Bankruptcy before 1831
Bankruptcy proceedings distribute the property of an insolvent person between his or her creditors in proportion to the debts due to them. They were first formally regulated by the Statute of Bankrupts 1542, which delegated such administration to certain official members of the Privy Council and the chief justices of the Courts of King's Bench and Common Pleas.
Under the Bankrupts Act 1571 their jurisdiction passed to commissioners of bankrupts appointed by and under the general superintendence of the Lord Chancellor or Lord Keeper. The Office of the Commissioners of Bankrupts was attached to the Court of Chancery. Bankrupts were defined as insolvent persons engaged in trade or business and, until the Bankruptcy Act 1861, a distinction was maintained between such persons and other insolvents.
Court of Bankruptcy and London Court of Bankruptcy, 1831-1861
The Bankruptcy Court (England) Act 1831 replaced the jurisdiction of the commissioners in bankruptcy by a Court of Bankruptcy, consisting of four judges, one of whom was the chief judge, and six commissioners. Under the Court of Bankruptcy (England) Act 1833 judges of the court could also sit as commissioners of the Court for the Relief of Insolvent Debtors.
To deal with country bankruptcies, district courts were established under the Bankruptcy Act 1842. In the same year, under an Act for the Relief of Insolvent Debtors, any person not being a trader, or being a trader and owing less than £300, could obtain a protection order from the Court of Bankruptcy or a District Court of Bankruptcy, staying all process against him on condition that he vested all his property in an official assignee. By the Joint Stock Companies Act 1844 new procedures were introduced to deal with the affairs of insolvent companies.
Under the Bankruptcy etc Act 1847 the jurisdiction relating to non-traders and to traders owing less than £300 passed to the Court for the Relief of Insolvent Debtors in London and to the newly-established county courts elsewhere. This act also abolished the Court of Review and its work was taken over by such one of the vice-chancellors of the Court of Chancery as nominated by the Lord Chancellor.
Court for the Relief of Insolvent Debtors, 1813-1861
At the beginning of the nineteenth century, the plight of people imprisoned for debt became a cause for concern. In each of the two previous centuries occasional acts had been introduced to reduce the pressure on the prisons and to mitigate the harshness of the system by enabling debtors to apply to courts of quarter sessions for release from imprisonment on specified conditions. Further such acts were introduced from 1801 onwards and these were followed by the appointment of a Commissioner for the Relief of Insolvent Debtors to preside in a new court for the Relief of Insolvent Debtors under the Insolvent Debtors (England) Act 1813.
The insolvency laws were designed to provide for the discharge from prison of debtors, other than those engaged in trade or guilty of fraud or dishonesty, by settling a fair distribution of their existing and future property among their creditors. In 1840 the Royal Commission for inquiring into Bankruptcy and Insolvency drew attention to the injustice and artificiality of the distinction between insolvents and bankrupts, particularly as many of the former were small traders of insufficient substance to bring them within the scope of the laws relating to bankruptcy.
The Insolvent Debtors Act 1842 attempted to remedy this by providing that any person not being a trader, or being a trader and owing less than £300, could obtain a protection order from the Court of Bankruptcy or a District Court of Bankruptcy staying all process against him on condition of vesting all his property in an official assignee. Under the Bankruptcy Act 1847 this jurisdiction passed to the Court for the Relief of Insolvent Debtors in London and to the newly-established County Courts elsewhere. The latter courts also took over the circuit business of the Insolvency Court.
Bankruptcy Law Reform, 1861-1883
Under the Bankruptcy Act 1861 the distinction between bankrupts and insolvent debtors was ended and the jurisdiction of the Court for the Relief of Insolvent Debtors passed to the Court of Bankruptcy. Under the same act the jurisdiction of the Court of Bankruptcy was confined to London and it was known thereafter as the London Court of Bankruptcy.
Except in certain cases, such as a debtor to the crown, a defaulting trustee or solicitor, or a judgment debtor, who is able but refuses to pay, imprisonment for debt was abolished under the Debtors Act 1869.
Under the Supreme Court of Judicature Act 1873 it was laid down that the office of chief judge in bankruptcy should be filled by a judge of the High Court. Bankruptcy appeals also passed to the newly-established Court of Appeal.
Court of Review
The Bankruptcy Court (England) Act 1831 provided for the establishment of a Court of Review consisting of the judges, or any three of them, of the Court of Bankruptcy constituted under that act. The court was empowered to hear appeals from decisions of the Bankruptcy Court and to take over from the Lord Chancellor the general superintendence of bankruptcy business including the consideration of petitions in such causes.
The Court of Review was abolished under the Bankruptcy etc Act 1847. Its jurisdiction passed to one of the vice-chancellors of the Court of Chancery as nominated by the Lord Chancellor. Under the Bankruptcy Law Consolidation Act 1849 the general superintendence of bankruptcy work was devolved on the Court of Bankruptcy itself, leaving the vice-chancellor to deal with appeals. In 1851, on the establishment of the Court of Appeal in Chancery, under the Court of Chancery act of that year, appellate jurisdiction in bankruptcy passed to the lords justices then created. This, in turn, passed to the Court of Appeal in 1875 under the Supreme Court of Judicature Act 1873.
High Court of Justice in Bankruptcy
By the Bankruptcy Act 1883 it was laid down that the courts having jurisdiction in bankruptcy should be the High Court and the County Courts. For the purposes of their bankruptcy jurisdiction County Courts were to enjoy, in addition to their ordinary powers, all the powers and jurisdiction of the High Court. Appeals from their decisions lay to a Divisional Court of the High Court and from decisions of the High Court of Justice in Bankruptcy to the Court of Appeal.
It was also enacted that the London Bankruptcy Court should form part of the Supreme Court of Judicature and its jurisdiction should be transferred to the High Court as though such union had been effected under the Supreme Court of Judicature Act 1873. This merger had, in fact, been provided for by the 1873 act but had later been repealed by the Supreme Court of Judicature (1873) Amendment Act 1875.
Since 1921 cases in the High Court of Justice in Bankruptcy have been assigned to judges of the Chancery division. Before that time they were taken by Queen's Bench judges, and during the vacation judges from that division may still act.