of £ after payment thereout of the costs of and incidental to the application to the Court {z) shall be repaid to the said [^person pro- viding money.] Dated this day of 19 . {Signature of debtor {a}.) {x) As to remuucration of the the debtor if the court refuses to trustee, see ante, p. 72. approve the scheme. (?/) The Court makes the vest- (o) In the case of joint debtors, ing order, see B. Act, 1883, s. the proposal should be signed in 23 (2). the firm's name by such of the (s) By rule 203 no costs of the debtors as the official receiver application are to be allowed to shall require. 148 Precedents. XVIII. Proposal for Statutoky Scheme. In the County Court of holden at In Bankruptcy. No. of 1 9 . Re [debtor]. I the above-named debtor hereby submit the following proposal for a scheme of arrangement of my affairs in satisfaction of my debts. 1. As in last -precedent. 2. Ditto. 3. Ditto. 4. That [set out terms of scheme]. Dated day of • 19 . {Signature of debtor.) ( 149 ) THE DEEDS OF ARRANGEMENT ACT, 1887. This statute iutroduced a novelty into English bankruptcy law, for although the Bankruptcy Act, 1861, s. 192, provided for the registration of deeds of arrangement as a condition precedent to their Ijecoming binding on creditors who did not sign or otherwise assent to them, and also (s. 194) required all such deeds, whether intended to bind non-assenting creditors or not, to l^e registered in the Court of Bankruptcy under the penalty of Jiot being receivable in evidence, this is tlie first Act which has made absolutely void all private arrangements {i.e. arrangements outside Ijankruptcy) between a debtor and his general creditors which are not registered as provided ]jy the Act. Havino- regard to tlie wide terms in which the Act defines the class of instruments which it seeks to bring within its net, it would be difiicult to frame a precedent of any instrument whicli would l)e outside the Act, and at the same time be of general utility ; but some remarks on this point will be found in the notes to the Act. 150 Di't'ii"^ of Arraiigi'mrnf Act, 1887. Short title. Extent of Act. Com- mence- ment of Act. Applica- tion of Act. The Deeds of Arrangement Act, 1887. 50 & 51 Vict. c. 57. An Act to i>rovide for the Registration of Decff-^- of Arrangement. [l6tL September, 1887.] Be it enacted by the Queen's most excellent Majesty, by and with the advic-c and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament asseml)lcd, nnd l>y the authority of the same, as follows : 1. This Act may be cited for all [)urposes as the Deeds of Arrangement Act, 1887. 2. This Act shall not extend to Scotland. 3. This Act shall, except as in this Act specially provided, come into operation on the first day of January one thousand eight hundred and eighty- eioht, which date is in this Act referred to as the commencement of this Act. 4. — (l) This Act shall apply to every deed of arrangement, as defined in this section, made after the commencement of this Act. (2) A deed of arrangement t(» which this Act applies shall include any of the following instru- ments, whether under seal or not, made by, for, or in respect of the affairs of a debtor (a) for the (a) " Debtor " means a person subject to tlie Enf,'-Hsh law of bankvuptciy and docs not tliere- fore include a company (Be Blleys, [1903] 2 Cli. 590; 72 L. J. Ch. 678 ; 89 L. T. 529 ; 10 Mans. .314), nor to a person domiciled abroad executin"- a foreign deed in respect of pro- perty in Eng-land (Dulaveij v. Ma-ry, [190lJ 1 K. B. 563; 70 L. J. K. B. 377 ; St L. T. 156 ; 8 Mans. 152. Tliis seems to be now altered by 3 & 4 Geo. 5, c. 34. s. 9. Deeds of Arrangement Act, 1887. 151 benefit of his creditors generally (otherwise than in pursuance of the law for the time being in force relating to bankruptcy {f>)), that is to say : — (a) An assignment of property (c) ; (b) A deed of or agreement foi- a composition ; And in cases where creditors of a debtor obtain any control over his property or business : — (c) A deed of inspectorship entered into for the purpose of carrying on or winding up a Vjusiness ; (d) A letter of licence, authorizing the debtor or any other person to manage, carry on, realize or dispose of a business, with a view to the payment of debts ; and (e) Any agreement or instrument entered into for the purpose of carrying on or winding up the debtor's business, or authorizing the debtor or any other person to manage, carry on, realize, or dispose of the debtor's business, with a view to the payment of his debts. The keynote to this ith section, and, indeed, to the whole Act, must, it would seem, be found in the words, " by, for, or in respect of the affairs of a debtor for the benefit of his creditors generally," which words require close analysis. The importance of these words has, however, been consider- ably lessened by s. 37 of the Bankruptcy and Deeds of Arrangement Act, 1913, which extends the Act of 1887 to any instrument made by an insolvent debtor for the benefit ('>) Tliat is, under s. o of the after udjudicatiou. Bankruptcy Act. 1890, before (c) For definition of "pro- adjudication, and under s. 2o perty."' see j>os/. p. !!. of tlie Bankruptcy Act, 1883, note ^d). 152 Deeds of Arrangement Act, 1887. of any tliree or more creditors {d). But the question whether an instrument is for the benefit of creditors generally may still arise, even when the instrument is expressed to be made for the benefit of three or more creditors, as, indeed, the wordinj^" of s. 37 seems clearly to indicate {e). It seems to be now settled that the words " for the benefit of his creditors generally " mean for the benefit of all creditors who choose to come in under the deed, and that an arrangement for some only of the creditors was not within section 4 and did not consequently require registration. Thus an assignment for the benefit of certain named creditors only without any option for the other creditors to assent to the deed is not a deed for the benefit of creditors generally within the meaning of the section (/'). So, too, a deed of assignment by a partnership firm of its partnership assets for the benefit of its trade creditors only is not an assignment of an individual partner's property for the benefit of his creditors generally so as to constitute an act of bank- ruptcy as against him (//). But the fact that certain family creditors withdraw their claims and are not entitled to the benefit of the deed does not prevent it from being for the benefit of creditors generally if all the other creditors may come in who choose to do so (/<). Whether a deed is within the section or not is a question of fact in each case (/), and an arrangement whether expressed to be for the benefit of all creditors or not and even one which is apparently for the benefit of some creditors only may l)e construed as being for the benefit of all those who choose to come in and take the benefit of it (/,-). {d) Ante, p. -1. Such u deed ((/) Re Phillips, Ex parte would seem to reciuire reg-istra- Phillips, [1900] 2 Q. B. ;J-29 ; 69 tiou under the Bills of Sale Act, L. J. Q. B. ()04 ; S-J L. T. 691 ; 1878, s. 4, a}ile, p. ;J0. 7 Mans. •111. (e) And see Be Bih'ij.^. Lim.. {h) Hedyrs v. L'resto,,. (1899) infra. 80 L. T. 847. (/) liC Sduiiiarez, E.r parte (i) Be Holibitts, Ex parte Salaman, [1907] 2 K. B. 170 ; Official Beceii.'er.{mn))HM.'dut^. 76L.J. K.B.828;97L. T. 121; 212. 14 Mans. 170; but seeavte,-p.3. (k) Be Bileijs. Liiu., [1903] 2 Deeds of Arrangement Act, 1887. 153 It seems also that the primary object of the deed must Ije to benefit tlie debtor's creditors generally. Where therefore the trusts of the deed were first to repay an advance made by one of the trustees of the deed, secondly to pay the debtor's debts, and thirdly to hold the residue in trust for the debtor's daughter, it was held that the primary object of the deed was to benefit the debtor and his daughter and therefore the deed did not require registration (/). With regard to sub-sect. 2 (a), of this section, it may l)e observed that sect. 4, sub-sect. 1 (a), of the Bankruptcy Act, 1883, defines as an act of bankruptcy an assignment by a debtor of " his " property (/.e. substantially all of it) for the benefit of his creditors ; whereas in this sub -section the word " his " is omitted, no doubt with the intention of meet- ing the case of an assignment of a part only of the property, which, if expressed to be or held to be for the benefit of " creditors generally," is clearly within the Act. The Act being applicable to written instruments only, it may be of interest to consider how far the inconvenience of registration may be avoided by relying on parol agreements for a composition. We have seen ((inte, p. 42) that a debt may be validly discharged by the giving of a negotiable instrument for a smaller sum than the debt. It thus becomes possible in certain circumstances to practically effect the results of a composition by a series of parol agree- ments with creditors by which they consent to receive promissory notes in discharge of their debts. And applying the principle of Mancheder, S/ipftJehl <£■ Linroliishirc Ry. v. Xorth Ontntl Waggon Co., (1888) {m), it would appear that in such a case a receipt given would not require registration, the transaction being legally perfect and complete without the support of this document. The validity of the trans- action depends, not on the receipt, but on the consideration. If therefore there is an independent agreement, the validity Oh. 590 ; 72 L. J. Ch. 678 ; 8!> tract. (1895) :W Sol. Jo. 504 L. T. 529 ; 10 Mans. 314. {m) 13 App. Ca. 554 ; 58 L. J. {I) Re Hobbiits, supra; see Ch. 219; 59 L. T. 730: :;7 Sauisoit and Srlir/'eher'.'i cou- AV. R. 305. 154 Deeds of Arrangement Act, 1887. Avoidant of unre- gistered deeds of arrange- ment. of tlie transaction onglit not to be affected by avoidance of the receipt (//). 