ARTICLE XLIII.—OF PROCEEDINGS IN BANKRUPTCY

 

§962.  Every person owing debts to the amount of two thousand dollars, who shall refuse or fail to make payment of any of his just demands, for ten days after the same shall have matured, and been presented for payment to him or to his agent:  or who shall depart the Kingdom with the intend to defraud or delay his creditors; or secrete himself, or keep his house to avoid his creditors, or the service of legal process for the collection of any debts; or make any fraudulent conveyance of his property to a friend or secret trustee, or make any secret removal or other disposition of his property for the purpose of delaying or defrauding any creditor, may upon petition to any justice of the Supreme Court by any one creditor to the amount of four hundred dollars, or by any two or more creditors, the sum of whose debts shall amount to one thousand dollars, be declared bankrupt:  provided, however, that every such person owing debts to the amount of one thousand dollars, which shall not have been created in consequence of a defalcation as a public officer, or as executor, administrator, guardian or trustee, or while acting in any other fiduciary capacity, may, upon finding himself insolvent, appear before any justice of the Supreme Court, and upon making oath of such insolvency, declare himself a bankrupt.

 

§963.  Every petition to declare a person a bankrupt, shall be verified by oath; state as near as may be the amount due to the petitioner or petitioners; and the act or acts of bankruptcy relied on.  The person or persons making such petition shall give a bond, in the penalty of at least two thousand dollars, or in a larger sum, if the justice shall think it just, conditioned for the payment of all costs of the proceedings, and damages to the party petitioned against, in case he or they fail to prove him a bankrupt.

 

§964.  Upon receiving such petition and bond, or when any insolvent shall come before any justice of the Supreme Court, and declare himself a bankrupt, as provided in Section 962, the justice shall issue an order to the marshal, or to the sheriff of the island, to take possession of the debtor’s property, and to put his storehouses, counting houses, effects, books and papers, under lock and seal, and such order shall be full authority for so doing.

 

§965.  After issuing such order, the justice shall fix a time when he will hear the parties at chambers, and decide the question of bankruptcy, where the same is disputed.  He shall cause such previous notice of the time for hearing as he may deem reasonable, to be published in the Government Gazette.   A party petitioned against shall, in all cases, be served with a summons to attend, and a copy of the petition, if he be within the Kingdom.

 

§966.  At the time appointed for the hearing of the parties, the justice shall proceed to take testimony that the petitioners are creditors, and that the debtor has committed an act of bankruptcy.  After hearing all the testimony, both on the part of the petitioners and the debtor, he shall give his decision; and if it be in favor of the debtor, his property shall be immediately released from custody.

 

§967.  Whenever any person shall declare himself a bankrupt, or shall be adjudged a bankrupt by the justice, notice of such bankruptcy shall be given in the Government Gazette, and notice shall also be given for three consecutive weeks, in said Gazette, calling upon all creditors of the debtor to appear before the justice, at such time or times as he may appoint, to prove their debts.

 

§968.  Debts may be proved before the justice by the oath of the creditors, but when the debtor or any creditor shall dispute the amount claimed, the justice shall compel the claimant to prove his debt by testimony independent of his own oath.

 

§969.  Debts not due may be proved before the justice, allowing a discount for interest; and all persons who are endorsers or sureties for the debtor, or who have demands against him as drawer or endorser of any note, and all who have demands upon any bottomry or respondentia bond, or for a debt that may become due upon any other contingency whatever, may be considered as creditors within the provision of this article:  provided, that the bill, note, bond or other contract, be made by the debtor before the bankruptcy committed; and that the debt demanded thereupon shall become absolute before the final divident of the bankrupt’s estate.

 

TO SECURE THE PAYMENT OF WORKMEN IN CASES OF BANKRUPTCY.

 

All claims for personal labor shall be preferred in cases of bankruptcy, and paid in full out of any assets remaining in the hands of the assignees after payment of such debts as are now preferred by law.  But no claims shall be so preferred, which shall have accrued more than forty days before an act of bankruptcy; and if the amount due to any person shall exceed the sum of fifty dollars; then no more shall be paid in full, but a dividend shall be declared on the remainder rateably with the claims of other creditors.

 

§970.  When it shall appear to the justice that there are absent creditors, whose interest will suffer from having no person to represent them, he may appoint some fit and proper person as an attorney for that purpose, and such attorney shall receive, in the discretion of the justice, a reasonable compensation out of the dividend coming to such absent creditors.

 

§971.  Any creditor who, after having been served with twenty days previous notice, (either written or printed) to attend before the justice and prove his debt, shall fail to attend without showing good cause for such non-attendance, shall be considered as having waived his debt, and shall not be allowed to come in and prove such debt afterwards.

