them from the debtor, or a proposal for a scheme of arrangement of the debtor's affairs.

(2.) The composition or scheme shall not be binding on the creditors unless it is confirmed by a resolution passed (by a majority in number representing three-fourths in value of all the creditors* who have proved) at a subsequent meeting of the creditors, and is approved by the Court.

Any creditor who has proved his debt may assent to or dissent from such composition or scheme by a letter addressed to the official receiver in the prescribed form, and attested by a witness, so as to be received by such official receiver not later than the day preceding such subsequent meeting, and such creditor shall be taken as being present and voting at such meeting.

(3.) The subsequent meeting shall be summoned by the official receiver by not less than seven days' notice, and shall not be held until after the public examination of the debtor is concluded. The notice shall state generally the terms of the proposal, and shall be accompanied by a report of the official receiver thereon.

(4.) The debtor or the official receiver may, after the composition or scheme is accepted by the creditors, apply to the Court to approve it,† and notice of the

It will be seen that there is a material difference between the majority required to pass the resolution at the first meeting and the majority requisite to confirm it at "the subsequent" meeting. In the latter case the majority, whether in number or value, is one, not of the creditors present at the meeting, but of creditors who have proved. In this way the highest attainable security is obtained that no composition or scheme of arrangement is passed without the active assent (as distinguished from the mere passive tolerance) of a decided preponderance of the creditors.

See clause 99 for the cases in which the powers conferred upon the Court by this section, may or may not be exercised by the registrars of the High Court or of the County Courts.

time appointed for hearing the application shall be given to each creditor who has proved.

(5.) The Court shall, before approving a composition or scheme, hear a report of the official receiver as to the terms of the composition or scheme and as to the conduct of the debtor, and any objections which may be made by or on behalf of any creditor.

(6.) If the Court is of opinion that the terms of the composition or scheme are not reasonable, or are not calculated to benefit the general body of creditors, or in any case in which the Court is required under this Act where the debtor is adjudged bankrupt to refuse his discharge, the Court shall, or if any such facts are proved as would under this Act justify the Court in refusing, qualifying, or suspending the debtor's discharge, the Court may, in its discretion, refuse to approve the composition or scheme.

(7.) If the Court approves the composition or scheme, the approval may be testified by the seal of the Court being attached to the instrument containing the terms of the composition or scheme, or by the terms being embodied in an order of the Court.

(8.) A composition or scheme accepted and approved in pursuance of this section shall be binding on all the creditors so far as relates to any debts due to them from the debtor and provable in bankruptcy.†

(9.) A certificate of the official receiver that a composition or scheme has been duly accepted and approved shall, in the absence of fraud, be conclusive as to its validity.

(10.) The provisions of a composition or scheme

*See post, clause 28, for the cases in which the court is required to refuse the discharge of a bankrupt, or is empowered to suspend or qualify such discharge.

As to what debts are provable in bankruptcy, see post, section 37.

under this section may be enforced by the Court on application by any person interested, and any disobedience of an order of the Court made on the application shall be deemed a contempt of Court.

(11.) If default is made in payment of any instalment due in pursuance of the composition or scheme, or if it appears to the Court, on satisfactory evidence, that the composition or scheme cannot in consequence of legal difficulties, or for any sufficient cause, proceed without injustice or undue delay to the creditors or to the debtor, or that the approval of the Court was obtained by fraud, the Court may, if it thinks fit, on application by any creditor, adjudge the debtor bankrupt, and annul the composition or scheme, but without prejudice to the validity of any sale, disposition, or payment duly made, or thing duly done under or in pursuance of the composition or scheme. Where a debtor is adjudged bankrupt under this sub-section any debt provable in other respects, which has been contracted before the date of the adjudication, shall be provable in the bankruptcy.

(12.) If under or in pursuance of a composition or scheme, a trustee is appointed to administer the debtor's property, or manage his business, Part V. of this Act* shall apply to the trustee as if he were a trustee in a bankruptcy, and as if the terms "bankruptcy," bankrupt," and "order of adjudication" included respectively a composition or scheme of arrangement, a compounding or arranging debtor, and order approving the composition or scheme.

(13.) Part III. of this Act shall,† so far as the nature of the case and the terms of the composition or scheme admit, apply thereto, the same interpretation being given to the words "trustee," "bankruptcy," "bankSee, post, clauses 37 to 65.

*See, post, clauses 72 to 91.

rupt," and "order of adjudication," as in the last preceding sub-section.

(14.) No composition or scheme shall be approved by the Court which does not provide for the payment in priority to other debts of all debts directed to be so paid in the distribution of the property of a bankrupt.*

(15.) The acceptance by a creditor of a composition or scheme shall not release any person who under this Act would not be released by an order of discharge if the debtor had been adjudged bankrupt.†

19. Effect of Composition or Scheme.-Notwithstand ing the acceptance and approval of a composition or scheme, such composition or scheme shall not be binding on any creditor so far as regards a debt or liability from which, under the provisions of this Act, the debtor would not be discharged by an order of discharge in bankruptcy, unless the creditor assents to the composition or scheme.

Adjudication of Bankruptcy.

20. Adjudication of Bankruptcy where Composition not accepted or approved.§-(1.) Where a receiving

See, post, clauses 40 and 41.

See, post, clause 30. The 4th sub-section of this clause provides that partners, co-trustees, joint-contractors, or co-sureties with the bankrupt shall not be released by his discharge.

See post, clause 30, sub-sections 1 and 2.

§ This and the following clauses, down to clause 23, contain many of the provisions of clauses 14, 17, 18, 28, and 83 of the Bankruptcy Act of 1869. But they are so far modified-in principle as well as in detail-in order to adapt them to the wholly different scheme of the present Act, that no useful purpose would be secured by dwelling minutely upon the points of similarity or difference. The powers conferred upon the Board of Trade are of course entirely new.

order is made against a debtor, then, if the creditors at the first meeting or any adjournment thereof by ordinary resolution* resolve that the debtor be adjudged bankrupt, or pass no resolution, or if the creditors do not meet, or if a composition or scheme is not accepted. or approved in pursuance of this Act within fourteen days after the conclusion of the examination of the debtor or such further time as the Court may allow, the Court shall adjudge the debtor bankrupt; and thereupon the property of the bankrupt shall become divisible among his creditors, and shall vest in a trustee.

(2.) Notice of every order adjudging a debtor bankrupt, stating the name, address, and description of the bankrupt, the date of the adjudication, and the Court by which the adjudication is made, shall be gazetted and advertised in a local paper in the prescribed manner, and the date of the order shall for the purposes of this Act be the date of the adjudication.

21. Appointment of Trustee.-(1.) Where a debtor is adjudged bankrupt, or the creditors have resolved that he be adjudged bankrupt, the creditors may, by ordinary resolution, appoint some fit person, whether a creditor or not, to fill the office of trustee of the property of the bankrupt; or they may resolve to leave his appointment to the committee of inspection hereinafter mentioned.

(2.) The person so appointed shall give security in manner prescribed to the satisfaction of the Board of Trade, and the Board, if satisfied with the security, shall certify that his appointment has been duly made, unless they object to the appointment on the ground

* An ordinary resolution means (clause 168) "a resolution decided by a majority in value of the creditors present personally or by proxy at a meeting of creditors, and voting on the resolution."