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(4) Discharge and arrangement (composition) cases.-Giving referees jurisdiction will greatly expedite administration (see Comment note (c) 2 following).

(5) Receivers and trustees' bonds.-Section 50b: Trustees are to file their bonds within 5 days instead of 10 days, and the provision is made applicable to receivers as well.

(6) Notices of sales.-Section 588 (4): Permitting the court on cause shown to shorten the time of notices of sale or to order immediate sales without notice.

(7) Unclaimed dividends.-Section 66a: Expediting the early dis charge of the trustees by reducing the time for holding unclaimed divi dends (or other moneys) from 6 months to 60 days. Cases may thus be closed 4 months sooner than at present.

(8) Summary jurisdiction.-Sections 50n, 57h, 571, and 678 (4): The giving to bankruptcy courts of summary jurisdiction in the enforcement of the obligation of bonds furnished pursuant to the act (sec. 50n), the determination of the value of securities (sec. 57h), the recovery of excess dividends (sec. 571), and the setting aside of preferential liens (sec. 67a (4)) will greatly expedite proceedings.

(b) The restricting of expenses, allowances and priorities and facilitating increased realizations with the consequent building up of dividends for creditors.

(1) The shortening of administrative periods as indicated under the preceding classification will have the general effect of reducing expenses.

(2) Exemptions.-Section 6: In the proviso added to this section no allowance shall be made for exemptions out of property which is recovered after a preference or fraudulent transfer. The decisions are conflicting and it is considered that the law should be made clear that a bankrupt should not profit at the expense of the creditors from the efforts of the trustee in undoing the bankrupt's own acts.

(3) Turnover proceedings.-Section 211: In turnover proceedings the new provision establishing the presumption that sales are not below cost unless the contrary is shown should be helpful in securing recoveries for creditors.

(4) Compensation and expenses of officers of court.-In the revision of section 48, while it is recognized that in most cases the compensation of custodians, receivers and trustees is too low, and while it is true that rates of compensation generally have increased, the fees have been held, generally speaking, to those established by the present law. There are no increases in rates except that the commissions in "arrangements" (compositions) cases will be the same as those normally administered, and in the very small cases the court may allow trustees, where their services warrant, not more than $100 altogether if funds are available. Compensation is provided in ancillary proceedings, there being in the present law no specific provision for such compensation. Judges are authorized in section 40 to restrict the compensation of referees, if in any case it becomes excessive, to amounts within reasonable limits. Their expenses are more closely and specifically regulated under the amendment proposed in section 62.

(5) Elimination of certain priorities.-Section 64: Certain State priorities have been eliminated. The necessity for so doing is obvious; many estates have been consumed, to the exclusion of general creditors, by the ever-increasing classes of State priorities. (See Comment on amendment 2h (4), Miscellaneous provisions, priorities.)

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(6) Inheritances, estates by entireties, contingent interests.-Section 70s: Enabling the trustee to reach interests of this character vesting within 6 months after bankruptcy will serve to increase realizations.

(7) Accounting by receivers not appointed under the act.-Section 69d: This new requirement will do much to conserve assets.

(8) Reorganization expenses.-In new Chapter X. Corporate Reorganizations, the matter of compensation and expenses has been given careful consideration. It has been safeguarded, we believe, with adequate provisions.

Numerous other provisions to which reference is made in these comDents will accomplish favorable results. For example, the use of cquity rules in proceedings for discovery (secs. 3d and 21k), enlarging the jurisdiction of referees (sec. 38a (4), (5)), and the elimination of rumerous notices (sec. 58a).

(c) The extending of the jurisdiction of referees, raising the requirements as to their qualifications and enlarging their duties.

(1) Territorial jurisdiction.-Section 34a: Amend by extending the jurisdiction of referees in matters referred to them so that it will be cocxtensive with the territorial limits of the jurisdiction of the courts &ppointing them. There has been some uncertainty about the territorial jurisdiction of referees, whether it extends outside their particular Counties, and under this provision their orders will be enforceable within the territorial jurisdictions of the appointing courts.

(2) Jurisdiction in discharge and arrangement (composition) cases.Section 38a (4), (5): Giving referees jurisdiction to grant, deny, or revoke discharges and to confirm, or refuse to confirm, arrangements (compositions) or wage-earner plans, or set aside the confirmation of Arrangements or plans and reinstate the cases. The new jurisdiction would, of course, be exercised subject to review. Under the law as at present referees usually hear these matters on reference to them as special masters and report back to the judges. This is an unnecessary and undesirable circumlocution. The referees have opportunity not only to hear but to observe the witnesses and are, by reason of their direct contact, in better position to determine the questions at issue than the judges, whose only information is given them by the referees. These amendments are recommended in the interest of expediting the proceedings and the saving of expense.