 

§972.  After all the creditors in this Kingdom shall have proved their debts, or failed to do so after due notice as aforesaid, the clerk of the Supreme Court shall appoint a meeting of the creditors who shall have proved their debts; and give two consecutive weeks notice of the same in the Government Gazette.  At the time appointed, the creditors shall meet, in the presence of the said clerk, and choose two persons as assignees of the bankrupt’s property, real and personal, and the clerk shall enter such choice of record.  The assignees shall be chosen by ballot, and the two persons having the greatest number of votes on the first ballot, shall be considered as duly chosen.

 

§973.  In the choice of assignees, no creditor to an amount less than one hundred dollars shall be entitled to vote.  All creditors to the amount of one hundred, and less than five hundred dollars, shall be entitled to one vote each; all creditors to the amount of five hundred dollars, and less than twenty-five hundred dollars, shall be entitled to two votes each; and all creditors to an amount exceeding twenty-five hundred dollars, shall be entitled to three votes each.  All disputes that may arise as to the manner of voting, or as to who shall be entitled to vote, shall be referred to, and decided by the justice.

 

§974.  The justice shall make an order to the marshal, or the sheriff, as the case may be, requiring him to assign to the assignees thus chosen, all the property of the bankrupt of whatever name, kind or nature, and such assignees shall dispose of the same by public or private sale, as to them may seem best for the interest of all concerned.  The assignees shall give such security for the faithful performance of their trust as the justice shall deem sufficient.

 

§975.  If any assignee die, or become incapacitated from any cause, to person the duties of an assignee, the justice shall, upon the petition of any party interested, appoint some other person to fill his place.

 

§976.  The assignee shall, within one month after receiving possession of the bankrupt’s estate, file a report with the clerk of the Supreme Court, showing the liabilities and assets of the estate, and shall render a cash account of the estate to said clerk, at the end of every succeeding month, and shall linvest and dispose of such moneys in the payment of dividends, in such manner as the justice may direct.  There shall be one or more dividends or payments, not exceeding three, to creditors in proportion to their debts, without any priority or preference whatsoever, at such times as the justice may name:  provided, however, that all debts due or owing by any bankrupt to the Hawaiian Government shall, before any dividend is made to the other creditors, be first paid in full, and that the third or final dividend shall be made within eighteen months from the date of the assignment, unless in the opinion of the justice, a just settlement of the bankrupt’s estate shall require the time for making the final dividend to be extended, in which case he shall have the power to extend the same.

 

§977.  The assignees shall have full power to sue for and collect debts due to the bankrupt, in their own name.  They may also bring any other suit in their own name, which has for its object the recovery of any portion of the bankrupt’s estate.

 

§978.  The bankrupt shall be divested of all his title and interest in his property from the day of his failure (except the necessary clothing of himself and family, and such other necessaries, not to exceed the value of three hundred dollars as the justice may designate), and every assignment, conveyance or transfer of his property, by him, after he shall have become insolvent or committed an act of bankruptcy, except upon a good consideration to a bona fide purchaser having no reasonable cause to believe him to be insolvent or bankrupt, shall be void, and the property so transferred may be recovered and disposed of by the assignees for the benefit of the creditors.

 

§979.  All executions, or attachments, laid upon any person’s property after he shall have committed an act of bankruptcy, shall be void.

 

§980.  From the time any person entitled to the benefit of this law has declared himself a bankrupt, or from the filing of any petition by any creditor, or creditors, to have him declared a bankrupt, all civil suits depending against him shall be suspended:  provided, nevertheless, that such bankrupt may be arrested and imprisoned as a fraudulent debtor, by order of any justice of the Supreme Court, upon the sworn petition of any of his creditors, setting forth sufficient cause for such arrest and imprisonment.

 

§981.  If the property of a person declaring himself a bankrupt, or proceeded against as a bankrupt, be of a perishable nature, the justice may, upon the application of any party interested, setting forth such fact under oath, order the same, at any time before the appointment of assignees, to be sold at auction, and the money to be deposited in the public treasure to await the order of the court.

 

§982.  During the pendency of any proceedings against a person charged with bankruptcy, and until the justice has decided whether he has committed bankruptcy or not, the justice shall make allowance to him for his own support and that of his family, if he has one:  provided, that such allowance shall not exceed the rate of three hundred dollars per annum, if a single man, or the rate of five hundred dollars per annum, if a man of family.

 

§983.  Every person who, upon finding himself insolvent, shall declare himself a bankrupt, or may have been adjudged a bankrupt on petition, as provided in this article, and who shall surrender, discover, and deliver over to the assignees chosen by his creditors, all his property, personal and real, shall, with the consent of a majority of his creditors in value and number within this Kingdom, be entitled to a certificate of discharge from all his debts, to be given him by the chief Justice of the Supreme Court:  provided, however, that no such discharge shall release any person who may be liable for the same debt, as a partner, joint contractor, indorser, acceptor or surety for or with the debtor.

