Home >> Dictionary Of Banking >> Paying Banker to Transfer Of Shares >> Proof of Debts_P1

Proof of Debts

debt, creditor, bankruptcy, estate, receiving and joint

Page: 1 2 3

PROOF OF DEBTS. A proof of debt is the form which is filled up by a creditor setting forth the amount of his claim against the estate of a bankrupt.

The proof must be made upon the regula tion form, which is shown on pages 41$ and 4 19.

The Bankruptcy Act, 1853, provides as follows :— Description of Debts Provable in Bankruptcy. "37. (1) Demands in the nature of liquidated damages arising wise than by reason of a contract, promise, or breach of trust, shall not be provable in bankruptcy.

" (2) A person having notice of any act of bankruptcy available against the debtor shall not prove under the order for any debt or liability con tracted by the debtor subsequently to the date of his so having notice.

" (3) Save as aforesaid, all debts and lia bilities, present or future, certain or contingent, to which the debtor is subject at the date of the receiving order, or to which he may become subject before his discharge by reason of any obligation incurred before the date of the receiving order, shall be deemed to be debts provable in bankruptcy.

" (4) An estimate shall be made by the trustee of the value of any debt or liability provable as aforesaid, which by reason of its being subject to any contingency or contingencies, or for any other reason, does not bear a certain value." sum due from one party shall be set off against any sum due from the other party and the balance only shall be claimed or paid on either side respectively.

In the case of partners the joint estate shall be applicable in the first instance in pay ment of their joint debts, and the separate estate of each partner shall be applicable in the first instance in payment of his separate debts. If there is a surplus of the separate estates it shall be dealt with as part of the joint estate. If there is a surplus of the joint estate it shall be dealt with as part of the respective separate estates in propor tion to the right and interest of each partner in the joint estate. (Section 44', s.s. 3.) A proof of debt is limited to the amount of principal and interest due at the date of the receiving order. Interest subsequent to the

receiving order cannot be added. (See INTEREST.) If the proof is in respect of a bill of ex change, promissory note, or other negotiable instrument, on which the debtor is liable, such instrument, subject to any special order of the Court to the contrary, must be produced before the proof can be admitted either for voting or for dividend.

The rules in the second Schedule of the Bankruptcy Act, 1883, with respect to proof of debts are as follow :— Proof in Ordinary Cases.

" I. Every creditor shall prove his debt as soon as may be after the making of a receiving order.

" 2. A debt may be proved by delivering or sending through the post in a prepaid letter to the official receiver, or, if a trustee has been appointed, to the trustee, an affidavit verifying the debt.

" 3. The affidavit may be made by the creditor himself, or by some person author ised by or on behalf of the creditor. If made by a person so authorised it shall state his authority and means of knowledge.

" 4. The affidavit shall contain or refer to a statement of account showing the particulars of the debt, and shall specify the vouchers, if any, by which the same can be substan tiated. The official receiver or trustee may at any time call for the production of the vouchers.

" 5. The affidavit shall state whether the creditor is or is not a secured creditor.

" 6. A creditor shall bear the cost of prov ing his debt, unless the Court otherwise speci ally orders.

" 7. Every creditor who has lodged a proof shall be entitled to see and examine the proofs of other creditors before the first meeting, and at all reasonable times.

" 8. A creditor proving his debt shall deduct therefrom all trade discounts, but he shall not be compelled to deduct any discount, not exceeding five per centum on the net amount of his claim, which he may have agreed to allow for payment in cash.

Page: 1 2 3