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Bankruptcy

debtor, notour, creditors and insolvency

BANKRUPTCY, BCOTCH.—Bankruptcy in Scotland means public insolvency, and stands midway between a private insolvency and sequestra tion, by which latter a debtor is divested of his property for the benefit of his creditors. The technical term is notour bankruptcy, and it is constituted (a) by sequestration, or by an adjudication of bankruptcy in England or Ireland ; (h) by insolvency, with a duly executed charge for payment followed by imprisonment, absconding, or execution ; or with a sale of any of the debtor's effects under a poinding or a sequestration for rent ; or with his retiring to sanctuary for twenty-four hours, or making application for the benefit of cessio bonorum. Strict proof of inability of the debtor to meet his obligations as they arise is not always required ; it being sufficient if his actions are such as to give rise to an inference of insolvency. Notour bankruptcy is not the same thing as English bankruptcy proper ; it refers to the position of the debtor before he has been sequestrated. Sequestration would be the Scotch equivalent of the English bankruptcy, the term bank ruptcy in Scotland being applicable in England to the position of a person who has committed an act of bankruptcy. After notour bankruptcy, the creditors are in principle the true owners of the debtor's property, and from this follows as an effect of notour bankruptcy, that the debtor must abstain from any act that can affect the preference of his creditors ; he can not effectually do any deed to alter their condition and to confer preferences on his friends. Not even can he establish any equality between them.

The debtor may, however, make in his ordinary course of business necessary and proper payments in cash in respect of debts due at the time ; so, too, he may carry through transactions in the ordinary course of his trade, so long as there is no collusion and no notice to the creditor of his insolvency ; and also he may pay new debts, the result of new transactions, where the price paid is a just one, give conveyances for full value, and fair security for money borrowed. A second effect of notour bankruptcy is that of the equalisation of diligences and pari passu ranking of creditors. A further most important effect is the right of creditors to petition for sequestration. This may be done within four months after the constitution in any particular of notour bankruptcy ; but the debtor must have a personal residence or carry on business in Scotland. From this it will be seen that the notour bankrupt, and his dealings 3% ith his property and creditors, are subject to similar principles and effects as are the insolvent debtor and his dealings in England. Sec S EQ E STU AT I 0 N.