After the conclusion of the public examination, the debtor or the official receiver may apply to the Court for its approval of the proposal ; notice of the application must be given to each creditor who has proved who mav, even though he has voted at the meeting accepting the proposal, oppose its approval by the Court. In any case, the Court will, before approving, hear a report of the official receiver as to the terms thereof, and as to the conduct of the debtor, and any objections which may be made by any creditor. Nor will it approve the proposal if, in its opinion, the terms thereof are not reasonable ; or are not calculated to benefit the general body of the creditors; or provision is not made for payment in priority to other debts of all debts directed to be so paid in the distribution of the property of a bankrupt ; or where the debtor has so acted as to require the Court to refuse his discharge. In the latter case, before approval can be obtained, the proposal must provide reasonable security for payment of not less than 7s. 6d. in the pound on all the unsecured debts provable against the debtor's estate. Though such a proposal, when duly approved by the Court, is binding upon all the creditors, yet it does not release the debtor from any liability under a judgment against him in an action for seduction, or under an affiliation order, or under a judgment against him as a co-respondent in a matrimonial cause, except so far as the Court expressly orders in respect of such liability. The provisions of a composition or scheme may be enforced by the Court on application by any person interested, and any disobedience of an order of the Court made on the application will be punishable as a contempt of Court ; and a composition or scheme may be annulled if it appears that it cannot be worked out satisfactorily to the interests of the creditors, or that the debtor is in default in payment thereunder, or that it was obtained by fraud.
as we have already seen, a creditor is not entitled to share in the distribution of a bankrupt's estate until he has proved his debt, yet in the calculation and distribution of a dividend it is obligatory upon a trustee to make provision for provable debts appearing in the debtor's statement to be due to creditors residing at a distance and who have not had an opportunity to send in their proofs. In like manner provision mint be made for unascertained or disputed claims, and for the costs and expenses of the bankruptcy. Subject to such provisions, all money realised and in hand must be distributed to the creditors pro rata ; regard being had, how ever, to claims IN hich are required to be paid in full. The first dividend, if any, must be declared and distributed within four months after the con clusion of the first meeting of creditors; subsequent dividends at intervals of not more than six months. There is no remedy against a trustee personally for not making sufficient provision for a reserve in cases where he could not possibly have known that there would be any deficiency in realising a secured creditor's security. So long as there are any undivided assets available for dis tribution in the bankruptcy, a creditor may come in and prove his claim. A dividend in the hands of an official receiver or trustee cannot be garnished; nor does any action lie against the trustee for a dividend. But in the latter case the Court may compel the trustee to pay a dividend, even after his release, provided he has available funds in hand.
Discharge of the bankrupt.—The debtor having had a receiving order made against him, duly filed his statement of affairs, relinquished his property to the official receiver or a trustee, passed his public examination, possibly made a proposal for a composition or scheme, submitted to the investigations of meetings of his creditors, been adjudicated a bankrupt, and had his pro perty realised and distributed amongst his creditors, desires now but one thing, and that is his discharge. Until this is obtained he is what is termed an undischarged bankrupt, and as such is liable to imprisonment if he should obtain credit with any person to the amount of .e20 or more without disclos ing the fact of his bankruptcy, and that he has not been discharged therefrom. The offence is committed even if there was no intent to defraud, or if the credit was not stipulated for. Merely receiving and keeping such an amount
of goods, though sent in execution of an order for goods below 110, would be sufficient to bring the undischarged bankrupt within the reach of the law. This position, therefore, amounts in fact to a prohibition from trading on his own account. Moreover, until he receives his discharge the disqualifica tions enumerated above continue in full force ; and to make the discharge immediately available, it should be accompastied by a certificate of conduct.
We will now describe the conditions of discharge. At any time after being adjudged bankrupt the debtor may, notwithstanding he has been convicted under the bankruptcy laws, apply to the Court for his discharge. The application can only be heard after the conclusion of the public examina tion and in open Court. The discharge may be absolute, or suspended for a specified time, or subject to conditions as to earnings or income which may afterwards become due to the bankrupt, or as to his after-acquired property ; or it may be refused. In deciding as to the course to be adopted, the Court will take into consideration the report of the official receiver as to the bankrupt's conduct and affairs both before and during the proceedings of the bankruptcy, and any mitigating circumstances. The Court may also put such questions to the official receiver and to the debtor, and hear other evi dence; and if the discharge is granted, the debtor may be required to give any assistance yet necessary in the winding-up of his estate.
Facts determining question of discharge.—The Court will absolutely refuse the discharge in all cases where the bankrupt has committed any misde meanour under the Debtors Act or under the principal Bankruptcy Act, or any felony or misdemeanour connected with his bankruptcy, unless for special reasons the Court otherwise determines. The misdemeanours under the Debtors Act will be found in an article under the title of that Act, to which the reader should refer. For the present attention should be paid to the following twelve sets of circumstances, which have an important bearing on the question of discharge, as will subsequently be seen :— (i.) Where the bankrupt's assets are not of the value of ten shillings in the pound on the amount of hie unsecured liabilities, the Court not being satisfied that the fact of such disproportionate value has arisen from circum stances for which he cannot justly be held responsible : (ii.) Where the bankrupt has omitted to keep such books of account as are usual and proper in the business carried on by him, and such as sufficiently disclose his business transactions and financial position within the three years immediately preceding his bankruptcy : Where the bankrupt has continued to trade after knowing him self to 13g insolvent: (iv.) Where the bankrupt has contracted any debt provable in the bankruptcy without having at the time of contracting it any reasonable or probable ground of expectation (proof whereof shall lie on him) of being able to pay it: (v.) Where the bankrupt has failed to account satisfactorily for any loss of assets or for any deficiency of assets to meet his liabilities : (vi.) Where the bankrupt has brought on, or contributed to, his bank ruptcy by rash and hazardous speculations, or by unjustifiable extravagance in living, or by gambling, or by culpable neglect of his business affairs : (vii.) Where the bankrupt has put any of his creditors to unnecessary expense by a frivolous or vexatious defence to any action properly brought against him : (viii.) Where the bankrupt has within three months preceding the date of the receiving order incurred unjustifiable expense by bringing a frivolous or vexatious action : (ix.) Where the bankrupt has within three months preceding the date of the receiving order, when unable to pay his debts as they became due, given an undue preference to any of his creditors: (x.) Where the bankrupt has within three months preceding the date of the receiving order incurred liabilities with a view of making his assets equal to ten shillings in the pound on the amount of his unsecured liabilities : (xi.) Where the bankrupt has on any previous occasion been adjudged bankrupt, or made a composition or arrangement with his creditors : (xii.) \\There the bankrupt has been guilty of any fraud or fraudulent breach of trust.