tion-in accordance with the examination and ranking of credits-of a provisional or final dividend, according to the stage of the liquidation. This report is kept in the clerk's office, in order that the creditors may take note of it and comment thereon. The filing of this statement will be communicated to creditors by notices, published during 3 days, by which they are advised that the liquidation and distribution will be approved if no opposition is presented within 8 days after the publication. Should objection be made to the liquidation, the objecting creditor, or creditors, and the liquidator will be summoned to an oral hearing in which they must present the evidence supporting their contentions. Objections may be grounded only in an omission or error in the statement of liquidation, concerning the existence or amount of a credit statement of assets, account of expenses, and distribution according to a degree of preference. The court will decide this incidental proceeding at the hearing, or within 3 days thereafter if he is unable to get the parties to agree, and his ruling will be final except in controversies involving privilege of degree of preference, when it will be appealable. These proceedings may not take more than 15 days. (Arts. 156-159.) DISTRIBUTION OF ASSETS When the matter just mentioned is disposed of, or when the clerk certifies that no objection has been raised against the statement of distribution, the court orders that such distribution be made according to the statement and any modifications made thereto. After the privileged credits are paid, the remainder is distributed pro rata among the common creditors. This does not prevent creditors with special privilege or secured by mortgage from obtaining payment of their claims at any time after their examination, provided they give sufficient security as creditors with a better right. The creditor holding securities jointly and severally guaranteed by the bankrupt and other coobligors will also share in the dividends paid by all the estates, claiming in each for the nominal value of his securities, until he is paid in full. These estates will have no recourse against each other by reason of such payments, unless the sum of the payments exceeds the total amount of his credit in capital and interest. In such case the excess will belong, according to the nature and ranking of the obligations, to those coobligors, or their bankrupt estates, who were guaranteed by others. If the holder of shares on which the bankrupt is jointly and severally liable with other codebtors has received before the bankruptcy a part payment, he may claim against the estate for the remainder yet due, retaining his rights against the codebtors and guarantor (fiador) for any amount still owed to him. The codebtors or guarantors who made the part payment may file claim for the amount disbursed by them in discharge of the bankrupt. A portion will be withheld from the distribution to cover the share corresponding to credits under litigation, those depending on a condition, those claiming a privilege which is questioned, and the absent creditors whose credits appear upon the books of the bankrupt and were admitted. When these questions are decided, a supplementary liquidation and distribution will be made in which the portion with held, the valuables which have accrued to the estate, and any others which are found to belong to the bankrupt, will be taken into account. (Arts. 160–167.) CRIMINAL LIABILITY OF BANKRUPT Culpable or fraudulent bankrupts and their accomplices are subject to prosecution under the Penal Code. This liability is separate and distinct from civil action; the fact that the Court of Commerce has found grounds for qualifying the bankrupt as culpable or fraudulent is not an impediment to the institution of criminal proceedings, nor is the classification of this court binding on the criminal court. (Arts. 168, 178.) WHEN BANKRUPTCY IS CULPABLE For the purpose of determining culpability, the following facts and circumstances will be taken into account: (1) Whether the insolvent has been adjudicated bankrupt without having fulfilled the obligations of a prior composition. Such obligations will be deemed to have been fulfilled for this purpose if the insolvent paid dividends amounting to 65 percent of his total liabilities. (2) Whether he has, for another's account and without receiving equivalent values, contracted liabilities deemed to be too onerous in view of the position in which he was at the time of contracting them. (3) Whether he did not appear at the time and in the manner prescribed by law. (4) Whether he absented himself or failed to enter an appearance during the prosecution of the proceedings. (5) Whether the insolvent's personal or domestic expenses are considered excessive, having regard to his capital and the number of persons in his family. (6) Whether he lost considerable sums by gambling, or in speculations, or through bets. (7) Whether, with the intention of retarding the bankruptcy, he sold at a loss, or at less than the current price, goods bought by him on credit within the 6 months preceding the adjudication of bankruptcy, and not yet paid for. (8) Whether, with the like intention, he had recourse to ruinous measures for securing funds, during the 6 months prior to his appearance. (9) Whether he