ASSIGNMENT FOR BENEFIT OF CREDITORS. A person who is unable to pay his debts may legally call his creditors together and offer to transfer his property to a trustee, in order that it may be realised and the proceeds apportioned amongst the creditors, according to the amount of their claims, in full discharge of what he is owing to them.
The deed assigning the property to the trustee must be registered within seven days, otherwise it is void. (See DEED OF ARRANGE MENT.) Such a deed is binding only upon the creditors who assent to it.
An assignment of the debtor's property for the benefit of his creditors, is an arrange ment quite apart from proceedings under the Bankruptcy Acts.
No further cheques must be paid upon the account of a customer who has made an assignment.
Where a debtor assigns his property to a trustee for the benefit of his creditors it is an act of bankruptcy (see ACTS OF BANK RUPTCY), and a debtor may be adjudged a bankrupt upon a bankruptcy petition pre sented within three months from the date of an act of bankruptcy (see RECEIVING ORDER). When such a petition is presented
and the debtor is made bankrupt, the deed of assignment becomes void. The trustee is therefore liable at any time within three months from the date of the deed of assign ment, to be called upon, in the event of the debtor's bankruptcy, to hand over to the official receiver or trustee in bankruptcy, all funds and property of the debtor which have come into his possession since the date of the deed of assignment. Any balance in the hands of a banker should, therefore, not be paid to the trustee of a deed of assignment until the expiration of three months from the date thereof. (See BANKRUPTCY, COM POSITION WITH CREDITORS.)