5. From and after the commeucement of this Act a deed of arrangement to wliieli this Act aj)plies should be void unless the same sliall have l)een registered under this Act within seven clear days after the first execution thereof by the debtor or any creditor, or if it is executed in any place out of England or Ireland respectively, then within seven clear days after the time at which it would, in the ordinary course of post, arrive in England or Ireland respectively, if posted within one week jvfter the execution thereof, and [o) unless the same shall l)ear such ordinary and ad valorem stamp as is under this Act provided. An assignment of property by a debtor to a trustee or assignee for the benefit of his creditors cannot be registered under the Act unless it is executed or signed by the trustee or assignee ( p). A deed of arrangement which is void under the Act for want of registration is void ah initio and for all intents and purposes (^). But a deed though not registered or stamped may be given in evidence as an act of bankruptcy under sect. 4 (a) of the Bankruptcy Act, 1883 (/). An arrangement by a company does not require regis- tration ; but it seems that an arrangement In- a foreign debtor would come within the Act (.s). (//) SeaStonivier^y. Marfjrctf. (U»0o) 21 T. L. R. ;342. (o) As to tlie stamp, see s. ♦», sub-s. 2, and note tliereou. {p) Eule 5a, post, p. 170. (S) //t'*'.7''>- V. Preston. (18J»lt) 80 L. T. SIT. (/•) lie HoIlinsJiL'od. E,r parte lleapy, (188J>) oS L. J. Q. B. 207 ; H Mor. (JO ; m L. T. 27;.{. If registered, an office copy ma}' be evidence, see s. 11, pout. {.'<) Aiif''. p. i:)(>, n. (a). Deeds of An-anr/cmenf Act, 1887. 155 If an assignment "with the nsual declaration of trusts by leaseholds has been ref^fistered, a subsequent assignment of the leaseholds does not require registration (/). The limit of seven days seems to have been fixed by analogy to the Bills of Sale Act (?/), but, if so, the analogy is not a very close one, because a bill of sale is, practically, a complete document as soon as the grantor has signed it ; but in the case of a deed of arrangement the signatures of creditors, though not of the essence of the deed like the signature of the debtor (inasmuch as only assent, and no particular form of assent, is necessary (.<•) ), are nevertheless desirable, and their signatures will seldom be obtained within the seven days. ^loreover, creditors may sign after registration, without avoiding the deed or vitiating the registration (//). It should be observed also that the expression " seven clear days " has a somewhat different meaning in this connection from that which it bears in the Eules of the Supreme Court as to notices. In the latter case the first and the last days are excluded, but in the case before us the registration nmst be within the period prescribed, so that an instrument executed on May 1st must ))e registered not later than May 8th (2) ; subject of course to the exception expressed in sect. 10 {post). 6. The registration of a deed of arrangement Mode of under this Act shall l»e effected in the followino- tion. manner : — (1) A true copy of the deed, and of every schedule or inventory thereto annexed, or {t) Be Cranmer. (190:)) ;«t (?/) Be Batteu.ExparteMilne, L. J. N. C. 10. (1889) 22 Q. B. D. H85 ; 58 L. J. (») See 4') .t 4(; Vict, c t;5, Q. B. 3;W; 87 W. R. 499; (> s. 8, substituted for 41 .V t2 Mor. llo. Vict. c. 31, s. 8. (r) See Will nuns v. Bur- (x) See per Lord Cottenliain, gess, (1840) 12 .\<1. \ E. r>:lj; 9 in Ex parte Jerrard. Be Clifn)i- Dowl. 544. hers, (1SS7) 3 Deac. 1. 7. 156 J)(r(ls (>/' Arraiiffniieiif Act, 1887. tlierciu referred to, shall be presented to and filed with the registrar (a) within seven <-leai- days after the execution of the said deed (in like manner as a bill of sale given by way of security foi' tlie payment of money is now required to be filed), together with an aftidavit (b) verifying the time of execution, and containing a descrip- tion of the residence and occupation of the del) tor, and of the place or places where his business is carried on, and an affidavit(r) by the debtor stating the total estimated amount of property and liabilities included under tlie deed, the total amount of the composition (if any) payable thereunder, and the names and addresses of liis creditors : "Creditors" here means unsecured creditors. Therefore the names and addi'esses of the secured creditors need not l)e set out {(/). Nor is the registration void, in the ahsence of fraud, if the aftidavit of the debtor intentionally omits some of the un- secured creditors' names (c). In an earlier edition of this work a doubt was expressed as to the proper method of registration in cases in which the signatures of all the creditors could not be procured within the seven days prescribed for the registration of the deed and ((«) This is ex])laiu<;(l by s. H, ^xiaf. p. 17i. sub-s. 1, to mean the Reg-istrar ('/) Chaplin v. Dahi. 1S!»4) of Bills of Sale in Eii^'land and 71 L. T. 569 ; J. Mans. J. irehind respet-tively. ' 31<(:) See Forms of Atfidavil. 1 K. B. (!71 ; 72 L. J. K. B. post, -p. 17-A. -37; 88 L. T. 148; 10 Mans. (c) See Konn of Atti(l:i\i1. 121. Deeds of Arrangenienf A'-f, 18ST. 157 schedules. The difficulty has l^eeu sot at rest hy the decision in Rp Batten, Ex fa do Milne (1889) (/"), th/0 See Alpe on Stamp (o) There may be some doubt Duties (12th ed.), 294. See as to whether, iu case of iu- also Stamp Act, 1891, s. 86 spectorship, the uames and \X) (c), and Codteii v. Perry, addresses of the insiiectors must .'{ B, iV: B 48. be entered, but it would seem (»() A form of tlieabstraettobe that they oujrlit to be eon- entered on the rej^'ister is given side red to be trustees for tliis in the appendix to the rules purpose, made under the Aet. foff, p. 17o. 160 Deeds of Arrangement Act, 1887. included under the "deed, as estimated by the debtor (^> ). Registrar g^ — (] ) Tlie redstrar of bills of sale in l]noland and ofticc \ ' o o and regis- and Ireland respectively shall be tlx- registrar for tnition. . . the purposes of this Act. (2.) In England the bills of sale department of the Central Oliice of the Supreme Court of Judicature, and in Ireland the bills of sale office of the (^)ueen's Bench Division of the Hish Court of Justice, shall be tlie office for the reiristration of deeds of arrangement. 9. The Court or a judge upon being satisfied that the omission to register a deed of arrange- ment within tlie time required by this Act or that the omission or mis-statement of the name, resi- dence, or description of any j^erson was accidental or due to inadvertence, or to some cause beyond the control of the debtor and not imputable to any negligence on his part, may on the application of any party interested, and on such terms and conditions as arc just and expedient, extend the time for such registration, or order such omission or mis-statement to be supplied or rectified by the insertion in the register of the true name, residence, or description. Rectifica- tion of register. This section, which proceeds on the hnes of sect. 14 of the Bills of Sale Act, 1878, is a very important one. It will {'jj) See Form \. poi't. p. 17-"). in tlie debtor's affidavit wliichis This amount must probably to be produced to tlie rep-istrar correspond Avith that mentioned under s. (>. Deeds of Arrangt'ment Act, 1887. 161 be observed tbat there must have I)een an actual omission to register within the time required by the Act before appli- cation is made for furthur time, so that there is no room for the doubt, which has risen in similar cases (as, for instance, on application for extension of time to disclaim leases under the Bankruptcy Act, 1869), whether the application must not be made before the original time has expired (c/) ; the application is to be made after such expiration, and must, of course, show the cause for extension of time. In a former edition of this work the opinion was hazarded that the cause for extension would doubtless usually be the inability of the debtor or his solicitors to obtain the signatures of the creditors to the deed within the brief period Hmited by the Act, this being probably, in ordinary cases, a thing " beyond the control of the debtor, and not imputable to any neo-li- gence on his part ; " but, having regard to the subsequent decision of Re Batten, Ex parte Milne, (1899) (/•), that creditors may sign after registration, this opinion must be modified. If the extension of time be granted, and the deed be registered, within the extended time, it will thereupon cease to be void, and will take effect as if the extended time had been originally Umited by sect. 5 for registration of the deed. The word " omission " is, in this section used in two different senses; the first being a neglect or default in registering the deed, and the second a leaving out of some- thing from the register itself. As this latter kind of omis- sion, or the mis-statement with which it is coupled, is to be supplied or rectified only by the insertion in the register of the true name, residence, or description of some person, it is evident that the register cannot be rectified as regards any other details or particulars referred to in sect. 7 ; it seems also that the only " person " alluded to is the debtor or his trustee, as no names of creditors are required to be entered on the register. (See sect. 7, sul)-sect. b, supra, and Form of Eegister, po^t, p. 175.) {q) See Ex parte Lovering, L. R. Ir. 85, 93. Be Jones, (1874) L. R. 9 Ch. (r) 22 Q. B. D. 685 ; 58 L. J. 586; 43 L. J. Bk. 94; 30 L. T. Q. B. 333; 37 W. R. 499; 6 621 ; and Be Parh; (1884) 13 Mor. 110. D.A. 11 Office copies 162 Deeds of Arraruji'ment Act, 1887. Time for jQ. WliGii tliG time foi' resfisteriiiff a deed of registra- _ " '=' tion. arraugement expires on a Sunday, or other day (ju which the registration othee is closed, the registration shall be valid if made on the next following day on which the oHice is open. 11. Subject to the provisions of this Act, and to any rules made thereunder, any person shall be entitled to have an office ('opy of, or extract from, any deed registered under this Act upon paying for the same at the like rate as for office copies of judgments of the High Court of Justice (s), and any copy or extract purporting to Ijc an office copy or extract shall, in all f^ourts and before all arbitrators or other persons, be admitted as prima facie evidence thereof, and of the lact and date of registration as shown thereon. This section is taken from sect. 1(5 of the Bills of Sale Act, 1878. Tlie deed referred to is, of course, the copy which is filed with the registrar. The oilicial extract from this copy may apparently be as full as is desired ; see sub-sect. (2) of sect. 12 as to other extracts. An office copy under this section is sufficient prima farie proof of the commission of an act of bankruptcy, but the Court may in the exercise of its discretion require further evidence (/) Inspection 12. — (l.) Any pcrsou shall ])e entitled, at all of register i i • i i and regis- reasonable times, to search the register on pay- deeds, ment of one shilling, or such other fee as may be prescribed, and subject to such regulations as may (.s) By tlie rules under the p. 177. Act, the fee for office co])ies and ,/) Br Shitrr. (lS!t7) 76 L. T. extracts is (IJ. a folio : s^>^- p(»o.'