paid any creditor to the detriment of the remainder, after his appearance or the suspension of payment. (10) Whether, at any time between the last inventory and his appearance, the insolvent was in debt for his direct obligations to the extent of twice the amount of his assets as shown by said inventory. (11) Whether it is proved that, during the 60 days preceding his appearance, he made purchases on credit to an extent disproportionate to the requirements of his business. (12) Whether he did not regularly keep his books in the manner prescribed in this code. (13) Whether he did not comply with the obligation to register the marriage contract or any other special property belonging to his wife. (Art. 169.) WHEN THE BANKRUPT IS FRAUDULENT The bankruptcy will be deemed fraudulent when any of the following circumstances obtain: (1) If the bankrupt is discovered to have shown fictitious expenses or losses, or the outgoing or existence of the assets of his last inventory and of any money or other valuables whatsoever of which he has subsequently become possessed, is not proved. (2) If he concealed any sum of money, credit, goods, or any other class of property or rights whatsoever, in his balance sheet. (3) If he contracted fictitious debts or executed feigned deeds, or constituted himself a debtor without consideration, whether by public or private instrument. (4) If he effected fictitious sales of any kind whatever. (5) If he consumed and applied to his own business, funds or effects entrusted to him by way of deposit, mandate, or consignment, without authority from the depositor, principal, or consignor. (6) If he purchased property of any kind in the name of a third party. (7) If, after the adjudication in bankruptcy was made, he received and applied to his own personal uses, money, effects, or credits, belonging to the bankrupt estate, or, in any manner whatsoever, withdrew therefrom any property thereof. (8) If he did not keep, or if he concealed or produced in an incomplete or falsified condition, the books which he, as a trader, was indispensably bound to keep. Bankruptcies of brokers shall always be deemed fraudulent, and no plea to the contrary will be admitted, whenever it is proved that the broker effected any commercial transaction for his own account, either in his own name or in that of another, or constituted himself surety in transactions in which he took part as broker, even if his bankruptcy is not due to such causes. The provisions of section 12 of the preceding section and section 8 above shall not apply when the insolvent's business did not require the keeping of books, or when, on account of its being a retail business, a single book or merely notebooks were sufficient and these were produced. (Arts. 170, 173, 180.) ACCOMPLICES OF THE BANKRUPT The following will be considered accomplices in a fraudulent bankruptcy: (1) Any person who has connived with the insolvent to cause false credits to appear or to alter true credits in amount or date. (2) Persons who, before or after the adjudication in bankruptcy, have in any way cooperated in the concealment or withdrawal of property of any kind. (3) Persons who conceal, or refuse to surrender to the receiver, any of the insolvent's property, credits, or securities, held by them. (4) Persons who, after the publication of the petition of bankruptcy, accept any private assignments or endorsements on the part of the insolvent. (5) Any creditors, even if lawfully such, who acted in concert with the insolvent to the detriment of the bankrupt estate. (6) Brokers taking part in any commercial transaction effected by the bankrupt after adjudication. Accomplices of fraudulent bankrupts will, in addition to any penalty which they incur by virtue of criminal legislation, be condemned: (1) To lose any rights they have on the bankrupt estate. (2) To make good thereto any property, rights, or rights of action, as to the subtraction of which their complicity is shown. (3) To pay the bankrupt estate, by way of compensation, a sum equal to twice the amount of the attempted fraud. (Arts. 171, 172.) PROCEEDINGS TO CLASSIFY THE BANKRUPTCY In the classification of bankruptcies the court will take into consideration (1) The conduct of the bankrupt in fulfilling the obligation imposed by article 55. (2) The showing of the balance sheets drawn out of the bankrupt's commercial position. (3) The state of his business books. (4) Any statement submitted by the insolvent as to the causes of the bankruptcy, and the showing of the books, documents, and papers, as to the origin thereof. (5) Any merits shown by the investigations to which articles 18 and 24 refer, and any evidence filed within the proper time. The bankruptcy will be qualified, on the basis of the above criteria, by the commercial judge in a separate proceeding, which shall be commended with the receiver's report as to the causes of the bankruptcy or of the unbalanced condition of the business, and the insolvent's culpability and liability, and with any defenses the latter may file, to which end, said report shall be served on him for a period of 5 days, which may not be extended. Should there be any dispute as to facts, the judge will summon the liquidator and the insolvent to produce at an oral hearing the evidence on which they rely, and the evidence will be presented at that