(3) Ancillary jurisdiction. Section 38a (6): Conferring this jurisdiction will avoid the necessity of references to referees as special masters and questions of costs and fees.

(4) Qualifications. Section 35a (5): Section 358 (5) requires referees to be members in good standing at the bar of the district court in which they are appointed. The requirement does not affect referees holding office on the date when the amendatory act takes effect. Under the proposed amendment referees must also reside within their jurisdictions as well as to have their offices therein.

(5) Full-time referees.-Section 37: The bill recognizes, as did the Hastings-Michener bill, the great desirability of limiting the number of referees to those employed on a full-time basis insofar as possible. This will increase efficiency and reduce expenses.

(6) Duties. Section 39a: The revised subdivision is a rearrangeent of the provisions relative to the duties of referees. The present subdivision is not in chronological order and is confusing. The amendDont sets up the duties in a proper order. Several changes in phraseology are suggested for the sake of clarity.

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(7) Petitions for review.-Section 39c: This is a new subdivision, establishing the practice on petition for review, which is highly desir able. It states definitely and clearly the proceedings to obtain a review of a referee's order, which is in the interest of certainty and uniformity.

(8) Contempt proceedings.-Section 41b: The amendments improve the practice in contempt proceedings by providing that the referee in certifying the facts to the judge may require by order the respondent to appear before the judge upon a day certain to show cause why he should not be adjudged in contempt. This will expedite the hearings and obviate difficulty in many cases in obtaining personal service at a later date.

(9) Records. Section 42: The changes permit a more modern system of record keeping by referees than the present law sanctions. (d) The appointment of creditors' committees to cooperate with the court.

Section 44b: This new subdivision provides for the appointment by the creditors at their first meeting of a committee of not less than three creditors to consult with and advise the trustee in connection with the administration of the estate. The committee is given official standing and the right to submit to the court any question affecting administration. Both the English and the Canadian bankruptcy acts provide for the appointment of creditors' committees and the system is reported to have worked admirably in those jurisdictions.

In the larger centers, creditors' committees are customarily selected by the creditors, but, in the absence of official standing, they have no right to appear before the court in a bankruptcy proceeding proper. Under section 77B of the present law (ch. X of this bill) creditors' committees are officially recognized, and it is believed that the official recognition of committees by this amendment will be welcomed by creditors in the larger cases and will result in benefits in the adminis tration of estates.

Under the amendment proposed to section 58, notices of examinations of the bankrupt, proposed sales of property, and the compromise of controversies need only be given to the creditors' committee, if one has been appointed, and to creditors who bave filed a demand for the receipt of notices. The result will be a saving in the cost of sending numerous notices to large bodies of creditors in cases where such committees have been appointed and are acting.

(e) The summary enforcement of liability on bonds to the court.

Section 50n: The amendment gives the court of bankruptcy power to enforce by summary proceedings recovery on bonds filed with it. The right to do this now is questionable, although it seems ridiculous that it should be necessary to go into another forum to enforce the obligations of the bonds. This express grant of power is, of course, in the interest of efficiency.

The regulating of ancillary receiverships.

Section 69c: This new subdivision establishes the practice in the matter of the appointment of ancillary receivers. General Order LI, promulgated by the Supreme Court on April 17, 1933, deals with the subject, but it is considered desirable to incorporate it in the act. Since it is intended to correct the abuses which existed in connection with the appointment of ancillary receivers and their compensation,

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it is deemed advisable to expand upon the provisions of the general order. The appointment must be made only upon cause shown. The primary receiver is to be appointed as ancillary receiver if but one is appointed, or, if more than one, he is to be one of the ancillary receivers. It is believed that this last provision will be a highly effective check upon abuses in practice.

(g) The coordination of receivership proceedings in other courts with bankruptcy proceedings pending adjudication.

Section 69d: The new provision is designed to make it possible for equity receivers, where there is a supervening bankruptcy proceeding, to know just how to proceed with further administration during the period intervening between the filing of the involuntary petition in bankruptcy and the adjudication without danger to themselves and the equity estate. It is manifestly in the interest of efficiency in the conservation of assets.