*^, to enacts that the Lord Chau- pp. 176 ct scq. cellor, with the consent of three (6) The section here referi'ed judges of the Supreme Coiu-t ion Deeds of Arrangement Avf, 1887. Supreme Court of Judicature Act (Irelund), 1877, as regards Ireland, and any enactments for the time being in force amending or substituted for tliose sections respectively shall apply to fees under this Act, and orders under those sections may, if need ])e, be made in relation to such fees accordingly. Amend- jg, — (l.) The third sub-section, paraoraph (g), & 47 Vict, of the twenty-eio-hth section of the Bankruptc-y 0.52,8.28. . . Act, 1883, which enacts amongst other things that one of the facts on proof of which the Court shall either refuse an order of discharge to a bankrupt, or suspend the operation of the order for a specified time, or grant the bankrupt an order of discharge subject to the conditions men- tioned in the section, is that the bankrupt has on any previous occasion made a. statutory composi- tion or arrangement with his creditors, shall be read and construed with the word " statutory " omitted therefrom. The 28tli section has been repealed and replaced by sect. 8 of the Bankruptcy Act, 1890, in sub-sect. 3 (k) of which the word " statutory " is omitted. The composition or arrangement here referred to appears to include not only such deeds or instruments as require registration under the Act, hut all other private arrange- ments with his creditors which a bankrupt applying for his discharge has at any time made, which are placed for this aud tlie coucurreucu of the or any court rreat.t'd l)y auy Treasiuy, may fix the fees and coinnii,s.siou, or any office cou- percentag-es to be takeu in the ueoted witli any of those courts. High Court or Court of Appeal. Dned.H of Ai-rangi'inenf Act, 18b7. 1(17 purpose in the same category as compositions or arrange- ments made under the Bankruptcy Acts. , (2.) This section shall not apply to Irehmd. 17. Nothing contained in this Act shall be ^^""^l^^ construed to repeal or shall affect any provision ^^^^P' of the law for the time beiug in force in relation to bankruptcy, or shall give validity to any deed or instrument wliic.h by law is an act of bank- ruptcy, or void or voidable. 18. — (1.) Rules for carrying this Act into effect Rules. may be made, revoked, and altered from time to time by the like persons and in the like manner in which rules may be made under and for the purposes of the Supreme Court of Judicature Acts, 1873 to 1884, as regards England, and the Supreme Court of Judicature Act (Ireland), 1877, 4q&4i ^ V ICu* C« u tf • as reoards Ireland. (2.) Such rules as may be required for the purposes of this Act may be made at any time after the passing of this Act. The rules made pursuant to this section appear l)elo\v, p. 169. 19. In tliis Act, unless the context otherwise interpre- tation of requn'es, — terms. " Court or a judge " means the High Court of Justice and any judge thereof; " Creditors generally " includes all creditors who may assent or take the benefit of a deed of arrangement (c) ; ((■) Antr. p. l.yJ. 168 Deeds of Arrangement Act, 1887. " Person " includes a body of persons corporate or unincorporate ; " Prescribed " means prescribed l)y rules to be made under this Act ; " Property " has the same meaning as the same expression has in the Bankruptcy Act, 1883 ( creditors, arc contained in the schedule to this my affidavit. Sworn at , tliis I day of , 19 . -• Before me, A commissioner for oaths. Schedule. Names of Creditors. I'Ull Pcistal Addresses. Amount of Del)t duo to or claimed by eacli Creditor after Iieduction of Value of Securities held by tbe Creditor. (a) State whether deed of assignment of property ; deed of, or agree- ment for, a composition ; deed of inspectorship ; a letter of licence, or an agreement to carry on or wind up debtor's business. (b) The estimated surplus (if any) from securities held by creditors should not be deducted from the gross amount of property. (c) This amount must correspond with the amount of securities de- ducted above. No deduction should be made in respect of the unsecured balances of partially secured debts. (d) If there is no composition payable, strike this clause out. Ko. 4. — Form of Reffisfer.'^ OS o a = H ^ B « ■a.S o§ H o O 1 p< •< S o So ^1 ■a D «J 3 p a a 3 « =rt a - z;55 Amount of Pro- perty as estimated by Debtor. Amount of Lia- bilities as esti- mated by Debtor. .= 3 0) O S.SP. Z T3 3 I 73 5 g a _, £- « '' 'i .si: > mS iz p. "5 , a-a on = I 9 t a-- £ .2 B>-s O 3 •^ 8 'C O 0/ BE * This form is superseded by Form 12 of the Rules of March 30, 1914, iwst, p. 231. 17G Order as to Fees for Registration. DEEDS OF ARRANGEMENT ACT, 1887. OEDEK AS TO FEES. The Eight Honourable Hardinge Stanley, Baron Halsbury, Lord High Chancellor of Great Britain, by and with the advice and consent of the undersigned judges of the Supreme Court of Judicature, and with the concurrence of the Lords Commissioners of her Majesty's Treasury, doth hereby, in pursuance and execution of the powers given by the Deeds of Arrange- ment Act, 1887, and all other powers and authorities enabling him in this behalf, order and direct in manner following : — Fees. The fees contained in the schedule hereto are fixed and appointed to be, and shall be, taken in the office for the registration of deeds of arrangement pursuant to the Deeds of Arrangement Act, 1887. The said fees shall, until otherwise determined by the Treasury, be taken by stamps. II. Payment -'^H fees payable under this Order, except fees in of fees. respect of searches, inspections and office copies, shall be paid at the time of registration. Com- mence III. This Order shall come into operation on tlie first day , , of January one thousand eight hundred and eighty-eight, ment and '' ° -r^ c ^^ • short title, and may be cited as "The Order as to Fees lor Kegistra- tion of Deeds of Arrangement ; " and expressions therein shall have the same meaning as in the Deeds of Arrange- ment Act Rules, 1888. s. d. Order as to Fees for Reglstrafion. 177 SCHEDULE. Scale of Fees. FUiny. 1. Where the total estimated amount of property included under or the total amount of composition payable under a deed shall appear from the aftidavit ( /') of the debtor not to exceed the following amounts, the fee on filing such deed shall be as under : — £ Wheretlieproperty does not exceed 1,000/. ... 1 Exceeds 1,000/. but „ 2,000/. ... 2 2,000/. „ „ 3,000/. ... 3 3,000/. „ „ 4,000/. ... 4 Exceeds 4,000/. ... 5 In every case to which the above fees do not apply 2 2. On every certificate {g), indorsed on an original deed, of the registration thereof 2 6 3. On every copy of a deed transmitted to a county court registrar [h), for every folio or part of a folio contained in such copy li But if the total amount shall involve a fraction of a penny, then such fraction shall be charged as Itl. Searches (/). 4. On searching the register (for every name inspected) and on inspecting the filed copy, in- cluding the limited extract to be taken pursuant to the Act and Rules 2 6 Copies (Jc). 5. On office copies and extracts of or from the filed copy of a deed, for every folio (72 words) or fractional part of a folio 6 6. On examining a copy brought in to he marked as an office copy, for every folio or fractional part of a folio 2 (/) The affidavit is sworn pur- deuce is outside the Loudon Bank- .suant to s. 6 of the Act, ante, ruptcy district ; s. IS, ante, p. 163. p. 156. For form, see p. 174. (i) Ss. 12 and 18, sub-s. 2, of {g) The certificate is made pur- the Act, ante, pp. 1G2, 164; and .suant to Rule 6 of the Rules under Rules 11 and 12, p. 171. the Act, ante, p. 155. (k) Ss. 11 and 13, sub-s. 2, (h) That is, in cases where the a)Uc, pp. 162, 164 ; and Rule 12, debtor's place of business or resi- p. 171. D.A. 12 178 Order as to Fees for Registration. MiscellaneoKS. 7. On all other documents and proceedings (including liling affidavits) the same fees as are payable in respect of the like documents and proceedings under the Order as to Supreme Court fees, 1884. The 17th day of December, 1887. (Signed) IIvlsbiky, C. Coleridge, L. C. -T. ESHER, M. K. C. E. Pollock, B. H. Manisty, J. We concur, Herbert Eustace Maxwell, Sidney Herbert, Lords Commissioners of Her Majesty's Treasury. ( 171) ) THE DEEDS OF ARRANGEMENT ACT, ISOO (-). 53 & 54 Vict. c. 24. An Act to amend the Law relating to Deeds of Arrangement. [25th -hily, 1890.] Be it enacted by the (^)ueen's most excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present parliament assembled, and by the authority of the same, as follows : 1, — (1.) Where the place of business or resi- Local re- £•11 1 • 1 r' gistratioQ dence oi a debtor who is party to a deed of of deeds of „ , 1 . . . arrange- arrangement, or is reierred to therein, is situate mentin within the jurisdiction of a local court of bank- ruptcy in Ireland, the Registrar of Deeds of Arrangement in Ireland shall, within three clear days after registration, transmit a copy of such deed of arrangement to the registrar of the local court of bankruptcy in the district in which such place of business or residence is situate. (2.) Every copy so transmitted shall be filed, kept, and indexed by the registrar of the local («) This' Act relates to Ireland exclusively. 