hearing or on the following day. The judge will render his decision, at the time or within 48 hours, qualifying the bankruptcy as accidental, culpable, or fraudulent, pursuant to the rules of the preceding articles. Should he decide that it is accidental, he orders that the record of the cases be filed; if he finds it culpable, the judge orders the record to be passed to the proper correctional or criminal court; and in case the bankruptcy is found to be fraudulent, the arrest of the bankrupt will be ordered, and he will be placed at the disposal of the criminal judge to whom the record is sent. An appeal lies from the decision qualifying the bankruptcy. (Arts. 174-177.) LIABILITY OF DEBTOR WHO ENTERS INTO A COMPOSITION AND OF OTHER PERSONS An insolvent with whom a composition has been made will be punished with the penalty imposed by the Penal Code, if the following circumstances obtain: (a) If he wilfully concealed a part of his assets in order to obtain an advantageous composition. (b) If he has caused or permitted one or more fictitious creditors, or persons whose credits have been exaggerated, to take part in the meeting of creditors. Persons who, not being creditors, fraudulently took part in the business of the meeting, or, being creditors, exaggerated the amount of their credit shall be punished with the like penalty as shall persons who compacted with the insolvent or any other person for advantages for themselves in return for their vote, and those who have made a private agreement whereby an advantage in their favor is derived at the expense of the insolvent. If at any time during the proceedings sufficient grounds appear to determine that any of the acts specified in the preceding articles have been committed, the record concerned shall be passed to the competent criminal judge, without prejudice to the provisions of article 170. The receiver shall be deemed an accomplice of the insolvent if he in any manner concealed or dissimulated the aforesaid acts. (Arts. 181-184.) DISCHARGE OR REINSTATEMENT OF BANKRUPT The right to a discharge or reinstatement (rehabilitation) is granted by the law to merchants, and to nonmerchants who are regis tered in the Public Registry of Commerce and who conduct their business in the form of a commercial enterprise. The discharge is given: (a) When the proceeds of the liquidation are enough to pay all creditors in full. (b) When the debtor presents receipts of payment issued by his creditors. (c) After 3 years following the declaration in bankruptcy, if the bankruptcy was held by the court to be accidental (causal), even though no receipt of payment is presented. (d) After 3 years following the date of dismissal of the bankruptcy action or of acquittal if the bankrupt is prosecuted for culpable or fraudulent bankruptcy. The court may reduce his term to that of section (c) if the circumstances of the case warrant it. (e) After 3 years following the fulfillment of the penalty imposed for culpable bankruptcy and 6 years after fulfillment of the one for fraudulent bankruptcy. Except in the case of section (a) above, when the discharge is granted as of course, the bankrupt must make application for it to the court which threw him into bankruptcy, and must submit with his petition: (1) Receipt of payment from his creditors, and deposit of the sums due those who have not issued such receipt; (2) certified copy of the order of dismissal or of the judgment of acquittal, under section (d) above; and (3) certificate as to the date on which he completed the punishment to which he was sentenced. This application must be brought to the attention of creditors by notices published for 8 days in the newspapers designated by the court. Any creditor may oppose the discharge within 10 days after expiration of the term for publication, on the grounds of lack of payment of his credit or want of compliance with any of the formalities and conditions of the law. When the term expires, or the opposition is rejected, the court will decide whether to grant or deny the discharge; in the first case, it must be published for 3 days in two newspapers. By virtue of the discharge, all legal disabilities resulting from the declaration in bankruptcy cease immediately. The discharge also causes all liability for amounts still owed by the bankrupt to cease as regards property acquired by him after that date. The decision granting or rejecting the discharge is subject to appeal for reinstatement by the debtor or the public attorney, as the case may be. Certain bankrupts, although not discharged, may again engage in business operations for the account of another or under the responsibility of a principal, thereby earning a salary, emoluments, or share in poperty. This does not deprive the creditors, however, of their rights in the property which bankrupts acquire in this or in another manner, if the assets of the estate are not sufficient to make payment in full. Such bankrupts are the following: (1) Those whose bankruptcy was accidental; (2) those whose bankruptcy was classified as culpable or fraudulent, but who have been acquitted or have fulfilled the penalty imposed on them. (Arts. 179, 185-192.) SPECIAL PROVISIONS FOR COMPANIES Corporations and limited-liability partnerships will be represented in the manner prescribed by this law; the provisions on culpable and |