THE BANKERS' MAGAZINE AND Journal of the Money Market. AUGUST, 1882. THE REPORT OF THE COMPTROLLER IN BANKRUPTCY. THE Report of the Comptroller in Bankruptcy continues to show the same main features as in previous years as to the inefficient working of our Bankruptcy Laws Both 1880 and 1881 were marked with fewer instances of inability to meet mercantile engagements than the two years immediately preceding, but the amount of the liabilities of insolvents was larger in 1881 than in 1880. The number of cases dealt with, as will be seen by the table at the close of this article, had dropped from the enormous totals of 11,450 in 1878 and of 13,132-the maximum hitherto recorded -in 1879 to 10,298 in 1880, and 9,727 in 1881. The number of insolvents has now practically returned to the position it occupied in 1877, and it may be considered doubtful whether it is likely, so long as the law regulating insolvency remains unchanged, ever to be much smaller than it was in the year 1881. We may thus consider the condition of affairs shown in this year's report as being much what we must always expect. It should be observed that the estates of last year were, generally speaking, of the same small class as those of the preceding year, as is shown by the following averages. Such satisfaction as may be felt in the fact that the number of insolvencies is less, is diminished by the fact which the report also discloses, namely, that the proportion which the average value of the estates bore to the liabilities was also smaller, showing that trading had been carried on even with greater recklessness of the con VOL XLII. 43 Mr. Mansfield Parkyns, the Comptroller in Bankruptcy, observes on these figures that it would appear from them that the average value of estates in liquidation is twice as great as of the estates in bankruptcy, but this apparent difference is mainly attributable to the fact that there are no returns respecting liquidations, except of the debtors' own estimates of the gross value of their estates, while the bankruptcy returns give the value of the assets as estimated or realised by the trustees. The one part of the statement shows in fact, the truth-the other the estimate which the bankrupt himself has made of his own position. Everyone who has had any experience in such matters knows that the debtor, under such circumstances, almost invariably under-estimates his liabilities and over-estimates his property, frequently to a very considerable extent. In the average of cases in which the bankrupts have filed any statements of their affairs the estimate made by the trustee appears to be about one-half of the amount which the bankrupts themselves have stated. If the figures given in by the liquidating creditors were checked in the same manner, it is probable that their trustees would discover quite as large a difference between their estimates and those of the bankrupts. We must not therefore assume from the figures before us that debtors who arrange with their creditors by way of liquidation have pursued a less reckless course of trading than debtors whose affairs are wound up in bankruptcy, or that their estates were really larger in proportion to their liabilities. The necessity of compelling as accurate and complete a state ment to be made of the results produced by the estates of liquidating debtors as of those whose affairs are passed through the Bankruptcy Court is shown in a very distinct manner by their figures. The existing laxity with respect to the arrangements which liquidating debtors can make with their creditors without any preliminary examination before a competent tribunal by which their affairs could be looked into, is greatly to be regretted. The total amounts which are dealt with in this manner are indeed enormous. We subjoin the figures of the liabilities and assets of insolvent debtors for the last eight years. LIABILITIES AND ASSETS OF INSOLVENT DELTORS. ENGLAND AND WALES, These figures show, as might be expected, that insolvency is greatly influenced by the times; but even in the years which are marked by no commercial inflation the amounts are enormous. A very considerable deduction must be made from the assets as they stand, if we desire to estimate the sums which actually reach the hands of the creditors entitled to participate in them, and it is probable that the actual loss by bad debts in cases under the Bankruptcy Act have not been on an average less than eighteen millions a year for the eight years under notice. This is a very heavy tax on the commercial classes on whom it principally falls. It does not include either the losses from insolvents in Scotland or Ireland from the liquidation of joint stock companies, deceased insolvents, private arrangements, or many thousands of small insolvencies which are not dealt with under the present Bankruptcy Law. the As no returns are made of the results of liquidations, we cannot lay any fact respecting them before our readers, but the character of the compositions made with creditors has continued to deteriorate in a very rapid manner since the existing Bankruptcy Laws came into force. That this is the case is shown in a very clear manner by the table marked No. 1, which follows at the close of this article. This table contains the number of compositions in all with creditors from the year 1870 to the end of the year 1881. It is divided according to the class of composition paid. Columns of proportional figures have been added to it which show the percentage in each class. By examining the columns of proportional figures, it will be seen that the number of small compositions steadily increases, while that of the larger compositions as steadily and regularly falls off. The same results may be observed if we examine the details of the estates wound up in bankruptcy. If we examine the details of the estates thus closed during the last seven years, it will also be seen that the cases where the distribution is smaller tend to increase, while those where the distribution is larger tend to decrease in number. It is not often the case that the effect of the working of an Act of Parliament can be clearly shown in a statistical form. But there can be no doubt that, under the provisions of our present Bankruptcy Law, a distinct encouragement is given to debtors to evade their engagements to their creditors, while through the operation of the same cause a proportionately smaller share of the assets is distributed among them. Table 2 at the close of this article shows the number of bankruptcies and trust deeds or liquidations in England and Wales since the commencement of the Bankruptcy Act of 1861. It will be observed that the number of cases dealt with properly in the Bankruptcy Court remains far more uniform from year to year than is the case either with liquidations or compositions. This is an additional reason for desiring that all cases of insolvency, whether the creditors are willing to accept a composition for the debts due to them or not, should be dealt with under the supervision of the court. The manner in which the estates of debtors are sometimes dissipated by trustees in liquidation is illustrated by the following statement, which we derive from the report. Mr. Parkyns, the Comptroller in Bankruptcy, mentions that the registrar of a county court recently sent him a copy of the bill charged by a receiver in a recent liquidation. The debtor was a shoemaker, in a way of business so small that his whole property, stock, furniture, fixtures, &c., altogether realised only £160. The receiver belonged, as described, to the class of persons who are constantly on the look-out for receiverships and trusteeships, and is a bill-of-sale money-lender. He was receiver altogether twenty-three days, including the dates of obtaining the office and ceasing to hold it. But he was actually engaged in the matter, as represented by his bill, about six days only; namely, four or five whole days and various part days, and his charges amounted to £64. 4s. 6d. His services are stated in detail; eleven guineas, and a shilling for a telegram, being charged for the duties performed on the day he obtained the receivership, six guineas of which may be thus explained: One guinea for attending to consent to accept the office, if he should be appointed; another for accepting it; two guineas more for "taking possession" of the debtor's property; a fifth for putting a man in possession of it; and the sixth for a few miles railway fare and "expenses." Under the same date, five guineas, and eight guineas more under other dates, are charged for valuing the shoemaker's stock, book debts, &c., and otherwise helping him to prepare his statement of affairs. Under various dates appear a letter to the solicitor, sundry conferences with his clerk, and one attendance, "to see as to the progress of the business; " and on the last day three guineas are charged for attending the meeting of creditors, at which he was not appointed trustee; a fourth, for "delivering up possession" to the trustee who was appointed, and railway fare and expenses. With this explanation, the whole bill may be condensed as follows: "to £25 9 0 23 0 0 12 1 0 3 14 6 £64 4 6 The Bill suggests no advantages to the creditors, and may probably be regarded as typical of many others. The state of public business in Parliament is such as to afford no hope of a revised Bankruptcy Bill being passed this year, either in the present session or in the one which is likely to be held in the autumn. The Bill which Mr. Chamberlain brought forward last year was a very sound one in principle, and would have been very useful to the mercantile portion of the community if it had become law. We can only hope that it will not be long before the attention of the Legislature is turned to this subject, as the report of the Comptroller in Bankruptcy shows that matters are only proceeding from bad to worse under existing arrangements. |