This act of bankruptcy consists in a person having "suffered or permitted while insolvent any creditor to obtain a preference through legal proceedings, and not having at least five days before a sale or final disposition of any property affected by such preference, vacated or discharged such preference."
This act consists in a failure to prevent a preference by one creditor over the others through legal proceedings. It differs from the other acts in that it consists in no affirmative act on the part of the bankrupt. The terms "suffered and permitted" as here used indicate not a mere permission of an act that could be avoided, but a failure to prevent an act that could not be avoided, that is, a failure to prevent a preference through legal proceedings, although he have no way to prevent such preference.90
90. Wilson Bros. v. Nelson, 183 U. S. 191,
This act of bankruptcy consists in having "made a general assignment for the benefit of his creditors, or, being insolvent, applied for a receiver or trustee for his property or because of insolvency, a receiver or trustee has been put in charge of his property under the laws of a state, or of the United States."
(1) General assignment for benefit of creditors.
If a debtor assigns his property to a trustee or assignee in order that such assignee or trustee may hold it for the benefit of his creditors, this is both an act of bankruptcy and a transaction that will be set aside by the court of bankruptcy.
(2) Application for receiver.
The language of the act contemplates that because of insolvency, a receiver has been applied for by the bankrupt, or because of insolvency, a receiver (at his suit or the suit of his creditors) has been put in charge of his property under the laws of a state or of the United States.
The word "receiver" is of course used in this connection not to indicate the officer known as a receiver in a bankruptcy case.
The receivership proceedings must be on account of insolvency. Receiverships of corporations or partnerships are not uncommon for other purposes, as in cases of mismanagement, fraud, etc.
To give the bankruptcy court jurisdiction there must be insolvency when the receiver is appointed and when the petition is filed.91
91. In re Sedalia Farmers Co-Op. Packing & Produce Co., (D. C. Mo.) 268 Fed. 898.
This act consists in having "admitted in writing his inability to pay his debts and his willingness to be adjudged a bankrupt on that ground."
This is a sort of voluntary bankruptcy - a sort of "confession of judgment." Generally one willing to become a bankrupt would file his own petition in bankruptcy.
In this act of bankruptcy insolvency, as defined by the bankruptcy act is immaterial.92
The board of directors have authority to make this admission.93
92. In re Dressier, Producing Corp., (C. C. A. 2nd Cir.) 262 Fed. 257. 93. Id.