SECTION 2. Any person owing debts to the amount of five hundred dollars which have not been created in consequence of defalcation as a public officer, or executor, administrator, guardian or trustee, or while acting in any other fiduciary capacity may file his petition verified by oath, before any Justice of the Supreme Court and ask to be adjudged a bankrupt, which petition shall be heard and acted upon forthwith.

SECTION 3. Any petition to declare a person bankrupt shall be verified by oath, and state the act or acts of bankruptcy relied upon, such petition shall be accompanied by a bond, the penalty thereof to be fixed in such a sum as the Justice may think proper, which bond shall be conditioned for the payment of all costs of proceedings and damages accruing to the party petitioned against in case of failure to prove him bankrupt.

SECTION 4. Upon receiving such petition and bond as mentioned in Section 3, or when any person shall be declared bankrupt upon his own petition as provided in Section 2, the Justice shall issue an order to the Marshal of the Kingdom or his Deputy, or to the Sheriff of an island as the case may be, to take possession of the debtor's store and counting house, goods, chattels, property, books and papers and hold the same until the election or appointment of an assignee or assignees. Provided, however, that in all proceedings where any of the property and effects of the debtor ought, in the discretion of the Justice, to be sold and that such sale would be for the benefit of the bankrupt's creditors that the said Marshal or his Deputy or the Sheriff as the case may be, shall, upon the order of the Justice sell the same and hold the proceeds of such sale, until the election or appointment of an assignee or assignees.

SECTION 5. After the filing of the petition and bond as provided in Section 3, the Justice shall fix a time for hearing

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the alleged bankruptcy, and notice of such hearing and a copy of the petition shall be served upon the party petitioned against.

SECTION 6. Whenever any person shall be declared a bankrupt either upon his own petition or that of his creditor or creditors he shall immediately file with the Clerk of the Supreme Court a schedule of all his creditors, with the amounts due such creditors respectively which schedule shall contain all secured and unsecured accounts and if secured, the nature of such security; he shall also file an inventory of all assets including such as may be exempt by law.

SECTION 7. Upon the adjudication by the Justice, of any person as a bankrupt, the Justice shall order a notice to be published in some newspaper, notifying the creditors of such bankrupt to come in and prove their claims before the Justice upon a day to be named in such notice, and shall also cause the Marshal, his Deputy or Sheriff as the case may be, or either of them, to serve notices by mail upon the creditors of such bankrupt of such meeting, and all creditors who have so proved their claims on the day named in said publication and notice, may proceed forthwith to elect one or more assignees of said bankrupt estate as herein after provided; and in case of failure of the creditors to elect and assignee or assignees on the day named in said notice and publication, then the Justice shall appoint an assignee or assignees, who shall immediately give notice by publication of such appointment or election.

SECTION 8. Any creditor may object to the allowance or proof of any claim and the hearing shall be had before the Justice, and any creditor whose claim is so objected to shall have no voice in the choice of assignees, provided, however, that the creditor or creditors making such objection file an affidavit that such objection is bona fide, and is not made for the purpose of depriving the creditors objected to of having a

voice or vote in the election of assignees. Either party or the assignees may take an appeal from the decision of the Justice to a Jury, upon complying with the requirements in regard to appeals contained in Section 21.

SECTION 9. Creditors may prove their claims at any time before the discharge of the debtor, but shall participate only in such dividends as may be declared after the proof of their claims. Debts not due may be proved allowing a discount for interest, and all persons who are endorsers or surety for the debtor, or who have demands against him as drawer or endorser of any note, or upon any other demands or undertakings whatsoever, may be considered as creditors provided that the bill, bond, note or other contract be made before bankruptcy and that the debt demanded shall become absolute before the final dividend of the bankrupt estate.

SECTION 10. Upon the election or appointment of an assignee or assignees as the case may be, the Marshal, or his Deputy or the Sheriff of the island where the property may be situate, shall immediately deliver all property in his possession or under his control to the assignee or assignees, and the election or appointment of an assignee or assignee shall immediately vest all property real, personal or mixed of said bankrupt in such assignee or assignees.

SECTION 11. Claims shall be proved before the Justice by the oath of the creditors, and to entitle any creditor to have a vote in the election of assignees, he must first prove his claim. All elections for assignees shall be by ballot and no creditor to an amount less than one hundred dollars shall be entitled to vote. A majority in number and value of all the creditors who have proved their claims shall be necessary to elect an assignee or assignees, and upon a failure by the creditors to elect an assignee, the Justice presiding shall appoint one or more assignees as he may think proper. The Justice may order the assignee or assignees so elected or appointed to give

bond for the faithful perfomance of his or their duty in such sum as he may deem sufficient.

SECTION 12. The assignee or assignees shall have full power in his or their own name or names to sue for and collect debts due the bankrupt, and also bring any suit in his or their own name or names which has for its object the recovery of any portion of the bankrupt's property. The assignee or assignees may dispose of all property belonging to the bankrupt of whatever name, nature or kind at either public or private sale. Such private sales however shall be valid only upon confirmation of the Court having jurisdiction of the proceedings. If any assignee dies or becomes incapacitated to perform his duties the Justice may appoint some other person to fill his place. The assignee or assignees may at any time examine the bankrupt upon oath before the Justice as to such matters connected with his bankruptcy as he or they may think proper for the interest of the creditors. They shall have power to execute all documents under seal or otherwise necessary or proper to convey the property sold by them to the purchaser.

SECTION 13. The assignee or assignees shall immediately after their election or appointment file with the Clerk of the Supreme Court a list of all the assets that have come to their possession or knowledge. They shall make as many dividends of said estate as they may think proper not to exceed five, among the creditors who have proved their claims without priority or preference, provided, however, that all debts due the Hawaiian Government shall be paid in full before any dividend is declared, and provided also that any employee or servant of a bankrupt shall be entitled to receive in full not more than one month's salary or wages due him at the time of the failure or bankruptcy of his employer.

SECTION 14. The bankrupt shall be divested of all his title and interest in his property from the day of his failure (except

the necessary clothing of himself and family and such other necessaries not to exceed the value of three hundred dollars as the Justice may designate) and every assignment conveyance or transfer of his property made by him after he shall have become insolvent or committed an Act of bankruptcy, except upon a good consideration to a bona fide purchaser having no reasonable cause to believe him to be insolvent or bankrupt or in contemplation of insolvency or bankruptcy shall be void, and the property so transferred may be recovered and disposed of by the assignees for the benefit of the creditors.

SECTION 15. Upon the filing of a petition as provided in Sections 1 and 2, all civil suits pending in relation to and all executions or attachments laid upon the bankrupt's property shall cease, determine and be stayed; provided, however, that any bankrupt may be arrested and imprisoned as a fraudulent debtor upon the sworn petition of any creditor setting forth sufficient cause for such arrest and imprisonment.

SECTION 16. Every bankrupt who shall have surrendered, discovered and delivered over to the assignee or assignees all his property real and personal, may, after the expiration of six months from the date of his adjudication as a bankrupt apply to the Court for a discharge from all his debts. Upon application for such discharge the Justice shall order notice to be given by an advertisement of two weeks and also by mail to all creditors who have proved their debts to appear on the day appointed by such advertisement and notice and show cause, if any they have, why a discharge should not be granted to the bankrupt.

SECTION 17. No discharge shall be granted, or if granted be valid, in any of the following cases:

1. If the bankrupt has willfully sworn falsely in his petition, schedule or inventory or upon any examination had in the course of the proceedings in bankruptcy.

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