180 Deeds of Arrangement Amendment Act, 1890. court of bankruptcy, and every person shall have the same right to search, inspect, make extracts from, and ol)tain copies of the registered copy, in the like manner, and upon the like terms, as to payment or otherwise, as near as may be, as in the (iase of deeds registered under the principal Act. Accounts 2. — (1.) Copies of every petition filed in the posais in court of bankruptcy or a local court of bankruptcy For^ ' in Ireland, under the provisions of section three menttobo hundred and forty-three of the Irish Bankrupt licfjfcir ' and Insolvent Act, 1857, and of the affidavit of ^^^^•''' • assets and liabilities and proceedings instituted by creditors now required from the petitioning del)tor l)y the general orders of the court of bankruptcy or local court of Ijankruptcy, as the case may be, shall be filed in the bills of sale office of the Queen's Bench Division of the High Court. (2.) Such copies shall be filed in the said office within two days after the originals have been filed in such court of bankruptcy, and shall be accompanied by an affidavit of the petitioning debtor, which shall set forth, in addition to any prescribed particulars, the place or places where Jiis business is carried on, the title of the firm or firms under which he carries on business, and the names and addresses of his creditors. (3.) A copy of every order confirming a resolution of creditors made in the matter of a petition filed in the court of l)ankruptcy or a local court of Ijankruptcy in Ireland in accord- ance with the provisions of the said section of Deeds of Arrangement Amenchivnit Act^ 1890. 181 the said Act, shall also be filed in the bills <»f sale office of the (^)ueen's Bench Division of the High Court. (4.) Such copies shall be filed by the petitioning debtor within two clear days after the making of the order confirming such resolution. (5.) The court of bankruptcy or a local court of bankruptcy in Ireland shall not order a second sitting of creditors to be held in the matter of a petition for arrangement until it is shown to the satisfaction of the court that subsections one and two of this section have been complied with. (6.) The seventh section of the principal Act, so far as the said section may be applicable, shall apply to every document and affidavit filed in pursuance of this section, provided always that in such application, the date of filing a petition for arrangement shall be substituted for the date of a deed of arrangement. (7.) The several documents filed in pursuance of this section shall for the purposes thereof and of section one of this Act be deemed to be a deed of arrangement ; and the provisions of section fifteen, subsection one, of the principal Act shall apply thereto, and the eighty-fourth section of the supreme Court of Judicature Act (Ireland), 40 & 4i ^ ... Vict. c. 57. 1877, and any enactment for the time being in force amending or substituted for the said section shall apply to fees under this Act, and orders under the said section may, if need be, be made in relation to such fees accordingly. 182 Deeds of Amnigemenf Amendment Act, 1890. 20 & 21 Vict. c. 60. 35 & 36 Vict. c. 58. Rules of court. Interpre- tation. 50 & 51 Vict. c. 57. 51&52 Vict. c. 44. Short title. Com- meuce- mcnt. (8.) Notwitlistanding auytliiug contained in the Irish Bankrupt and Insolvent Act, 1857, and the Bankruptcy (Ireland) Amendment Act, 1872, the eleventh and twelfth sections of the principal Act sliall apply to every document and affidavit filed in the Queen's Bench Division of the High Court under this Act. 3. Rules of court shall be made for the purpose of carrying this Act into effect in accordance with the provisions of section eighteen of the principal Act. 4. — (1.) In the construction of this Act, unless the context otherwise requires, — (a) " The principal Act " shall mean the Deeds of Arrangement Act, 1887. (b) " A deed of arrangement " shall mean a deed of arrangement as defined in the principal Act. (c) " J^ocal court of bankruptcy " sliall have the same meaning as " local bankruptcy court " has in the Local Bankruptcy (Ireland) Act, 1888. 5. This Act may be ost. (c) Where a trustee neglects to comply with a direction to transmit the account and obliges the Board of Trade to give notice Returns to Board of Trade of receipts and ex- penditure under 50 & 51 Vict, c. 57. 184 Hanlruptnj Act, 1890 {sect. 25). iissij^ncd may, for the purpose of enforcing tlie provi- sions of this section, exercise, on the application of the Board of Trade in the matter, all the powers conferred on the Court by sub-section 5 of section 102 of the principal Act in cases of bankruptcj'. The term " trustee " in this section shall include any person appointed to distribute a composition or to act in any fiduciary capacity under any deed of arrangement. (3.) The accounts transmitted to the boai'd of Trade in pursuance of this section shall be open to inspection by the debtor or any creditor or other person interested on payment of the prescribed fee (J), and copies of or extracts from the accounts shall on payment of the prescribed fee be furnished to the debtor, the creditors or any other persons interested (//). of motion to compel compliance, Man. 61. he will have to pay the costs so (/) The fee is one shilling on occasioned, though before the hear- every application. See order as ing he has complied, B,e Gallant, to fees, post, j). 193. Ex parte Board of Trade, (1893) (g) As amended bv 3 & 4 Geo. 5, 10 Mor, 128 ; Re Freeman, Ex c. 34, Sch. 2. parte Board of Trade, (1894) 1 ( 185 ) DEEDS OF ARRANGEMENT RULES, 1890, 1914. (The following Eules were made (November 26, 1890), under section 25 of the Bankruptcy Act of 1890, and were amended by Deeds of Arrangement Kules of March 23, 1914 :— ) 1. These Eules shall come into operation on the first day of January, 1891. They may be cited as the " Deeds of Arrangement Rules, 1890." 2. In these Eules, unless the context or subject-matter otherwise requires, terms and expressions shall have the same meanings as the same terms and expressions have in the Deeds of Arrangement Act, 1887, and the rules made thereunder, and in section 25 of the Bankruptcy Act, 1890. Returns of Registered Deeds. 3. The returns of the registration of deeds of arrange- ment to be made to the Board of Trade by the registrar shall be made once every week commencing with the 8th of January, 1891, and each return shall comprise all the deeds of arrangement which have been registered during the week immediately preceding the day on which the return is made. 4. Each return shall be signed by the proper officer of the central office of the Supreme Court, and shall be transmitted by him to the Board of Trade addressed — Bankruptcy Acts, The Inspector-General in Bankruptcy, Board of Trade, Whitehall, S.W. 5. Each weekly return shall contain the following par- ticulars relating to each deed of arrangement comprised in the return : — (1. ) The date of the deed. (2.) The date of registration. (3.) The full name and address of the debtor. (4.) The description of the trade or business of the debtor. (5.) The place or places where the debtor carries on busi- ness, and the title of the firm (if any) under which the business is carried on. Short title and com- mence- ment. Interpre- tation. Eeturns of registered deeds. Transmis- sion of return. Contents of return. 186 Deeds of Arrangement Rules^ 1890, 1914. Form of return. lleturns by registrar. Transmis- sion of accounts. (G.) The full name and address of each trustee (if any) under the deed. (7.) The nature and effect of the deed, and where a com- position is provided for, the amount of composition in the £, payable thereunder. (8.) The gross amount and the net amount of liabilities as shown in the register. (9.) The gross value and net value of tlie property as shown in the register. (10.) Such further particulars as the Board of Trade may by letter addressed to the registrar require. 6. The return shall be made in the Form No. 1 in the Appendix, with such variations as circumstances may require. [6^,] The Eegistrar shall once a week commencing with the 9th day of April, 1914, furnisli the Board of Trade with copies of all alterations in and additions to the register of each Deed of Arrangement which have been made during the week immediately preceding the day on which the return is made. Accounts of Receipts and Payments. 7. (1.) The account of receipts and payments to be trans- mitted to the Board of Trade by every trustee under any deed of arrangement as defined l)y section 4 of the Deeds of Arrangement Act, 1887, shall be in the Form No. 2 in the Appendix, in the Deeds of Arrangement Eules, 1890, with such variations as circumstances may require, and shall be on sheets 13 inches by 16 inches, and shall be transmitted to " The Inspector-General in Bankruptcy, Board of Trade, Whitehall." (2.) Where a Deed of Arrangement has been executed prior to the 1st day of x\pril, 1914, such account of receipts and payments shall be transmitted within 30 days of the 1st day of January in every year, and shall be verified by an affidavit in the Form No. 3 in the Appendix to the Deeds of Arrangement Eules, 1890, as altered by Order of 15th July, 1897. (3.) Where a deed is executed on or after the 1st day of April, 1914, the first account of receipts and pay- ments, commencing at the date when such deed was executed and brought down to the end of 12 months from the date of registration thereof, sliall be trans- mitted within 30 days from the expiration of such 12 months, and the subsequent accounts shall be transmitted at intervals of 12 months. Each account shall be brought down to the end of the Deeds of Arrangement Rules, 1890, 1914. 