 

§984.  Every debtor, prior to obtaining his certificate of discharge, shall take the following oath, viz.:

 

I, ___________  ______________, do solemnly swear that I have, according to the best of my knowledge and belief, delivered over and made a full, just, true and perfect discovery of all the property to me in any way belonging, and all such debts as are to me owing or to any person in trust for me; and that I have no money, lands or other estate, real or personal, beside that which I have surrendered to the assignees; and that I have not directly or indirectly, sold, disposed of, or concealed any part of m property, to secure the same to myself, or to receive any profit or advantage thereform, or to defraud or deceive any creditor to whom I am indebted in anywise whatever:  So help me God.

 

§985.  The debtor, if afterwards sued for any of his debts, shall have no benefit of the said discharge, but judgment shall be rendered against him for the amount that shall then appear to be due, if the plaintiff shall prove any of the following facts, to wit:

 

First.  That the debtor has made any gift to, or contract with, or given any security to any of his creditors, to obtain his or their consent to his certificate of discharge.

 

Secondly.  That he has fraudulently concealed, reserved or disposed of any of his property.

 

Thirdly.  That he did knowingly and willfully make any false statement, in any disclosure made to or for his creditors, concerning the amount or disposition of his property; or

 

Fourthly.  That he did at any time, in contemplation of bankruptcy, as in this article provided for, voluntarily make any payment or any transfer or conveyance of his property, with a view to give to any creditor or to any endorser or surety for the debtor, a preference or advantage over his other creditors.

 

§986.  The justice shall have the power, after bankruptcy declared, to examine any bankrupt under oath touching his estate, his acts and doings, his property and rights of property, which in the judgment of the court are necessary and proper for the purposes of justice, and in case he refuse to answer him, to commit him to prison until he consents to make such answer.

 

§987.  If any bankrupt shall refuse to deliver or surrender up to the assignees chosen by his creditors, as aforesaid, any of his effects, books or papers, the just may, upon the petition of the assignees, commit him to prison until he make such delivery or surrender.

 

§988.  After receiving his certificate of discharge, any bankrupt, who may be required, shall attend and render assistance to the assignees in settling accounts; for which services he shall be paid the sum of three dollars per day.  In case he refuse to attend assist them, he may, upon complaint to the justice, be committed to prison until he consents to render such assistance.

 

§989.  In case of the removal, illness or absence of the justice before whom proceedings under this article are instituted, such proceedings may be continued before some other justice of the Supreme Court.

 

§990.  Any party interested may except to any decision of the justice, in proceedings under this article, and appeal therefrom to the Supreme Court in banco:  provided, such party give notice of his appeal within five days after the rendition of such decision, and within ten days thereafter file with the clerk of the court, a good and sufficient bond, in the penal sum of one hundred dollars, conditioned for the payment of all costs arising from said appeal, in case it shall not be sustained.

 

§991.  Two or more persons doing business as partners, may declare themselves bankrupt as a firm, and may be declared bankrupt, and obtain a certificate of discharge, in the same manner and on the same terms as an individual.

 

§992.  When two or more persons who are partners in trade, become insolvent and bankrupt as provided in this article, all the joint stock and property of the company, and also all the separate estate of each of the partners, shall be taken, excepting such parts thereof as are herein excepted; and all the creditors of the company, and the separate creditors of each partner, shall be allowed to prove their respective debts; and the assignees shall also keep separate counts of the joint stock or property of the company, and of the separate estate of each member thereof; and after deducting out of the whole account received by such assignees, the whole of the expenses and disbursements paid by them, the net proceeds of the joint stock shall be appropriated to the payment of the creditors of the company, and the net proceeds of the separate estate of each partner shall be appropriated to pay his separate creditors; and if there shall be any balance of the separate estate of any partner, after the payment of his separate debts, such balance shall be added to the joint stock for the payment of the joint creditors; and if there shall be any balance of the joint stock, after the payment of the joint debts, such balance shall be divided and appropriated to and among the separate estates of the several partners, according to their respective rights and interests therein, and as it would have been if the partnership had been dissolved without any bankruptcy; and the sum so appropriated to the separate estate of each partner shall be applied to the payment of his separate debts, and in all other respects the proceedings against partners shall be conducted in the like manner as if they had been commenced and prosecuted against one person alone.

 

§993.  Any bankrupt who shall have been imprisoned as a fraudulent debtor, may be discharged from such imprisonment by order of any justice of the Supreme Court, either at or before the final settlement of the estate, if it shall appear to the satisfaction of such justice that the bankrupt has surrendered, discovered and delivered over to the assignees chosen by his creditors, all his property, personal and real, and in other respects conformed to the main provisions of the law relating to bankruptcy.

 

§994.  The costs of the proceedings under this article, except in cases where the petitioners fail to prove the person petitioned against a bankrupt, shall be borne by the bankrupt’s estate.  The assignees shall be paid two and one half per cent on all property received by them, and two and one half per cent on all property disbursed by them.

 

§995.  The books and papers of the estate shall, after the final dividend and settlement, be deposited with the clerk of the Supreme Court.

 

 

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