The above are the various and the only acts which, before the passing of 5 & 6 Viet. e. 122, rendered a trader liable to a fiat of bankruptcy ; but by this statute, the provisions of which have been continued by the Consolidation Act of 1849, an act of bankruptcy is also committed when a trader neglects pay: ing, securing, or compounding a judg ment debt, upon which the plaintiff might sue out execution (§ 20); also if a trader disobeys an order of any court of equity, or order in bankruptcy or lunacy, for payment of money on a peremptory day fixed (§ 21). No other acts, however strongly they may indicate insolvency or fraudulent intention in the trader, are sufficient to render him a bankrupt. The act of bankruptcy may be committed after a trader has ceased trading ; for so long as his trading debts remain unpaid, he is amenable to the law of bankruptcy. The debt, however, on which the fist is grounded must of course be one which was contracted during the period of his trading.
The liability to he made a bankrupt appears from what has been stated to be capable either of being a benefit or an injury to the bankrupt. If he is insol vent, it is for his benefit that his cre ditors should have his property equally distributed among them, and it is for his own benefit that he should be released from all further claims. It may be an injury, if he has a profitable business, the value of which depends on its not being disturbed ; for by committing an act of bankruptcy, and being under a temporary disability to meet his engage ments, he is liable to have all- his pro perty sold for the purpose of being dis tributed among his creditors. Such forced sales often realise very little, and never produce the full value of a pro perty. By such a sale what is called a business is totally destroyed. An act of bankruptcy may, therefore, ruin a man who would be able to satisfy all his cre ditors if his property had not been sold. The injury which a man may sustain by being made a bankrupt, or even having proceedings commenced against him wider the bankrupt act, has been ad mitted, and doubtless given rise to the provisions of the 12 & 13 Vict. c. 106, for effecting a private arrangement, either by deed or under the control of the Court.
Under 6 Geo. IV. c. 16, the debt of the petitioning creditor, if there was only one who petitioned, was required to be 1001.; if two, 1501.; if three or more, 2001. By the new act the petitioning creditor's debt must be 501. or upwards; if two creditors petition, their joint debts must be 701.; or if three, 1001.
The first step of the petitioning ere, ditor is to ascertain, by a search at the Bankrupt Office, that no proceedings have been previously taken for issuing a fiat against the trader. He then takes oath as to the amount of his debt, and his belief that the trader has committed an act of bankruptcy, and then executes a bond in the sum of 2001., binding him. self to prove his debt, either before the commissioners or on any trial at law, should the fiat be contested; and also to prove that the trader has committed an act of bankruptcy, and to proceed on the fiat. An entry is made in an official book, called the "Docket Book," and the petitioning creditor is then said to have "struck a docket" against the trader. A trader against whom a fiat
has issued may be arrested on proof to the court that there is probable cause for believing that he is about to quit Eng. land, or to conceal his goods with intent to defraud his creditors ; but any person so arrested may apply for his discharge forthwith.
If the petitioning creditor fails in proving the matters which he undertakes to prove by his bond, and if it appears that the fiat was taken out fraudulently or maliciously, the court may, on the petition of the trader, examine the mat ter, and order satisfaction to be made to the trader; and for that purpose may assign the bond to the trader, who may sue the petitioning creditor thereon in his own name. The assignment of the bond is in such case conclusive evidence of malice against the petitioning creditor; and the injured trader may also, if be please, bring a special action for mali ciously suing out the fiat, in which he may recover more considerable damages than the mere penalty which could alone be recovered in an action on the bond. An act of bankruptcy concerted between the bankrupt and one of his creditors does not render the.fiat invalid.
Before the 1 & 2 Will. IV. c. 56, § 12, which abolished commissions, and substituted fiats of bankruptcy, the Lord Chancellor used, by a commission under the Great Seal, to appoint such persons as to him seemed fit, who, by virtue of the bankrupt acts and of the commission, had authority to dispose of the person and property of the bankrupt for the advantage of his creditors. The act 1 & 2 Will. IV. c. 56, constituting the Bank ruptcy Court, substituted a simple fiat for the commission under the Great Seal, and the fiat has been superseded by a petition for an adjudication of bankrupt cy without fiat, by 12 & 13 Viet, e. 106, § Upon proof being made, either before the Court of Bankruptcy or the district court, of the petitioning creditor's debt, the trading of the bankrupt, and of an act of bankruptcy of the nature before described, the court formally adjudges the trader to be a bankrupt. The trader adjudged a bankrupt is to have notice thereof before the adjudication is adver tised, and is to be allowed seven days to show cause against the adjudication; and if the petitioning creditor's debt, the trading, or the act of bankruptcy, appear insufficient, the adjudication will be an nulled. Before the passing of 6 Geo. IV., the trader could at any time dispute the validity of the commission by bring ing an action against the assignees ; but by that statute the power of doing so was confined to a period within two months after the adjudication ; and under the present law the bankrupt cannot dispute the fiat or prosecute after twenty-one days from the appearance of the notice of bankruptcy in the London Gazette.' If he were not within the United King dom, but in some other part of Europe at the date of the adjudication, the period is extended to three months; and to twelve months if he were out of Europe. If the bankrupt die subsequent to the adjudication of bankruptcy, the commis sioners are authorized to proceed as if he were living.