187 Realiza- tions. Divi- dends. period of 12 months for which it is sent and shall be verified by an affidavit in the Form No. 3// in the Appendix. 8. In the account each receipt and payment must be Receipts entered in such a manner as sufficiently to explain its and pay- nature. 9. When the trustee carries on a business, a trading Trading account must be forwarded as a distinct account, and the account, totals of receipts and payments on the trading account must alone be set out in the yearly account. The trading account shall be in the Form No. 4 in the Appendix, and shall be on sheets 13 inches by 16 inches. 10. Petty expenses must be entered in the accounts in Petty cx- sufficient detail to show that no estimated charges are penses. made. 11. Where property has been realized the gross proceeds of sale must be entered under receipts in the account, and the necessary disbursements and charges incidental to sales must be entered as payments. 12. Where dividends or instalments of composition are distributed under the deed, the total amount of each dividend or instalment of composition must be entered in the trustee's account as one sum, and the trustee shall forward to the Board of Trade (1) with each account in which a charge in respect of dividend or composition appears a statement in the Form No. 5 in the Appendix to the Deeds of Arrange- ment Eules, 1890, as altered by Order of 15th July, 1897, showing the amount of the claim of each creditor and the amount of dividend or composition payable to each creditor, distinguishing in such statement the dividends or instalments of composition paid and those remaining unpaid ; and (2) with his final account a complete statement in similar form showing the amount of the claim and the full amount of dividend or composition paid to or reserved for each creditor. Such statements shall be on sheets 13 inches by 8 inches. 13. Where the deed has been made by a firm of debtors in partnership, distinct accounts shall be transmitted of the joint estate and of each of the separate estates. 14. Where it appears to the Board of Trade, that the account transmitted by a trustee under a deed of arrange- ment is incomplete, or requires amendment or explanation , the Board of Trade may require such account to be com- pleted or amended, or requ^ire the trustee to furnish explana- tions with reference to any of the entries appearing therein ; and any such requirement l)y the Board of Trade may be Partner- ship accounts. Imperfect accounts. Deeds of Arrangement Bides, 1890, 1914. Affidavit of no re- ceipts or payments. Affidavit verifying final account. Summary of ac- counts or modified forms of account in particular cases. Exemp- tion from transmis- sion of accomits when trusts fuimied prior to Jan. 1, 1891. Before w^hom affidavit to be sworn. enforced in the same manner as the transmission of accounts under section 25 of the Bankruptcy Act, 1890. 15. Where a trustee has not since the date of his hecom- ing trustee, or since the last time that his accounts have been transmitted, as the case may be, received or paid any money on account of the debtor's estate, he shall, at the period when he is required to transmit his accounts to the Board of Trade, forward to the Board of Trade an affidavit of no receipts or payments. 16. As soon as a trustee has realized all the property included in any deed of arrangement, or so much thereof as can probably be realized, and has distributed a final dividend, or final instalment of composition, or in any other case as soon as the trusts of the deed and the obligations of the trustee have been completelj' fulfilled, the trustee shall forthwith transmit his final account with an affidavit in the Form No. 6 in the Appendix hereto. (The following two rules were added (4th May, 1891) and came into operation on 4th June, 1891 : — ) 17. In any particular case in which it shall appear to the Board of Trade that an account of receipts and payments in the form and containing the particulars specified in the Deeds of Arrangement Rules, 1890, may for special reasons be dispensed with, the Board of Trade may permit the trustee to transmit, instead of accounts in the form therein specified such a summary of his accounts or modified statement of accounts as to the Board of Trade shall appear sufficient. 18. Where a trustee under a deed of arrangement satisfies the Board of Trade by an affidavit or otherwise that the trusts of the deed, or the obligations of the trustee thereunder, were complete fulfilled or discharged prior to the 1st day of January, 1891, the accounts prescribed by the Deeds of Arrangement Rviles, 1890, and these rules need not be transmitted. (The following rule was added (8th Jidy, 1905) and came into operation on 1st August, 1905 : — ) 19. All affidavits required by or made in pursuance of section 25 of the Bankruptcy Act, 1890, and the Deeds of Arrangement Rules, 1890, shall, if sworn in any place in England or Wales, be sworn before a Commissioner for Oaths, or before a Justice of the Peace for that place ; and may, if sworn in any place out of England and Wales, be sworn before any person having authority to administer an oath in that place. Forinf< under Birds of Ammgement Hules. APPENDIX. j\'o. 1. — Fonti of Rein III of Registered Deeds of Arrani/enmif. Eeturu of Deeds of Arrangement registered during the weeli ending the day of , 19 , made pursuant to section 25 of the Bankruptcy Act, 1890. 18<> Amuunt of Property S o a. a •go and Liabilities as .2-2 Ph'E ^ 2 _ estimated bj- Debtor, <» c 4) tn Ss s •2'S^ >ffect of Com Property. Liabilities. a o .2 00 Ig •Si: _^ !« _^ 2 .a in^ ^ 3 S i5 C 5 ,- o 3 S 3 to ■c ■~ c •s S« .2 = || is <^3 2 3 11. as - <; u 00 o a a So a|c BH^ y-s-n OtS t3 ^ ^ jjj S a ;zh g ^"^ Q g§§ ^■H ^g.S 5 o 25S O o » o a a No. 2. — Tiustees Accouid of Reieipts and Pdi/rnents. No. The Bankruptcy Act, 1890. In the matter of a deed of arrangement — Between and his creditors. Dated the day of , 19 . Eegistered the day of , 19 . Trustee. Account of Receipts and Payments pursuant to section 25 of the Bankruptcy Act, 1890. Receipts. Payments. Date. Of whom Nature of a mount received. Receipt. Amount. Date. To whom paid. Nature of Payment. Amount. Note. — The outstanding estate consists of \^liere set out particulars of aiiij outstandinij estate, and the estimated vahic thereof^. 190 Forms under Deecl^t of Arrangement Rules. No. 3. — Affidavit veiij'i/inii Tru>ih'es Arrount. In the matter of a deed of arrangement dated the day of , 19 , and registered the day of , 19 , l)etween A. B. as dehtor, and G. H as trustee. I, G. H., of , the trustee of the estate com- prised in the above-mentioned deed, make oath and say : — That "the account hereunto annexed marked B contains a full and true account of mjj receipts and ivujmentH on account of the estate comprised in the said deed from the day of , 19 , to the day of , 19 , inckisive, * and that I liave not, nor has any other person by my order or for my use, during such period received any moneys on account of the said estate * other than and except the items mentioned and. specified in the said account. (State whether he has sent to each creditor a statement of account, (mte, p. 8.) Sworn at, &c. No. "ia. — Ajjidiirit verifijing Trustee'' s Account. In the matter of a deed of arrangement, dated the day of , 19 , and registered the day of , 19 , between A. B. as delator and G. H. as Trustee, I, G. H., of the trustee for the purposes of the above-mentioned deed [or the person distributing the composition herein] make oath and say — 1. That -Hhe account hereunto annexed marked B contains a full and true account of my rexeipts and paijments on account if flie estate comprised in the said deed from the day of 19 , to the day of 19 , inclusive *and th(d I have not, nor has any otlier person by my order or for my iise during such period, received or paid any moneys on account of the said estate *other than and except the items mentioned and specified in the said account. 2. That on the day of 19 , and the day of 19 ,1 duly sent to each creditor of the said who has assented to the deed a statement of accounts and proceedings as required by Section 32, Sub-section 2, of the Bankruptcy and Deeds of Ari-angement Act, 1913. Sworn at, kc. * If no receipts or payments, strike out the words in italics. Forms under Deeds of Arrangement Rules. 191 Xo. 4. — Trustee's Trading Account. (Title as in No. 3.) G. H., the trustee of the property of the bankrupt in account with the estate. Dr. \ late. Receipts. Payments. Or. (Date) G. H., Trustee. * We have examined this account with the vouchers, and find the same correct; and we are of opinion that the expenditure has been proper. Dated this day of , 19 . COMJIITTEE OF INSPECTION. {or member of the Committee of Inspection.) * To be inserted if the accounts have been audited by a Committee of Inspection. No. 5. — List of Dividends or (Jomposition. (Title as in No. 3.) I hereby certify that a dividend (or composition) of in the £ has been paid, and that the creditors whose names are set forth below are entitled to the amounts set opposite their respective names. Dated this day , 19 . Trustee. To the Board of trade. Christian Name. Amount of Proof. A mount of Dividend (or Composition). Paid. Unpaid. 192 Forms under Deeds of Arrange ment Rales. Ko. 6. — Aflidai'it rerifyimj Trustee's Final Account. (Title as in No. 3rt.) I, of , the trustee for the purposes of the ahove-uientioned deed [or the person distri- buting the composition herein] make oath and say : — 1. Tliat *//<(? account hereunto annexed mariicd B contains a fidl and true account of mt/ receipts and paipnents on account of tlie estate compriscit in the said deed, from the day of to the date of swearing this my affidavit inclusive '^and that I have not, nor has any person by my order or for my use during such period received or paid any moneys on account of the said estate, *otfier than and except tJie items mentioned and specified in the said account. 