The trustee must keep regular accounts, and lodge the money recovered in a bank ; and at the end of ' twelve months from the date of the first deliverance, after due adveicisement, a dividend shall be paid to those creditors who have produced their grounds of debt and affidavits. When the term of payment of any debt is not arrived, a proportional discount shall be made, and the debt ranked accordingly. Where a debt is contingent, a dividend corresponding to the debt shall be set aside and deposited in the bank un til the contingency be declared.
At the end of eighteen months a second dividend shall be made; and in like manner, dividends at the end of every six months, till the whole funds be di vided. But at the expiry of a year and a half from the sequestration, four-fifths of the creditors may or der the whole outstanding debts, &c. belonging to the estate to be sold, for the purpose of making a final division.
After the second dividend, the bankrupt, with concurrence of the trustee and four-fifths of the cre ditors in number and value, may apply to the court, who are authorised to grant him a final discharge of all debts contracted prior to the sequestration, if cause be not shewn to the contrary.
As it is sometimes for the advantage of all parties to settle by composition, the statute declares, that the bankrupt may, at the meeting after his second examination, offer to settle by composition; and if this offer is approved of by nine-tenths of the credi tors present, another meeting shall be called to con sider of it ; and if at this second meeting nine-tenths of the creditors approve of the offer, a report of the proceedings shall be laid before the court; and if it shall appear that the offer is reasonable, and has been assented to by nine-tenths in number and value of the whole creditors who have produced grounds of debt, the proceedings in the sequestration shall cease, and the court shall declare the trustee exonered, and the bankrupt discharged, except as to the. payment of the composition.
Such are the general outlines of the law of bank. ruptcy in Scotland. It resembles that of England in some of its general features, though there is a strong and marked distinction betwixt the two sys tems in many particulars.
In England traders only can be made bankrupt. The effects of every other description of persons are left to the remedies of common law, and to be at..
tached and carried off by the diligence of individual creditors.
Certain acts are defined by the different statutes, as marks of bankruptcy, some of which are of an ambi guous and some of a•secret nature, such as the debtor " beginning to keep house," so as not to be seen or spoken to by his creditors. The commission of one of these acts invalidates all the debtor's future transactions, and entitles a creditor to a certain ex tent to apply for a commission of bankruptcy, which is immediately granted of course, by the Lord Chan cellor, vesting the bankrupt's estate in certain com missioners, who are empowered to lock up his shop, and to order his person into custody to undergo the necessary examinations. As this commission is grant ed without the knowledge of the bankrupt, and is meant to come suddenly upon him, certain precau tions are used to prevent its being maliciously sued out.
The commissioners take proof of the bankruptcy, and of the debtor's being a trader, and appoint three meetings to be advertised. At these meetings the debts are proved ;. and at one of them assignees are chosen, in whom the estate is vested for behoof of the creditors. At the third meeting at farthest, the bankrupt must surrender himself, and afterwards conform to the statutes in all respects, under pain of death.
The bankrupt and those connected with him, are to be examined as to his affairs ; and if their answers appear unsatisfactory, the commissioners may com mit them to prison till they submit and give satisfac tion.
The whole estate of the bankrupt is vested in the assignees, as it stood in his person when the first act of bankruptcy was committed. After that date, therefore, all his transactions are void and null. It is, however, now provided by Sir Samuel Romilly's bill, 46 Geo. III. 135. that all conveyances, all pay ments by and to, and all contracts and dealings by and with a bankrupt, made more than two calendar months before the date of the commission, shall be valid, notwithstanding any prior act of bankruptcy, if the person so dealing had not at the time any no tice of such prior act. It was provided by 19 Geo. II. c. 32., that no money paid by a bankrupt to a bona fide real creditor in the course of trade, even after an act of bankruptcy, should be liable to be refunded.