Composition or scheme of arrangement.Composition or scheme of arrangement.

### Composition or scheme of arrangement. E.B.A., ss. 16, 21. N.S.W., s. 19. Vic., ss. 248, 249 and 1897, s. 73. Q., s. 134. S.A., ss. 234–241. W.A., ss. 17, 21. 71.—(1.) Where a bankrupt intends to make a proposal— (a) for a composition in satisfaction of his debts, or (b) for a scheme of arrangement of his affairs, he shall lodge with the trustee a proposal in writing, signed by him, embodying the terms of the proposed composition or scheme, and setting out particulars of any sureties or securities proposed. (2.) The trustee shall hold a meeting of creditors, and shall send to each creditor, before the meeting, a copy of the bankrupt’s proposal with a report thereon; and if a special resolution is passed thereat accepting the proposal, it shall be deemed to be duly accepted by the creditors. (3.) The bankrupt may at the meeting amend the terms of his proposal, if the amendment is, in the opinion of the majority of the creditors, likely to benefit the creditors generally. (4.) Any creditor who has proved his debt may assent to or dissent from the proposal by letter, in the prescribed form, addressed to the trustee so as to be received by him not later than the day before the meeting, and the assent or dissent shall have effect as if the creditor had been present and had voted at the meeting. (5.) The bankrupt or the trustee may, after the proposal is accepted by the creditors, apply to the Court to approve it, and notice of the time appointed for hearing the application shall be given to each creditor who has proved. (6.) If, in the opinion of the Court it is desirable that the bankrupt should be publicly examined in accordance with this Act, the Court shall adjourn the hearing of the application until after the bankrupt has been publicly examined, and any creditor who has proved may, notwithstanding that he may at a meeting of creditors have voted for the acceptance of the proposal, be heard by the Court in opposition to the application. (7.) The Court shall, before approving the proposal, hear a report of the trustee as to its terms, and as to the conduct of the bankrupt and any objections made by or on behalf of any creditor. (8.) If the Court is of opinion that the terms of the proposal are unreasonable, or unlikely to benefit the creditors generally, it shall refuse to approve the proposal, and if it is of opinion that an offence against this Act has been committed by the bankrupt, it may refuse to approve the proposal. (9.) If any facts are proved on proof of which the Court would be required either to refuse, suspend, or attach conditions to the bankrupt’s discharge, the Court shall refuse to approve the proposal, unless it provides reasonable security for payment of not less than Five shillings in the pound on all the unsecured debts provable against the debtor’s estate. (10.) In any other case the Court may either approve or refuse to approve the proposal. (11.) If the Court approves the proposal, the approval may be testified by the seal of the Court being attached to the instrument containing the terms of the proposed composition or scheme, or by the terms being embodied in an order of the Court. (12.) 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 bankrupt and provable in bankruptcy, but shall not release the debtor from any liability under a judgment against him in an action for seduction, or under an affiliation order, or under a judgment against him as a co-respondent in a matrimonial cause, except to such extent and under such conditions as the Court expressly orders. (13.) A certificate of the Registrar that a composition or scheme has been duly accepted and approved shall, in the absence of fraud, be conclusive as to its validity. (14.) The provisions of a composition or scheme 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 contempt of Court. (15.) If— (a) default is made in payment of any instalment due in pursuance of the composition or scheme, or (b) 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 bankrupt, or that the approval of the Court was obtained by fraud, the Court may, if it thinks fit, on application by the trustee, or by any creditor, 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. (16.) The Court shall not approve any composition or scheme which does not provide for the payment, in priority to other debts, of all debts required by this Act to be so paid in the distribution of the property of a bankrupt. (17.) 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. (18.) If the Court approves the composition or scheme, it may make an order annulling the sequestration order and vesting the property of the bankrupt in him or in such other person as the Court appoints, on such terms, and subject to such conditions, if any, as the Court directs.