2. fThat all the property assigned under the deed, or so much thereof as can probably be realized, has been realized, and distributed according to the terms of the deed, and that a dividend (or dividends) of in the £ has been paid as shown in the list hereunto annexed, marked C. Or, 2. |That the composition proposed under the deed has been fully received and distributed as far as possible, as shown in the list hereunto annexed, marked C. 3. |That on the day of 19 and the day of 19 I duly sent to each creditor of the said who has assented to the deed a statement of accounts and proceedings as required by Section 32, Sub- section 2, of the Bankruptcy and Deeds of Arrangement Act, 1913. Sworn at, &c. * If no receipts or paymouts, strike out the words in italics. t Strike out paragrapli not applicable, or if neither paragraph is applicable strike out both and add a special paragraph setting out the facts. X Strike out paragraph 3 where deed executed before 1st April, 1914. Feefi under Bankrtqjtcy Acty 1890, ■'). (10.) In any other case the Court may either approve or refuse to approve the proposal. (11.) If the Court approves the proposal, the approval may be testified by the seal of the Court being attached to the instrument containing the terms of the proposed com- position or scheme, or by the terms being eud^odied in an order of the Court. (12.) A composition or scheme accepted and approved in pursuance of this section shall be binding on all the creditors so far as relates to any debts due to them from the debtor and provable in bankruptcy, but shall not release the debtor from any liability under a judgment against him in an action for seduction, or under an affiliation ordei', or under a jiKlgment against him as a co-respondent in a matrimonial cause, except to such an extent and under such conditions as the Court expressly orders in respect of such liability. (13.) A certificate of the official receiver that a composition («) These facts are set out in their claims, see ante, p. 63. The sub-s. 8 of s. 8, which is substi- amount in this sub-section was tuted for s. 28 of tbc Bankruptcy reduced to 5.s. by s. 7 of the Bank- Act, 1888. ruptcy and Deeds of Arrangement {b) As to creditors wbo release Act, 1918. Bankrui'fij/ Art, 18!)0 {sn-f.^. ;5, ()). 197 or scheme lias been duly accepted and approved shall, in the absence of fraud, be conclusive as to its validity. (14.) The provisions of a composition or scheme under this section may be enforced ])y the Court on application by any person interested, and any disobedience of an order of the Court made on the application shall be deemed a contempt of Court. (15.) If default is made in payment of any instalment due in pursuance of the composition or sclieme, or if it appears to the Court, on satisfactory evidence, that the composition or scheme cannot, in consequence of legal difficulties, or for any sufficient cause, proceed without injustice or undue delay to the creditors or to the debtor, or that the approval of the Court was obtained by fraud, the Court may, if it thinks fit, on application by the official receiver or the ti'ustee, or by any creditor, adjudge the debtor bankrupt, and annul the composition or scheme, but without prejudice to the validity of any sale, disposition, or payment duly made, or thing duly done, under or in pursuance of the composition or scheme. Where a debtor is adjudged bank- rupt vinder this sub-section, any debt provable in other respects, which has been contracted before the adjudication, shall be provable in the bankruptcy. (16.) If under or in pursuance of a composition or scheme a trustee is appointed to administer the debtor's property or manage his business, or to distribute the composition, section twenty-seven {<•) and Part V. {d) of the principal Act shall apply as if the trustee were a trustee in a bank- ruptcy, and as if the terms "bankruptcy," "bankrupt," and " order of adjudication," included respectively a com- position or scheme of arrangement, a compounding or arranging debtor, and order approving the composition or scheme. (17.) Part III. {(■) of the principal Act shall, so far as the nature of the case and the terms of the composition or scheme admit, apply thereto, the same interpretation being given to the words " trustee," " bankruptcy," " bankrupt," and " order of adjudication," as in the last preceding sub-section. (18.) No composition or scheme shall be approved by the Court W'hich does not provide for the payment in priority to other debts of all debts directed to be so paid in the distribution of the property of a bankrupt. (19.) The acceptance by a creditor of a composition or (t) This section relates to dis- tion, costs, accounts, release, covery of the debtor's property. appointment and removal, &c. ((/) Part V. relates to trustees {c) Part III. deals with adminis- in bankruptcy, their remunera- tration of property. 198 Biuihaptcii Act, 1890 {sicU. 3, 6). Jlesolu- tion for accept- ance of composi- tion or scheme. scheme shall not release any person who under the principal Act and this Act would not be released by an order of discharj' Arrangeimmt Act, 1913. Bills of Sale at the time uf the reuistratiou of a deed of arraiigeiiient, or, in the case of a deed of arrange meut assented to after registration, witliin twenty-eight days after registration or within such extended time as the Hi^h Court or the court having jurisdiction in 1>ankruptcy in the district in which the debtor resided or carried on business at the date of the execution of the deed may allow, a statutory declaration b}' the trustee that the requisite majority of the creditors of the debtor have assented to the deed of arrangement, which declaration shall, in favour of a purchaser for value, be (conclusive evidence, and in other cases be prima facie evidence, of the fact declared. (5) In calculating a majority of creditors for the purposes of this and the next following section, a creditor holding security upon the property of the debtor shall be reckoned as a creditor only in respect of the balance (if any) due to him after deducting the value of such security, and creditors whose 10 Deeds of Arrangemeuf Act, 11)18. Penalty on trustee acting when deed ofarrange- uaeut void. 50 & 51 Vict. c. 57. Effect of notice to criMlitors (a) A certificate that the seciuity required by this section has been given by a trustee, signed by the Registrar to whom it was given and filed with the Registrar of Bills of Sale, shall be conclusive evidence of the fact. (4) All moneys received by a trustee under a deed of arrangement shall be banked by him to an account to be opened in the name of tlie debtor's estate. 30. If a trustee acts under a deed of arrange- ment — (a) after it has to his knowledge become void by reason of non-compliance with any of the requirements of the Deeds of Arrange- ment Act, 1887, or this Act ; or (1)) after he has failed to give security within the time and in the manner provided for by this Act ; lie shall l)e liable on summary conviction to a fine not exceeding li\'e pouuds for every day between the date on which the deed l)ccamc void or the ex- piration of the time within which security should have been given, as the case may be, and the last day on which he is proved to have acted as trustee, unless he satisfies the court before which he is accused that his contravention of the law was due to inadvertence, or that his action has been confined to taking such steps as were necessar\' for the pro- tection of the estate. 31^ — (I ) Tf the trustee under a ilccd of arrange- ment serves in the prescribed manner on any Deeds of Arrangement Act, 1913. 211 creditor of the debtor notice in writing ot" the of deed of arrange- execution of the deed and of the filing of the ment. certificate of creditors' assents, with an intimation that the creditor will not, after tlie expiration of one month from the service of the notice, be entitled to present a Ijankruptcy petition against the debtor founded on the execution of the deed, or on any other act committed by him in the course or for the purpose of the proceedings preliminary to the execution of the deed, as an act of bankruptcy, that creditor shall not, after the expiration of that period (unless the deed becomes void), be entitled to present a bankruptcy petition against the delator founded on the execution of the deed, or on any act so committed by him, as an act of bankruptcy. (2) Where a deed of arrangement has become void by virtue of the Deeds of Arrangement Act, 1887, or this Act, the fact that a creditor has assented to the deed shall not disentitle him to present a bankruptcy petition founded on the execu- tion of the deed of arrangement as an act of bankruptcy. 32. — (1) Where in the course of the administra- Audit and tion of the estate of a debtor who has executed a '^^'^°^"*^- ) The causes which delay the termination of the winding up of the estate are (c). The estate will probably be completely wound up within The following special circumstances affect the costs of reahsation and the administration of the estate, viz. {d) Trustee. Address Date (a) Insert name of Bank. (b) Insert particulars or annex schedule. (c) Insert particulars or annex schediile. (d) Insert particulars or annex schedule. No. 11. — DeUor's Affidavit. In the High Court of Justice, King's Bench Division. I, of make oath and say as follows : — 1. That on the day of , 19 , 1 executed a Deed of («). 