Re W an Arranging Debtor

• Jurisdiction: Ireland
• Judgment Date: 03 March 1933
• Date: 03 March 1933
• Court: High Court (Irish Free State)

In re W., an Arranging Debtor

In re W., An Arranging Debtor

Bankruptcy - Arrangement - "Bill composition" - Whether "distribution of the property of a bankrupt" - Unemployment insurance - Arrears of contributions due by arranging debtor in respect of employed persons - Crown debt - Prerogative of the Crown - Preferential Payments in Bankruptcy (Ireland) Act, 1889 (52 & 53 Vict. c. 60). sect. 4 - Unemployment Insurance Act, 1920 (10 & 11 Geo. 5, c. 30), sect. 22, sub-sect. 6; sect. 26,sub-sect. 5.

The Unemployment Insurance Act, 1920, sect. 22, sub-sect. 6, provides that all sums due to the unemployment fund "shall be recoverable as debts due to the Crown, and without prejudice to any other remedy may be recovered by the Minister summarily as a civil debt."

Sect. 26, sub-sect. 5, provides: "There shall be included among the debts which, under sect. 4 of the Preferential Payments in Bankruptcy (Ireland) Act, 1889, are, in the distribution of the property of . . . an arranging debtor to be paid in priority to all other debts, all contributions payable under this Act by . . . the arranging debtor in respect of employed persons during the four months before the date of the . . . filing of the petition for arrangement, and that Act shall have effect accordingly."

W., an arranging debtor, effected a composition with his creditors whereby five shillings in the pound was to be paid on all his unsecured debts and on such portion of his partly secured debts as should not be covered by security. The composition was payable in three equal instalments at four, eight and twelve months, respectively, from the date of confirmation of the offer, the first instalment being secured by the promissory note of the debtor alone and the subsequent instalments being secured by joint and several promissory notes of the debtor and one surety.

Held, that such a "bill composition" was a "distribution of the property"of the arranging debtor within the meaning of sect. 4 of the Preferential Payments in Bankruptcy (Ireland) Act, 1889, and accordingly the Minister for Industry and Commerce was entitled by virtue of the Crown prerogative to be paid all arrears of the debtor's contributions to the unemployment fund (other than arrears accruing during the four months prior to the confirmation of the offer) in priority to all other debts.

In re D., an Arranging Debtor, [1921] 2 I. R. 1, and In re Hennessy, [1932] I. R. 11, applied.

Application on behalf of W., an arranging debtor.

W. obtained the protection of the Court of Bankruptcy on August 12th, 1932. The proposal made by the debtor was as follows:—

"To pay a composition of 5s. in the £ on all his unsecured debts and engagements and on such portion of his partly secured debts as may not be covered by security. Payable in three equal instalments at 4, 8 and 12 months respectively, from the date of the confirmation of the offer by the Court. The first of said instalments to be secured by the promissory notes of the debtor, and the second of said instalments to be secured by the joint and several promissory notes of the debtor and of M. P. C., and the third of said instalments to be secured by the joint and several promissory notes of the debtor and the said M. P. C."

The proposal was duly assented to by the creditors at the First Private Sitting and was confirmed and approved by the Court at the Second Private Sitting on November 4th, 1932. In pursuance of the arrangement a Proof of Debt Sitting was held at which the arranging debtor's debts were dealt with. In addition to the ordinary unsecured debts which were admitted, a claim was made by the Minister for Industry and Commerce for arrears of unemployment insurance, together with a small amount for current unemployment insurance. The arrears due to the Minister at the time of the filing of the petition amounted to £63 19s. 9d., of which sum £2 15s. 0d. was in respect of the period of four months before the date of the filing of the petition for arrangement, and which sum was paid to the Minister by the debtor, the balance, £61 4s. 9d., being in respect of arrears which became due...