ally recognized, but were
in certain circumstances made binding on all the creditors, including those
who refused to assent to them. Under the act of 1869, although such deeds
were no longer recognized or made binding on non-assenting creditors, the
proceedings under the "liquidation by arrangement" and "composition"
clauses were practically private arrangements by resolution instead of
deed, and were proved by experience to be open to the same abuses. It has
also been shown that under the act of 1883 no arrangements either by deed
or by resolution have any force against dissenting creditors, unless
confirmed after full investigation and approval of the bankruptcy courts.
Private arrangements, therefore, cease to form any part of the bankruptcy
system. But they are, nevertheless, binding as voluntary contracts between
the debtor and such creditors as assent to them. Being, however, in the
nature of assignments of the debtor's property, they are either deemed
fraudulent if the benefit of the assignment is limited to a portion of the
creditors, or, if it is extended to all they become acts of bankruptcy,
and, like any other voluntary assignment, are liable to be invalidated if
made within three months prior to the petition on which a receiving order
is made against the debtor. Treated as voluntary assignments, which are not
binding on those who do not assent to them, such arrangements, where
honestly entered into and carried out by capable administration, in many
cases form a useful and expeditious method of liquidating a debtor's
affairs, and where the debtor's insolvency has been brought about without
any gross misconduct they will probably always be largely resorted to. The
danger attending them is that even in cases where the debtor has been
guilty of misconduct, a private arrangement may be used to screen his
conduct from investigation, while in many cases it may be made the medium
for the concealment of fraudulent preferences. The absence of any
independent audit of the trustees' accounts may also encourage or conceal
irregularities in administration. Previous to 1887, however, much
inconvenience arose from the fact that the execution of these private
arrangements was frequently kept secret, and fresh credit was obtained by
the debtor without any opportunity being afforded for the new creditors
becoming acquainted with the fact that they were dealing with an insolvent
person, and that in many cases they were simply sup