INSOLVENCY SUMMER 2009/10

INSOLVENCY SUMMER 2009/2010 Lecture 6 TERMINATION OF BANKRUPTCY Discharge s 149 automatic discharge after 3 years, unless:s 149 s 149B - bankruptcy extended when objection mades 149B s 149D - grounds of objections 149D s duty to give assistances 152 s effect of discharges 153

INSOLVENCY SUMMER 2009/2010 TERMINATION OF BANKRUPTCY Annulment s 153A - annulment on payment of debts (annulment by operation of law)s 153A s 153B - sequestration order ought not to have been made (annulment by order of the court)s 153B s effect of annulments 154 Abuse of process - Clyne v DCT 154 CLR 589Clyne v DCT s 74 - creditors’ acceptance of bankrupt’s proposal under s 73s 74s 73

INSOLVENCY SUMMER 2009/2010 PERSONAL INSOLVENCY AGREEMENTS Part X S 188A - Debtor puts forward a proposed agreementS 188A S Meeting of creditors decides whether to accept itS 204 S Trustee administers the agreementS 190 Dividend paid to creditors S debtor is then discharged from all liabilityS 230discharged 2007 reforms required greater disclosure Now little used - about 1% of all personal insolvencies

INSOLVENCY SUMMER 2009/2010 DEBT AGREEMENTS Part IX Only available to debtors with limited assets and income with relatively small debts (< $100,000) - s 185Cs 185C Majority of creditors must accept the debtor’s proposal - s 185Es 185E Proposal is recorded on National Personal Insolvency Index (NPII) - debtor then protected from creditorsNPII Upon completion of agreement, debtor released from provable debts - s 185NAs 185NA Now about 20% of all personal insolvenciesabout 20%

INSOLVENCY SUMMER 2009/2010 LAW REFORM Bankruptcy Legislation Amendment Bill 2009 The objects of this Bill are: (a)to provide a more streamlined process for fixing trustee remuneration and a more transparent process for reviewing that remuneration; (b)to strengthen the penalties for some offences and ensure these are in line with the penalties for other similar offences; (c)to remove the outdated concept of Bankruptcy Districts in order to provide more flexibility in personal insolvency administration; (d)to increase the minimum debt to $10,000 for a creditor’s petition to reflect changes in the economic environment; (e)to increase the stay period that follows a declaration of intent to file a debtor’s petition to allow debtors to better assess their options; and (f)to increase the debt, income and asset tests thresholds for debt agreements to ensure the thresholds keep pace with increasing wages and the increasing availability of credit.

INSOLVENCY SUMMER 2009/2010 Bankruptcy Legislation Amendment Bill 2009 Bill homepage Explanatory memorandum to the Bill IPA explanation of the BillIPA explanation PILCH submission on the BillPILCH submission

INSOLVENCY SUMMER 2009/2010 REVISION OF BANKRUPTCY TOPICS Solvency Vesting of property Acts of bankruptcy Bankruptcy notices Creditor’s and Debtor’s Petitions Key dates in a bankruptcy Relation back Exempt transactions Transactions void against the trustee: –undervalued transactions –transactions to defeat creditors –preferences Termination of bankruptcy Personal insolvency agreements & debt agreements Past exam papers

INSOLVENCY SUMMER 2009/2010 Lecture 7: Corporate Insolvency Introduction to liquidation and administration Voluntary winding up Compulsory winding up including the use of statutory demands Winding up procedures Reading: Keays Corporations Act Parts 5.4, 5.4B, 5.5