2. The total estimated amount of my property included under the deed is £ , and the net amount of my pro- perty included under the Deed, after deducting £ , being the value {h) of securities held by creditors, and required to cover debts due to them, is £ 3. The total estimated amount of my liabilities included under the Deed is £ , and the net amount of my liabih- ties included under the Deed, after deducting £ , being the (c) amount covered by securities held by creditors, is £ 4. {d) The total amount of the composition payable there- under is £ 5. The names of my creditors under the Deed with their full postal addresses (so far as the same are known to me) and the amount of debt due to or claimed by each of such 230 Foniis under Deeds of Arrangement Rules, 1914. creditors are contained in the Schedule to this my Aftidavit. Sworn at this day of 19 , Before me, A Commissioner for Oaths. (a) State whether deed of assignment of property ; deed of or agree- ment for a composition ; deed of inspectorship ; a letter of licence or an agreement to carry on or wind up debtor's business. {h) The estimated surplus (if any) from securities held by creditors should not be deducted from the gross amount of property. (c) This amount must correspond with the amount of securities deducted above. No deduction should be made in respect of the un- secured balances of partially secured debts. {d) If there is no composition payable, strike this clause out. Schedule. Names of Creditors. Full Postal Addresses. Amount of debt due to or claimed by each creditor after deduction of value of securities held by the creditor. Forms under Deeds of Arrangement Rules, 1914. 231 Remarks. a 3 is 3! -a « S fl a 2 go- 2 < •■jaamiuioddB jo aiB(i | •pa^nioddB oioqjtt &^ •aa^stux A^sn jo aaajppv pnB auiB^ | li I ■ei6I 'Py luatuaSuBJiv JO spaaQ puT! ^D5dnJ3(UBg aqi jo cs 'ass japnn aatstiJX •^'1 aDijojI Jo aiBQ ■ET6 1 "V^Y inatnaaaBjay jo spaad puB jfoidnanuBa ^^'^ JO it) 65 'oss .tapnn 111103 jo japao Jo sibq 5 ■noil -Bsaadsip jo nojiBiBioap jo aiBd •a^Bagiwaa Jo a;B(i | Date of Declara- tion of Assent by majority of Credi- tors. Date of Regis- tration. =1 « -3 G Q Amount of lial)ilities as estimated liy Debtor. •eapHR^II JO ^nnouiB ^aii '^ i •sanuaoas ifq pajSAOO s^qap jo innoniv M 1—1 •sat?!Iiq'!l JO jnnomB sso.19 =rt Amount of property as estimated by Debtor. •j£}jadojd JO an^BA la^ | «n •suidins paiBtnnsa -Cub anipnpxa naAiS satjunoas jo aniBA =rt •iCwadoad jo ^nnoniB sso.i{) [ «^ Nature and effect of deed aud amount of compo- sition in tbei. Name and Address of Trustee (if any). 'ssanisnq no psujvo joiqaci qDtqAi as'pun stnjg jo nijg jo apix •uojiduosBd 1 •no patuBO ssaujsnq aiaqAv s30B[d ao aDtJid •ssajppv 1 •joiqaQ JO aniBii | d ' IZi 1 INDEX. ACCESSION TO DEED. See Assest of Creditors ACCOUNTANT, employed under inspectorship, 56 is agent of debtor, 56 trustee or inspector, may be paid for services, 56, 97, 103 i)recedent of provision for employment of, 97, 103 ACCOUNTS BY TRUSTEE, audit of, 7, 222 failure to transmit, 9 liability to account, 29 to be sent to creditors, 8 to be transmitted to Board of Trade, 29 ACT OF BANKEUPTCY, composition, when, an, 43 creditor having executed cannot allege deed of assignment to be, 11, 12 deed of assignment is, 18 effect of notice to creditors, 6 inspectorship deed is not, 53 letter of licence is not, 138 n. revoked deed whether an, 17 ACTIONS, power to bring or defend, precedent of, 79, 92, 98, 105, 11(5 AFFIDAVITS, adequacy of, 157 by debtor, 156, 157, 229 filed on registration, 173, 174 form of, by trustee on transmission of accounts, 189, 191 on registration, 173, 174 how sworn, 164, 165 AGENT, employed under inspectorship, whether agent of debtor or inspector, 56 234 Index. ARBITRATION, disputes may be settled by, precedent, 80, "J2, 08, lOG, 117 ARRANGEMENTS, outside bankruptcy, bind only assenting creditors, 22, 51 ASSENT OF CREDITORS, 21 after payment of dividend, 21 form of, 223 limit of time for, 21 relief against omission to assent within, 25 precedent of form of, 110, 141 revocation of, 21 signing not necessary, 21 what amounts to, 21 witliout being party to deed, 21 ASSIGNMENT, DEED OE, an act of bankruptcy, 18 though not assented to by creditors, 17 avoidance of unregistered, 154 clauses in, assignment, 7G, 88, 06, 135 copyholds, covenant to surrender, 78, 00 covenant not to sue, 35, 85, 03 leaseholds, trusts of, 80, 02 majority of committee to prevail, 83 powers, actions, bringing or defending, 70, 02, 08 arrangement with mortgages, 70, 01 committee, apiwintment of new members of, 83 compromise of debts, 70, 01 contracts, completion or rescission of, 80, 02 disputes, settlement of, 80, 02, 08 dissentient creditors, settling with, 83, 08, 112 employment of debtor and assistants, 79, 91, 97 meetings of creditors, 82 new or additional trustees, 82, 08 n. Ijostponement of conversion, 76, 89 power of attorney, 80, 03, 108 removing trustee, 83 remuneration of debtor and assistants, 70, 01, 07 of trustee, 70, 01, 07 subsistence money of debtor, 70, 01, 07 p)roviso for carrying on business, 136 recitals, 75, 87 release, immediate, 81, 08 on certificate, 85, 04, 109 rules of bankruptcy as to joint and separate estates, 02 securities, reservation of, 81, 04 shares, trust of, 7G n. sureties, proviso as to, 81, 04 trust, of proceeds, 77, 80, 06 to realize, 76, 88, 06 verification of debts, 78, 00 Index. 235 ASSIGNMENT, DEED OY— continued. executed by trustee or assignee, must be, 3 followed by composition, IG fraudulent, 19 irrevocable, when, 15 meaning of, in Bankruptcy Act, 1883.. 19 object of deed, 153 operation of, 13 ordinary provisions in, beuefit of all creditors, 30 copyholds, mode of dealing with, 34: covenant not to sue, 35 creditors, how to be described, 31 parties, 30 release. Si ■what properly assigned, 31 exception of leasehold, 32 shares liable to calls, 32 pensions and salaries, 33 precedent of, by partners, 87 short form, 9(J with covenant not to sue, 85 immediate release, 75, 81 proviso for carrying on business, 135 reconveyance of, 17 registration, 20 exemption under Bill of Sale Acts, 30 revocable, when, 14 signing not necessary for assent, 21 special provisions, 35 call meetings of creditors, 35 carry on business, 36 remove trustee, 35 settle with dissentient creditors, 35 statutory. See Statutory Composition or Scheme superseded by bankruptcy, 18, 25-27 composition, 16, 17 unassignable property, 33 use of, when revocable, 3-5 when irrevocable, 15 revocable, creditors named as parties but not aware of deed, 1-1 creditors not parties, l-t ATTORNEY, POWER OF, precedent of, SO, 93, 108, 119 AVOIDANCE, of composition deed, on default, 45 precedent of, 122, 130 of deeds of arrangement generally, on failure to give security, 5 where deed is unregistered, 2 where majority of creditors do not assent, 3 23G Index. AVOIDANCE— coHfi-H?(£'i. of inspectorship deed, on issue of execution or bankruptcy or breach of covenant, 58, 5!) precedent of, 110, 1-30 of letter of licence, precedent of, 138 of unregistered deed of arrangement, 154 BANK, deposit of moneys in, by trustee, 6 BANKRUPTCY, avoidance of deed in case of, D, 7, 11, o3, 40, 47, 97, 107, 109, 117 how far deed of assignment an act of, 18 composition an act of, 43 inspectorship an act of, 53 revoked deed whether an act of, 17 right of creditors to prove in, after release, 40 rule in, as to administration of joint and separate estates to be followed, 47, 92, 104 as to valuing securities, 47, 95 n. "BENEFIT OF CREDITORS," meaning of, 18, 152 BILLS OF SALE ACT, registration under, 30, GO, 152 n. sufficiency of description under, 158 " true copy," meaning of, in, 157 BONA FIDES, essential, 20, 48 BOOK DEBTS, assignment of, 34 BUSINESS, covenant to carry on or wind up, under control, 30, 54, 101 precedent of, 99, 113 under statutory arrangement, 142 l^ower to continue, under deed of assignment, 30 creditors do not become jiartners by virtue of, 36 COLLUSION, between debtor and surety, 131 n. COMMITTEE, appointment of, 30, 75 new members of, 83 majority to prevail, 83 COMMUNICATION, of deed to creditors, 14, 15 COMPANY, arrangement by, not witliin Act, 154 Index. 237 COMPOSITION, account by trustee, 51 act of bankruptcy, when, 43 as notice of suspension of payment, 43 by partners, 47 clauses in deed of, 45 assignment on trust to secure comi)Osition, 124 covenant by creditors not to sue, 122, 129 debtor to pay composition, 124, 12'J proviso for revival of debts, 122, 130 recitals, 121, 124, 128 clauses in deed of, release of debtor, 126, 130 securities, reservation of, 123 sureties, proviso as to, 123 for creditors generally, not a bill of sale, 30 particular creditors, with assignment, whether a bill of sale, qucere, 30, 152 n. precedent of deed of, with assignment and release, 124 covenant not to sue, 122 postponement by certain creditors of their debts, 128 surety, 115, 128 registration, 52, 151 statutory. See Statutory Composition suspension of payment, 43 usual provisions of, 45 covenant to pay composition, 45 delivery of bills or notes, 45 release by creditors or covenant not to sue, 45 reservation of rights as to securities, 45 against sureties, 45 with assignment, 43 CONCURRENCE, of debtor, to sale by inspectors, 55 CONSIDERATION, for composition, 42 with all or several creditors, 42 CONTRACTS, how trustees should make, 36 power to complete or rescind, 80, 92 CONVEYANCE. See Assignment "CONVEYANCE OR ASSIGNMENT," meaning of, within Bankruptcy Act, 1883.. 19 COPY, office, 162 fee for, 177 value of, as evidence, 162 what is true copy, 157 238 Index. COPYHOLDS, CDveniint to surrender, 78, 90 effect of general conveyance on, 78 n. mode of dealing with, 34, 78 n. trusts of, 78 COSTS, of trustee, where deed invalid, 27 provision for payment of, 125 n. COVENANT, by creditors, for postponement of claims, 49 precedent of, 128 for release of debts, 34, 45, 58 precedent of, in assignment deed, 85, 93 in composition deed, 122, 130 in inspectorship deed, 109, 119 not to sue, 23, 34, 43 precedent of, in assignment deed, 85, 93 in composition deed, 122, 129 in inspectorship deed, 100, 114 by debtors, to assign estate, under inspectorship, 57 precedent of, 107, 118 carry on or wind up business, 30, 55 precedent of, 101, 114 pay composition, 45 precedent of, 124, 129 surrender copyholds, 78 CKEDITORS, description of, in deed, 31 in Deeds of Arrangement Act, 1887. ..152 meaning of, 156 postponement of claims by, 50, 129 power to settle with dissentient, 37 secured, 40 unsecured, 156 who to be included in debtor's affidavit, 156, 174 n. " CREDITOKS GENERALLY," meaning of, 18, 152 DEBTOR, meaning of, 150 n. payment of allowance or salary to, 79, 91, 97, 103, 115 power to employ, 79, 91, 97 DEBTS, payment of part for whole, 41 parol agreement for, 41 rule in cases of arrangement with creditors, 42 where original terms of payment are varied, 41 preferential, payment of, 38, 77, 89 rateable payment of, 77, 89, 97 verification of, 78, 90, 106, 117 •what not released by statutory arrangement, 196 Index. 