The Statute of Bankrupts or Bankruptcy Act 1542 (
34 & 35 Hen. 8. c. 4), was an
act passed by the
Parliament of England
The Parliament of England was the legislature of the Kingdom of England from the 13th century until 1707 when it was replaced by the Parliament of Great Britain. Parliament evolved from the Great Council of England, great council of Lords Spi ...
in 1542. It was the first statute under
English law
English law is the common law list of national legal systems, legal system of England and Wales, comprising mainly English criminal law, criminal law and Civil law (common law), civil law, each branch having its own Courts of England and Wales, ...
dealing with
bankruptcy
Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the deb ...
or
insolvency
In accounting, insolvency is the state of being unable to pay the debts, by a person or company ( debtor), at maturity; those in a state of insolvency are said to be ''insolvent''. There are two forms: cash-flow insolvency and balance-sheet i ...
.
The act contained an extremely long preamble which denounced debtors acting in fraud of their creditors, directed that the bodies of the offenders and all of their assets be taken by the requisite authorities and the assets be sold to pay their creditors "a portion, rate and rate alike, according to the quantity of their debts". Thereby the first bankruptcy statute also imported into English law for the first time the ''
pari passu'' principle of distribution on insolvency.
These principles would later be heavily underscored by the
House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the lower house, the House of Commons of the United Kingdom, House of Commons, it meets in the Palace of Westminster in London, England. One of the oldest ext ...
in the cases of ''
National Westminster Bank Ltd v Halesowen Presswork & Assemblies Ltd''
972AC 785 and ''
British Eagle International Airlines Ltd v Compagnie Nationale Air France''
9751 WLR 758.
Preamble
The preamble to the act is as follows:
Legacy
The whole act was repealed by section 1 of the
Bankruptcy Act 1825 (
6 Geo. 4. c. 16).
See also
*
Bankruptcy Act
Notes
References
*
Roy Goode, ''
Principles of Corporate Insolvency Law'', 3rd ed., para 1-05
Acts of the Parliament of England 1542
Repealed English legislation
Bankruptcy in England and Wales
Insolvency law of the United Kingdom
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