In section 7 an act of bankruptcy is an act of default, voluntary or involuntary, committed by a debtor which is either evidence of an intent to deprive creditors of their rights through fraudulent assignment or is an implication of insolvency. This is the definition in the Report, at page 55. It is the foundation of the jurisdiction to entertain a bankruptcy petition. This is referred to in section 127 of the 1857 Act. The Committee recommended that the concept should be retained. Section 7 therefore retains the acts of bankruptcy set out in section 21 of the 1872 Act subject to the following changes: (a) certain acts of bankruptcy which can be committed by traders only will in future be capable of being committed by all debtors; (b) the following acts of bankruptcy are abolished: (i) that a debtor allowed himself to be outlawed — this is obsolete — and (2) that a debtor filed a petition for arrangements under the control of the court and it was dismissed. Under section 105 of the Bill such dismissal will result in adjudication of the debtor. It would be obsolete once section 105 becomes part of the corpus of the law.
As well as the two acts of bankruptcy that are being abolished there are two acts of bankruptcy created. One is where the debtor gives a fraudulent preference, and two, the present act of bankruptcy which occurs when execution has in the case of a trader been levied by seizure and sale of his goods for payment of not less than £20. It is replaced by one which arises from the levying of execution by the seizure of a debtor's goods or a return of no goods by the sheriff or county registrar.