239 DEEDS OF ARRANGEMENT ACT, 1887 .. 149 e< sf^. rules under, 1G9 et seq. DEEDS OF ARRANGEMENT AMENDMENT ACT, 1890.. 179 et seq. DISCRETION OF COURT, how exercised ia statutory arrangements, 62, 196 DISSENTIENT CREDITORS, power to settle with, 83, 98, 112 DIVIDENDS, clause for payment of, o9, 77, 89, 97 retention of, 105 not to be disturbed by subsequent assent of creditors, 21 trustee's duty to reserve, 23 DIVISION OF ESTATE, when to be made, 18 ELIZABETH, STATUTE OF (13 Eliz. c. 5), 19 ENFORCEMENT OF TRUSTS, by what Court, 10 EQXTALITY, agreement for ioequality of payment, 49 among creditors, 48 ESCROW, deed delivered as, not an Act of bankruptcy, 54 instead of covenant to assign, 54 EXTRACTS FROM REGISTERED DEED, fee for, 163 n., 177 FEES, application to appi'ove statutory arrangement on, 74 inspectioQ of deed, 163 n. orders as to, for inspecting deed, 177 registration, 177 searching register, 177 on accounts transmitted to Board of Trade, 193 registration, 165 searching register, 177 FOREIGN DEBTOR, arrangement by, 154 FRAUDULENT DEED, under 13 Eliz. c. 5... 19 INDEMNITY, to trustees making division, 19 INSPECTION OF REGISTERED DEED, 162 fee for, 163 n., 177 240 Index. INSPECTORS, liability of, 5G not trustees witliia Bankruptcy xVct, 71, 142 powers of, 55 remuneration of, D7 «., 104 INSPECTORSHIP DEED, assignment, in 100 n. clauses in, application of moneys, 103, 115 covenanty creditors, not to sue, 100, 114 by debtors, to allow inspection of books, 102 assign if required, 107, 118 carry on Ijusiness, 101 keep proper books, 102, 115 make up accounts, 101 not carry on new business, 103 wind up business, 114 deposit in bank, 104, 116 determination of deed, 110, 120 dividends, declaration of, 105 retaining moneys to answer debts not ascer- tained, 105 letter of licence, 100, 113 majority to prevail, 111 powers of inspectors, actions, bringing or defending, 105, 116 arrangement with mortgages, 107, 117 determination of deed, 110, 120 disputes, settlement of, 106, 117 dissentient creditors, settling with, 112 employment of assistants, 103, 115 indemnity, 112 new inspectors, appointment of. 111 power of attorney, 108, 119 remuneration of debtor and assistants, 103, 115 int-pector, 104 sale, 106, 116 subsistence money of debtor, 104, 115 recitals, 99, 113 release, 109, 119 rule of bankruptcy as to joint and separate estates, 104 securities, reservation of, 107, 118 sureties, proviso as to, 107, 117 verification of debts, 106, 117 different kinds of, 54 employment of accountant, 56, 103 in bankruptcy, when preferable to administration under an assignment, 71 not an act of bankruptcy, 53 precedent of, between partners and joint and separate creditors, where businesB to be carried on, 99 Index. 241 INSPECTORSHIP D^Y,\)— continued. precedent of, in bankruptcy proceedings, 142 where business to be wound up, 113 provisions of, application of moneys, 55 covenant by creditors not to sue, 55 debtor to assign if required, 57, 107 carry on business, 55 wind up business, 55 determination of arrangement, on breach of covenant by debtor, 59 execution issued or bankruptcy, 58 employment of assistants^ 55 inspector's powers, 55 bringing actions, 56 settling disputes, 55 verification of claims, 55 letter of licence, 55 release of debtors on certificate of inspectors, 58 registration, under Deeds of Arrangement Act, 59 whether required under Bills of Sale Act, 60 utility of, 54 when applicable, 53 INVALIDITY OF DEED, effect where trustee has acted, 25 where trustee acts after, 11 IRELAND, registration in, 179 JOINT AND SEPARATE ESTATES, administration of, 47, 92, 104 LAXDS CHARGES REGISTRATION AND SEARCHES ACT, 1888 registration under, 3, 194 LEASEHOLDS, acceptance of, by trustee, 32 declaration of trust by debtor as to, 80, 92 exception of, from assignment, 32 subsequent assignment of, does not require registration, 155 LICENCE, LETTER OF, in inspectorship deed, 55 precedent of, 100, 113 not an act of bankruptcy, 138 n. f)recedent of, 138 registration of, under Deeds of Arrangement Act, 59, 139 a. whether under Bills of Sale Acts, 60, 139 n. validity under Bills of Sale Act, 1882 .. 60 D.A. -^ 16 242 Index, LIMIT OF TIME. See Time LIMITATIONS, STATUTE OF, 51 MEETING OF CREDITORS, power to call, 35 precedent of, 82, 120, 126 MORTGAGEES, power to pay interest to, 79, 'Jl settle \vith,'lO, 91, 107 NOTICE, of avoiiliince of deed, 12 of suspension of payment, whether composition is, 43 to creditors of execution of deed, G form of notice to creditors, 227 OFFICE COPIES, 1(]2 fee for, 177 value of, as evidence, 162 PAROL AGREEMENT, for composition, how far effectual to avoid registration, 153 PARTNERS, creditors do not become, by receipt of dividends earned, 36 secured creditors of, 47 composition by, 47 PAYMENT INTO COURT, of surplus, 9 PENALTY ON TRUSTEE, for acting when deed void, 11 for failure to transmit accounts, 9 for making preferential payment, 9 PENSIONS, what assignable, 33 POSTPONEMENT, of claims by creditors, 50 precedent of, 129 PRECEDENTS. See Table of Contents PREFERENTIAL CLAIMS, must be paid under statutory arrangement, 69 provision for payment of, 38 PREFERENTIAL PAYMENTS by delator, 48 by trustee, 9 PROMISSORY NOTES, for payment of composition, 43 recital of delivery of, 121, 128 Index. 243 PROOF, by creditor? in subsequent bankruptcy, 40 PROPERTY, meaning of, 108 RECONVEYANCE, where assignment superseded by composition, 17 RECTIFICATION, of register, 160 REGISTER, under Deeds of Arrangement Act, form of, 159, 175, 231 inspection of, 162 rectification of, 160 REGISTRAR, who is, KiO REGISTRATION, avoiding necessity for, by parol agreement, 153 fees for, 165 in Ireland, 179 mode of, 155 not vitiated by subsequent signature of deed, 155, 157 supplemental deed of assignment of leaseholds, 155 under Bills of Sale Acts, when necessary, 30, 60 Deeds of Arrangement Act, 2, 52, 59, 155 in County Court, 163, 164 mode of, 155 rules regulating, 169 time for, 154, 156, 162 extension of, 160 under Land Charges Registration and Searches Act, 3, 194 unregistered deed, avoidance of, 154 RELEASE OF DEBTS, immediate, 34, 45 precedent of, 81, 98, 130 joint or separate, 94 n. on certificate of inspectors, 58 precedent of, 109, 119 official receiver or trustee in bankruptcy, 65 trustee and committee, 35 precedent of, 85, 93 on payment of composition, 45 precedent of, 122, 130 right to prove in bankruptcy after, 40 RESOLUTION, special, of creditors, under deed, 35 10—2 244 Index. RETURNS OF RKCilSTERED DEEDS, to be made to Board of Trade, 183 accounts accompanying, 183 affidavits, 187, 18i» fees, order as to, 103 forms, 188-1U2 rules, 185-188 form of, 188 rules as to, 185 REVOCATION, of deeds of assignment, 14-17 of assent, 24 RULES, under Bankru]itcy Acts, 187 Deeds of Arrangement Act, 169, 185 SALARY, clause for payment of, to persons employed, 79, 91, 97, 103, 115 trustee or inspector being an account- ant, 97, 103 when assignable, 33 SEARCH OF REGISTER, fee for, 163 n. in County Court, 164 n. SECRET PREFERENCE, 9, 48 SECURED CREDITORS, 4, 40 SECURITIES, reservation of rights as to, 40, 46 precedent of, 81, 94, 123 rule in bankruptcy as to valuing, 40 valuation of, 4, 40 SECURITY OP TRUSTEE, certificate of, 6, 226 cover note, 226 dispensing with, 5, 224 failure to give, 5 form of bond, 220 SEPARATE ESTATE, administration of joint and sc[iaratt; estates, 47, 92, 104 SHARES, assignment of, 32, 76 /'. SIGNING, after registration, does not vitiate registration or avoid deed, 155, 157 whether necessarj' to entitle creditor to benefit of arrangement, 21 STAMP DUTY, 158 Index. 245 STATUTOllY COMPOSITION OR SCHEME, after receiving order, 01 adjudication, ()1 amendment of, 69 annulling order of adjudication, 61, 199 annulment of scheme, 73, 145 aii]>roval by Court, 62 by majority of creditors, 62 deed of inspection, wliether preferable, 71 discharge of receiving order, 62, 203 discretion of Court, how guided, 63 distinction between composition and scheme, 61 n. effect of, approval of, 69 expunging jn'oof, 72 fees, 73 forms of, 142, 146 interest, 69 meaning of " reasonable security," 63 meeting of creditors, 62 misconduct of debtor, 66 must be reasonable, 64 payment into local bank, 72 proof of debts, 66 providing reasonable security for payment of 5s. in the £, 62 property included in, what, 67 reasonableness of arrangement, 64 refusal by Court, 62 when and how discretionary, 62 obligatory, 67 release, 65 remuneration of trustee, 72 statutory provisions as to, 195, 199 forms, list of, 205 rules, 201 what property included, 67 SURETIES, liabilitj^ not increased by subsequent assent, 22 reservation of rights against, 40, 46 precedent of, SI, 94, 117, 123 SURPLUS, debtor entitled to, 39 payment into Court of, y TIME, for assenting to deed, 4, 21, 24 executing composition, after agreement, 25 impeacliing deed, 20 registration, 154, 156, 162 extension t)f, 160 TRUSTEES, account hj, 7, 9, 29 appointment of new, 10, 82 audit of accounts, 7, 222 246 Index. TRUSTEES— coM^inttccZ. cannot refuse to \>^\ dividend to executing creditor, 24 costs of, 12, 2G duties of, 27 duty to ascertain validity of claim, 23 reserve dividend, 23 failing to transmit accounts, 9 liability for contracts, in carrying on business, oG liable to jiay, if notice of, cretUtor's claim, 24 new, appointment of, by court, 6, 10 power to ai)point, 82 personally liable to stamp T>oard of Trade return, if no assets, 29 l^osition of, when assignment superseded by bankruptcy, 25 deed proves invalid, 26 removal of, G, 3") proviso for, 83 remuneration of, 27, 28, 79, 91, 97 when may part with assets, 18 security to be given by, 5, 220 statement of trustees' accounts, 8, 229 statutory declaration by, as to assents of creditors, 224 us to dispensing with security, 224 VERIFICATION OF DEBTS, proviso for, 78, 90, lOG, 117 WAGES, must be paid, under statutory arrangement, 69, 143 provision for payment of, 38 PKINIKU BY WILLIAM CLOWES AND SONS, LIMITED, LONDON" AND BECCLES. v,^^ AA 000 758 329