History of Bankruptcy Laws
In most parts of the British empire the law of bankruptcy has been modelled upon the English system. This is particularly the case in Australia and New Zealand. Victoria, South Australia, Western Australia and New Zealand follow the lines of the existing English acts. In Queensland, Tasmania and New South Wales the system is rather that of the English act of 1869, leaving more to the creditors’ management and less to officialism.
One point may be mentioned in which the Australian colonies have improved on the English system. Under the English acts a bankrupt is under no obligation to apply for his discharge. The result is that the United Kingdom contains a population of 70,000 undischarged bankrupts—a manifest danger to the trading community. Under the bankruptcy systems of New South Wales, Victoria and New Zealand, a bankrupt is bound to apply for his discharge within a fixed period, otherwise he is guilty of a contempt of court.
In Canada, under the British North America Act 1867, the Dominion parliament has exclusive legislative power in regard to bankruptcy and insolvency: but there is no existing Dominion act on the subject. A Dominion act was passed in 1875, but repealed in 1880. The failure of this act may perhaps be ascribed to the diversity of the pre-existing provincial systems, embracing such contrasts as the English law of Ontario, and the French code based on cessio bonorum—which ruled in Quebec. Bankruptcy is dealt with in a fragmentary way by the provincial legislatures by acts regulating such matters as priority of execution creditors, fraudulent assignments and preferences, imprisonment of debtors, administration of estates of deceased insolvents.
In Cape Colony and Natal English law is substantially followed. In the Transvaal, where Roman-Dutch law prevails, the law governing the subject is the Insolvency Law, No. 13 of 1895. It provides for voluntary surrender and compulsory sequestration. The law of the Orange River Colony is similar.
In British Guiana, Gambia, Jamaica, Hong Kong, Mauritius, Grenada, Trinidad, Tobago and the Straits Settlements the law is modelled on the English pattern.
In India insolvency is regulated by the Indian Insolvency Act 1848, extended by the Act XI. of 1889.
An English bankrupt, it may be added, is entitled to plead his discharge in England as a defence in a colonial court. The explanation is this. The English act vests all the bankrupt’s property, whether in the United Kingdom or in the colonies, in his trustee in bankruptcy. Having thus denuded him of everything, it has been held to follow that the bankrupt’s discharge must also receive recognition in a colonial court.
Source: Encyclopedia Britannica (1911)
This entry provides an overview of the legal framework of bankruptcy laws, with a description of the most significant features of bankruptcy laws at international level.
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