SEQUESTRATION in Scots Law.—The aim of a sequestration is to vest in the trustee in a bankruptcy all the estate of the bankrupt with a view to its realisation and distribution among his creditors, according to their preferences, and to afford him, in a proper case, a discharge from his liabilities. A sequestra tion may be obtained at the instance and upon the application of either the lebtor himself (not necessarily notour bankrupt or insolvent) with concurrence at creditors qualified as aftermentioned, or one or more creditors so qualified, even though the debtor be a trader or not, a firm, a corporation (other than a railway or joint stock company), a married vvoman, an ineapax, a peer, a meinber bf parliament. Even a foreigner is not an exception, provided he has resided in Scotland for at least forty days ; but the court has power, within three months, to recall the award where the bankruptcy should more properly proceed in England or Ireland. The estate of a deceased debtor may, on the application )f the deceased's mandatary, or of a creditor or creditors duly qualified as after mentioned, also be sequestrated. Applications for sequestration are made by petition either in the Court of Session or in the Sheriff Court. The Sheriff Court having jurisdiction is that of the county where the debtor has resided or carried on business for the year Feceding the date of the petition for sequestration. A creditor's petition must be presented within four months of notour bank ruptcy being constituted. To support a sole creditor's petition it must be -founded on a debt amounting to not less than £50. To suppirt a petition by two creditors, or three or more, the debts must amount together respectively to not less than £70 or £100. The debt must not be a contingent one, though it may be liquid, illiquid, or future, and may include interest and expenses. The petition is verified by an affidavit of the creditor or his agent, accompanied by all vouchers necessary to prove the debt, and, upon its presentation, a citation is issued against the debtor requiring him to appear before the Court within a specified time and show cause, if he can, why seques tration should not be awarded. If no such cause be shown, and the debt claimed is not paid, the Court has no discretion (after production of evidence that the statutory requirements have been complied with) but to award seques tration, appoint the first meeting of creditors, and advertise a notice in the Gazelle. Subject to the debtor's right to any surplus lie is thereupon divested of his estate in favour of the whole body of his creditors for the purposes of the Bankruptcy Acts, the only property left to him being his necessary cloth ing and that of his wife and family. At the first meeting—called the " first statutory meeting "—a trustee is elected by those creditors who can prinul facie prove their claims against the estate by means, as a rule, of oath, business and other accounts and vouchers. A deduction nuist always be made in respect of 'securities, and the claim be made in respect of the balance. There is also elected at this meeting a committee of the creditors three in number (if there be so many creditors), who are called " The Commissioners." They act gratuitously, and their function is to advise with and form a check upon the trustee in his management of the estate. The bankrupt there puts in a statement of his affairs and places himself in the hands of the trustee in order to aid him in winding up the estate. As a rule the bankrupt is allowed a weekly dole. The Bankruptcy Act goes minutely into the mode in which the various classes of claims—contingent debts and annuities, for example— are assessed ; and in it will also be found the detail of the procedure at the election of the trustee, and an enumeration of the disqualifications for the office.
The trustee, who represents both the creditors and the debtor, derives his' title from an Act and Warrant, by which the Court confirms his appointment, and thereby he is completely vested with the bankrupt's estate. This he takes possession of, manages, realises, and converts into money with the view of its distribution among the creditors as directed by them or, failing such directions, with the advice of the commissioners, keeping all prescribed and necessary books and accounts, subject to a liability for penalties in the event of his default. Fixed salaries of office yield to the trustee any excess above a competence for the bankrupt ; and Government pay may be similarly docked. Alimentary funds, not in arrear and not in excess, cannot be touched, except indirectly as a condi. tion of discharge. As soon as may be after the Act and Warrant has been issued a day is appointed for the examination of the bankrupt—the third leading stage in the proceedings—at which the bankrupt is compelled, under penalty of apprehension, to make a full disclosure of all his affairs. His partners, wife, family, clerks, and others, who can give information in relation to the estate, are also liable to attend and submit themselves to examination. This examina tion is not the taking of evidence ; it is the procuring of information for the use of the trustee in the administration of the estate. Its object is "to ascertain what the bankrupt's estate consists of, where it is, what he has done with it or to affect it," not such matters as the validity of claims, or the whereabouts of the bankrupt himself. After the examination the second statutory meeting is called. This is the fourth and one of the most important steps in the process. Subsequently, the trustee having realised the estate and distributed it among the creditors, it is competent for the bankrupt to apply to the Court for his dis charge. Until this is obtained he labours under certain personal disqualifications in respect of his status as a citizen, though his status in family and non-official life may remain unchanged. The payment of a composition of five shillings in the pound will entitle him to a discharge, provided there has been no irregularity or fraud ; and so also will a less composition, if it can be proved that failure to pay more has arisen from circumstances for which the bankrupt cannot justly be held responsible. An offer of a composition can be made at the first statutory meeting and accepted at the second. The acceptance, however, must be the act of a majority in number and nine-tenths in value of the creditors. Only four-fifths in value will be a sufficient majority if the acceptance is made at a later meeting. Discharge upon a composition re-invests the estate in the bank rupt, under reservation of claim for the composition ; but if the composition is not paid the original debt will not revive. Payment of a dividend may also support an application for discharge, provided the dividend is of the amount requisite for a composition, that there has been no irregularity or fraud, and that the bankrupt has not fraudulently concealed any part of his effects or wilfully failed to comply with any of the provisions of the bankruptcy law. This dis charge may be craved at any time after the second meeting of creditors, if all concur ; and thereafter on the concurrence of a continually dwindling majority till two years after the award, when no concurrence is required.