CREDITORS’
PETITIONS
SOME PRACTICAL
CONSIDERATIONS
By M.D. Martin
Barrister-at-Law
JURISDICTION TO MAKE
SEQUESTRATION ORDERS – s.43
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Act of bankruptcy.
At the time when the act of bankruptcy was committed
the debtor:(i) was personally present or ordinarily resident in
Australia;
(ii) had a dwelling, house or a place of business in
Australia;
(iii) was carrying on business in Australia either
personally or by means of an agent or manager; or
(iv) was a member of a firm or partnership carrying on
business in Australia by means of a partner or
partners or of an agent or manager.
CONDITIONS ON WHICH A
CREDITOR MAY PETITION – s.44
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The creditor is owed at least $2,000.00.
The amount owing is a liquidated sum payable either
immediately or at a certain future time.
The act of bankruptcy on which the petition is founded
was committed within six months before the presentation
of the petition.
SECURED CREDITORS
A secured creditor:
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can only petition for the amount for which his or her debt
exceeds the value of the security.
may petition for his or her entire debt provided the
petition contains a statement that the security will be
surrendered for the benefit of creditors generally in the
event of a sequestration order being made.
must set out particulars of the security in the petition.
PROCEEDINGS AND ORDERS
ON CREDITOR’S PETITION – s.52
At the hearing of a creditor’s petition the Court shall require
proof of:
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the matters stated in the petition;
service of the petition; and
the debt on which the petitioning creditor relies is still
owing.
GOING BEHIND JUDGMENT
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Special circumstances.
Default judgment.
Two stage process.
SOLVENCY s.52(2)(a)
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“able” but not “willing”.
Evidence.
Will creditor be paid by other means.
OTHER SUFFICIENT CAUSE –
s.52(2)(b)
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Fraud or abuse of process.
Litigation or cross claim against creditor.
PAYMENT OF DEBT TO PETITIONING
CREDITOR
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No basis to prosecute petition.
Is another liquidated debt still owed.
Costs.
SUBSTITION OF PETITIONER – s.49
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Petition not prosecuted with due diligence.
Payment of petitioning creditor.
Liquidated debt.
Stand in the shoes of the petitioning creditor.
ADJOURNMENT TO ALLOW APPEAL
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Appeal must be genuine and arguable.
Evidence.
ADJOUNRMENT TO CONVENE
MEETING - PART X
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No adjournment as a matter of course.
Interests of creditors as a whole.
ADJOURNMENT TO ADDUCE
FURTHER EVIDENCE
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Petition not adjourned on first return date as a matter of
course.
Must show adjournment will actually produce cogent
evidence.
DEBTOR’S PETITION
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Approved form.
Accompanied by statement of affairs.
Sufficient connection with Australia.
Rejection of petition by Official Receiver.
Referral of petition to Court.
Creditor’s petition pending.