The recent amendment to section 69 of the present act is deleted. It is the substantive part of Section 3 of the amendatory act of June 7, 1934. It has been given careful consideration, but is disapproved because it is deemed unsound in policy. The 1934 amendment was intended to prevent the judges of the district court from appointing a standing receiver in bankruptcy. It was aimed particularly at the practice then obtaining in the southern district of New York of appointing the Irving Trust Co. as standing receiver in all cases. The condition at which the amendment was aimed has been elimineted by action of the judges of the district and obtains nowhere else. The existing provision is badly drawn. It is believed that the judges of the district court should be left free to provide such plans of administration in their respective districts as may be best adapted to the conditions there existing.

(h) Miscellaneous provisions in the interest of efficiency.

(1) Eramination of bankrupts.-Section 55b: Examinations of bankrupts in all cases are made mandatory instead of permissive D under the amendment. Under the amended section 47a (7) it is made the duty of the trustee to examine the bankrupt at the first meeting of creditors or at other meetings called for that purpose, unless the bankrupt has already been examined; also to examine bankrupts at hearings on objections, if any, to discharge, unless otherwise ordered by the court. These amendments will meet criticisms that bankrupts are not examined, or are not fully examined, and that discharges are granted without full inquiry.

The use of the equity rules pertaining to discovery, interrogatories, inspection, and production of documents and admission of execution and genuineness of instruments, as provided in the new subdivision, section 21k, according with the amendments to section 3d, will tend to reduce expenses and speed trials.

(2) Notices.-Section 58a: Under the proposed amendment to this subdivision the number of notices to creditors is materially decreased, Notices of examinations are to be sent only if the court directs. The court may order an immediate sale without notice for cause shown. Notices are not required of the filing of accounts by receivers and trustees unless confirmation is to be had, nor of proposed compromises in which the amount claimed is less than $1,000 in money or value. Where there are creditors' committees, notices need only go to the

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committees, unless individual creditors have filed requests for notices. Under subdivision c notices may be waived by any person entitled to them. The provision in the present law for the giving of notice of the declaration of a dividend is omitted as a relic of an earlier statute in which there was no prescribed time limit for the barring of claims and notice of the declaration of dividends was necessary in order to enable creditors to protect their interests. Under clause (7) where a proceeding is dismissed for nonpayment of costs, no notice to creditors is required.

It is believed that these amendments are all in the interest of efficiency without any loss of protection to creditors. Creditors are usually not interested in having notices of all examinations and the mandatory requirement of the present law is generally disregarded The amendment with reference to notices of sales is in conformity with General Order XVIII providing that perishable property may be sold without notice. This general order is in direct conflict with the present requirement that creditors shall have 10 days' notice of all sales. The amendment will doubtless prevent waste and deteri oration and avoid unnecessary delay. Creditors are not interested in the settlement of the smaller controversies and rarely attend hear ings on the notices now required. In dismissals for nonpayment of costs there is no fund out of which the expense of sending notices may be paid. There is no practical necessity in sending notices to creditors unless requested where a creditors' committee is acting for them. On the other hand, new clause (8) requires notice of all applications for compensation to be given to creditors. There is no such requirement in the present act and it is quite obvious that such notice should be given.

Under subdivision b notices with reference to discharge are required to be given to the trustee as well as to creditors for the reason that in most instances he is the person primarily in a position to oppose the discharge. As an added safeguard, notice is required to be given to the attorney for the trustee. Inasmuch as, under the revision of section 14, a hearing on the discharge is fixed by the court, it becomes proper to provide for notice to the bankrupt and his attorney.

(3) Claims-Filing-Section 57: Subdivision n relating to the filing of claims has been entirely recast, and several significant changes have been made.

All proofs of claim, except as otherwise provided in chapters X, XI, XII, and XIII, including claims for taxes and debts owing to a government, must be filed and proved. The provision in respect to government claims is added in order to overcome the decisions which hold that the bar time for the filing of claims is not binding upon a sovereign. Thus the administration of the estate is speeded up, and the distribution becomes more certain and definite.

Likewise, claims for breach of executory contracts and contingent claims provable under the revised section 63 must be filed and proved within the bar time. Their allowance will depend upon the new conditions set up in the recast of section 57d. It may here be noted that the provision in section 57n, relating to the time permitted for filing claims after liquidation, is deleted, because unnecessary under the new procedure.

The time for filing claims is made to relate to the date of the first meeting of creditors, instead of the date of adjudication. Creditors

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