Legal Definitions - distractio bonorum

distractio bonorum is a Latin term from Roman law that refers to the forced sale of assets belonging to an insolvent estate. This process was carried out by a court-appointed administrator, known as a curator bonorum, with the specific purpose of liquidating the property to generate funds to pay off the estate's creditors.

Here are some examples to illustrate this concept:

• Example 1: Deceased Individual's Insolvent Estate

  Imagine a scenario in ancient Rome where a prominent citizen passes away, and it is discovered that his outstanding debts to various lenders and merchants far exceed the value of his remaining property, such as his country villa, a few plots of land, and household goods. The estate is declared insolvent.

  In this situation, a curator bonorum would be appointed by the authorities. This curator would then undertake the distractio bonorum, systematically selling off the deceased's assets. The money raised from these sales would then be distributed among the creditors to partially or fully satisfy their claims against the insolvent estate, ensuring that the debts are addressed as much as possible.

• Example 2: Modern Analogy - Business Liquidation

  Consider a small, family-owned manufacturing business that has struggled for several years, accumulating significant debt to its suppliers, banks, and employees. Despite efforts to save it, the business becomes financially unsustainable and is declared insolvent.

  While not using the Roman term, the modern legal process that mirrors distractio bonorum would involve a court-appointed trustee or liquidator. This individual would oversee the sale of the business's assets, such as machinery, inventory, and real estate. The proceeds from these sales would then be used to pay off the business's creditors in a legally defined order, much like the Roman concept of selling assets to satisfy claims against an insolvent entity.

• Example 3: Modern Analogy - Incapacitated Person's Estate

  Suppose an elderly individual becomes incapacitated and is unable to manage their finances. A court appoints a conservator to manage their estate. Over time, it becomes clear that the individual's medical bills and care expenses have created debts that far exceed the value of their remaining assets, such as a modest home and a small investment portfolio.

  The conservator, acting in a role similar to a curator bonorum, might be authorized by the court to perform a process akin to distractio bonorum. This would involve selling off the individual's assets to generate funds. These funds would then be used to pay down the outstanding medical debts and other financial obligations, ensuring the creditors are satisfied to the extent possible given the estate's insolvency.