after his release and the close of the liquidation, and it is his duty CHAP. IX. to distribute same (7).

recover balance

As to the proceedings to recover balance remaining unpaid of a Proceedings to debt where a debtor has not obtained his discharge within three of debt from years from the commencement of the liquidation, vide s. 153 (11), and rr. 431 and 432, post.

undischarged debtor.

Jiquidation by

All proper costs of and incidental to the proceedings prior to Costs of the passing of the resolution, are paid by the trustee out of the arrangement. estate in like manner and priority as the costs of a petitioning creditor in insolvency (8).

estate by Court.

If it appear to the Court on satisfactory evidence that the Sequestration of liquidation cannot in consequence of legal difficulties or of there being no trustee for the time being or for any sufficient cause proceed without injustice or undue delay to the creditors or to the debtor the Court may on the petition of the trustee or of any creditor whose debt amounts to fifty pounds and upwards sequestrate the property of the debtor and proceedings may be had accordingly (t). As to the accounting by the trustee and the equalizing of dividends on sequestration happening, vide r. 415, post. R. 420 authorises the Court also to sequestrate the estate on petition of a creditor whose debt is £50 or upwards if the Form of petition. petition (form No. 162, in Appendix) shows that the creditor had no notice of the meeting at which the liquidation was agreed to, and that he dissents from the same, and that his vote would have altered the result arrived at. The Court may, on a creditor's petition, irrespective of the amount of the debt, order that the liquidation be not proceeded with (u). Every such petition must be heard upon affidavit, and it must be presented within thirty liquidation. days from the date of the meeting at which the liquidation was agreed upon (v).

Power to stay

On the death of the debtor occurring after the filing of the Death of debtor. petition it was held that the Court had no jurisdiction to order the continuance of the proceedings, which were consequently stayed by the death (w).

(r) Ex parte Witt, re Armstrong, 27 W.R., 888.

(8) R. 422.

(t) S. 153 (13), ante.

(u) R. 420-compare r. 143, Rules of

1890, which applied to composition
also.

(v) Ibid.

(w) Re Obbard, 19 W.R., 563.

CHAP. IX.

The first meeting.

resolution.

4.-PROCEEDINGS RESTRICTED TO COMPOSITION.

The proceedings and matters incidental to the same restricted to and applying to composition in addition to those common to both liquidation by arrangement and composition are as follows:

The first meeting has already been adverted to (x), and also the Essentials of the nature of the extraordinary resolution (y). In passing the resolution it is necessary to specify in it the amount of the composition, the instalments and dates at which the same are payable (2). The trustee may also be named, and any negotiable securities which may be given for the composition (a). Instead of specifying the security to be given, the creditors may resolve that the composition or some part or instalment thereof may be secured in such manner as may be approved by a creditor or creditors to be named by the resolution (b). Forms of resolutions at first general meeting are given in form 166, post.

As to security

for the composition.

Form of resolutions at first general meeting.

Sureties for payment.

In accepting a composition, the creditors agreed that as security for its payment the debtor should assign all his property to a trustee, and that the security of the trustee should be accepted for the composition. The trustee took an absolute assignment to himself, paid the composition and realised a surplus. In such circumstances it was held that he was absolutely entitled to the property, and that there was no resulting trust of the surplus in favor of the debtor (c). The surety is considered to enter into his contract with the knowledge that the creditors are remitted back to their original rights in default of payment of any instalment of the composition, and in the event of insolvency supervening the creditors can therefore prove for the whole amount of their debts, less any instalment paid which cannot be recovered back by the surety, his remedy being to prove on the estate (d). If the surety fails to pay, the trustee can sue him at law (). The Court has power to order the trustee to sue the surety on his covenant, but the order should provide for the indemnity of the trustee against the costs of the action (f). The surety is entitled

(x) Vide p. 413, ante.

(y) Vide pp. 412-417, ante.

(2) R. 434.

(a) Ibid.

(b) R. 435.

(c) Ex parte Wilcocks, 44 L.J. (Bky.), 12.

(d) Ex parte Gilbey, re Bedell, 8 C.D., 248.

(e) Ex parte Mirabita, re Dale, 20 L.R. (Eq.), 772.

(f) Ex parte Monkhouse, re Dale, 1 C.D., 287; and ride s. 154, as to en forcement of provisions of composition.

to retain security given to him by the debtor without the know- CHAP. IX. ledge of the creditors if he carries out his guarantee (g).

costs in resolution.

Provision for costs should be made in the resolution, for where Provision for creditors employ a solicitor and omit to do so the Court cannot enforce payment of costs by the debtor (h). As to costs when sequestration occurs, vide ante, at p. 60.

deed of

As to providing in the resolution for a deed of composition or Provision for inspectorship, and as to the provisions of the same, vide r. 436, composition or post.

inspectorship.

resolution, statements proofs and proxies.

The resolution passed at the first general meeting must be filed Filing of with the statement, proofs and proxies within three days from the s date of such meeting (¿).

meeting.

The second general meeting is held at an interval of not less The second than seven days nor more than fourteen days from the date of Time. the meeting at which the resolution was first passed (k). This Place. meeting is held at the same place as the first unless the resolution otherwise directs ().

advertisement.

Forms of same.

Notice of the meeting, form No. 167, post, must be given as Notice and directed in r. 437 (1), and notice of the meeting in the form No. 151, post, must be advertised in the manner directed by the same rule (m).

creditous at

meeting.

The creditors assembled at the second general meeting may Powers of confirm the resolution passed at the first general meeting or they second general may pass an extraordinary resolution that the affairs of the debtor are to be liquidated by arrangement and not in insolvency, or a majority of them may pass a resolution requesting the debtor to surrender his estate under Part III., Act of 1890 (n). The form of resolution at the second general meeting is given in form 168, Form of post. The creditors can adjourn the meeting if it has been duly convened to confirm the resolution (o). If the composition is rejected at the first meeting but subsequently accepted at an

(g) Ex parte Burrell, re Robinson, 1 C.D., 537.

(h) Re Pratte, ex parte Gush, 12 C.D., 915.

(i) R. 437 (1).

(k) Ibid.

(l) Ibid.

(m) R. 437 (2).

(n) R. 438.

(0) Ex parte Knowles, re Jones, 44 L.T., 160.

resolution at second general meeting.

Adjournment.

CHAP. IX.

The first meeting.

resolution.

4. PROCEEDINGS RESTRICTED TO COMPOSITION.

The proceedings and matters incidental to the same restricted to and applying to composition in addition to those common to both liquidation by arrangement and composition are as follows:—

The first meeting has already been adverted to (x), and also the Essentials of the nature of the extraordinary resolution (y). In passing the resolution it is necessary to specify in it the amount of the composition, the instalments and dates at which the same are payable (z). The trustee may also be named, and any negotiable securities which may be given for the composition (a). Instead of specifying the security to be given, the creditors may resolve that the composition or some part or instalment thereof may be secured in such manner as may be approved by a creditor or creditors to be named by the resolution (b). Forms of resolutions at first general meeting are given in form 166, post.

As to security for the composition.

Form of

resolutions at first general meeting.

Sureties for payment.

In accepting a composition, the creditors agreed that as security for its payment the debtor should assign all his property to a trustee, and that the security of the trustee should be accepted for the composition. The trustee took an absolute assignment to himself, paid the composition and realised a surplus. In such circumstances it was held that he was absolutely entitled to the property, and that there was no resulting trust of the surplus in favor of the debtor (c). The surety is considered to enter into his contract with the knowledge that the creditors are remitted back to their original rights in default of payment of any instalment of the composition, and in the event of insolvency supervening the creditors can therefore prove for the whole amount of their debts, less any instalment paid which cannot be recovered back by the surety, his remedy being to prove on the estate (d). If the surety fails to pay, the trustee can sue him at law (e). The Court has power to order the trustee to sue the surety on his covenant, but the order should provide for the indemnity of the trustee against the costs of the action (f). The surety is entitled

to retain security given to him by the debtor without the know- CHAP. IX. ledge of the creditors if he carries out his guarantee (g).

costs in

resolution.

Provision for costs should be made in the resolution, for where Provision for creditors employ a solicitor and omit to do so the Court cannot enforce payment of costs by the debtor (h). As to costs when sequestration occurs, vide ante, at p. 60.

deed of

As to providing in the resolution for a deed of composition or Provision for inspectorship, and as to the provisions of the same, vide r. 436, composition or post.

inspectorship.

The resolution passed at the first general meeting must be filed Filing of with the statement, proofs and proxies within three days from the date of such meeting (i).

resolution, statements proofs and proxies.

meeting.

The second general meeting is held at an interval of not less The second than seven days nor more than fourteen days from the date of Time. the meeting at which the resolution was first passed (). This Place. meeting is held at the same place as the first unless the resolution otherwise directs (1).

advertisement.

Notice of the meeting, form No. 167, post, must be given as Notice and directed in r. 437 (1), and notice of the meeting in the form No. 151, post, must be advertised in the manner directed by the same rule (m).

Forms of same.

creditors at

meeting.

The creditors assembled at the second general meeting may Powers of confirm the resolution passed at the first general meeting or they second general may pass an extraordinary resolution that the affairs of the debtor are to be liquidated by arrangement and not in insolvency, or a majority of them may pass a resolution requesting the debtor to surrender his estate under Part III., Act of 1890 (n). The form of resolution at the second general meeting is given in form 168, Form of post. The creditors can adjourn the meeting if it has been second general duly convened to confirm the resolution (o). If the composition is rejected at the first meeting but subsequently accepted at an

(g) Ex parte Burrell, re Robinson, 1 C.D., 537.

(h) Re Pratte, ex parte Gush, 12 C.D.,

915.

(i) R. 437 (1). (k) Ibid.

(1) Ibid.

(m) R. 437 (2).
(n) R. 438.

(0) Ex parte Knowles, re Jones, 44 L.T., 160.

resolution at

meeting.

Adjournment.