BANKRUPTCY LAW
SUMMARY
PX SOLUTIONS
BANKRUPTCY
SOURCES USED .................................................... ERROR! BOOKMARK NOT DEFINED.
INTRODUCTION TO BANKRUPTSY ...ERROR! BOOKMARK NOT DEFINED.
POLICY ................................................................ ERROR! BOOKMARK NOT DEFINED.
LEGISLATION ....................................................... ERROR! BOOKMARK NOT DEFINED.
HISTORY .............................................................. ERROR! BOOKMARK NOT DEFINED.
SECURED V UNSECURED CREDITORS .................... ERROR! BOOKMARK NOT DEFINED.
BANKRUPTCY ACT 1966 AND ITS PROVISIONS ..... ERROR! BOOKMARK NOT DEFINED.
CREDITOR’S PETITIONS .......................ERROR! BOOKMARK NOT DEFINED.
REQUIREMENTS ................................................... ERROR! BOOKMARK NOT DEFINED.
Kinds of Debtors...................................................... Error! Bookmark not defined.
FORM, PRESENTATION AND SERVICE .................... ERROR! BOOKMARK NOT DEFINED.
Form of Petition ...................................................... Error! Bookmark not defined.
SUBSTITUTION OF PETITIONERS ........................... ERROR! BOOKMARK NOT DEFINED.
LAPSING OF PETITION .......................................... ERROR! BOOKMARK NOT DEFINED.
ACTS OF BANKRUPTCY ........................ERROR! BOOKMARK NOT DEFINED.
GENERALLY ......................................................... ERROR! BOOKMARK NOT DEFINED.
1. CERTAIN DEALINGS WITH HIS PROPERTY .......... ERROR! BOOKMARK NOT DEFINED.
2. CERTAIN CONDUCT INTENDED TO DEFEAT OR DELAY CREDITORS .................ERROR!
BOOKMARK NOT DEFINED.
3. CERTAIN CONDUCT/EVENTS INDICATING INABILITY TO PAY DEBTS AS DUE ..ERROR!
BOOKMARK NOT DEFINED.
Execution against debtor ......................................... Error! Bookmark not defined.
Failure to Comply with a bankruptcy notice ........... Error! Bookmark not defined.
Notice of suspension of payment of debts................ Error! Bookmark not defined.
Signing Authority under Part X ............................... Error! Bookmark not defined.
DEBTOR’S PETITIONS ...........................ERROR! BOOKMARK NOT DEFINED.
GENERALLY ......................................................... ERROR! BOOKMARK NOT DEFINED.
DECLARATION OF INTENTION TO PRESENT PETITION ............ ERROR! BOOKMARK NOT
DEFINED.
Entitlement .............................................................. Error! Bookmark not defined.
Effect........................................................................ Error! Bookmark not defined.
ACCEPTANCE OR REJECTION OF PETITION ............ ERROR! BOOKMARK NOT DEFINED.
BANKRUPTCY UPON ACCEPTANCE ....................... ERROR! BOOKMARK NOT DEFINED.
BAKRUPTCY NOTICES ..........................ERROR! BOOKMARK NOT DEFINED.
FINAL JUDGEMENT OR ORDER .............................. ERROR! BOOKMARK NOT DEFINED.
“Final” Judgment or Orders .................................. Error! Bookmark not defined.
Deemed final judgment or order ............................. Error! Bookmark not defined.
FORM AND CONTENT............................................ ERROR! BOOKMARK NOT DEFINED.
Old Notices .............................................................. Error! Bookmark not defined.
New Notices ............................................................. Error! Bookmark not defined.
AMOUNT OTHER THAN JUDGEMENT DEBT ............ ERROR! BOOKMARK NOT DEFINED.
Overstatements ........................................................ Error! Bookmark not defined.
Understatements ...................................................... Error! Bookmark not defined.
INTEREST ON JUDGEMENT DEBT ........................... ERROR! BOOKMARK NOT DEFINED.
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SERVICE............................................................... ERROR! BOOKMARK NOT DEFINED.
TIME FOR COMPLIANCE ........................................ ERROR! BOOKMARK NOT DEFINED.
Extension of Time for Compliance .......................... Error! Bookmark not defined.
COUNTERCLAIM, SET-OFF OR CROSS-DEMAND ..... ERROR! BOOKMARK NOT DEFINED.
Counterclaim, set-off…: .......................................... Error! Bookmark not defined.
Could not have set up in the action ......................... Error! Bookmark not defined.
SETTING ASIDE NOTICE ........................................ ERROR! BOOKMARK NOT DEFINED.
Going Behind the Judgment .................................... Error! Bookmark not defined.
CREDITOR’S PETITION TO SEQUESTRATION ORDER ................... ERROR!
BOOKMARK NOT DEFINED.
REQUIREMENTS ................................................... ERROR! BOOKMARK NOT DEFINED.
Positive Requirements ............................................. Error! Bookmark not defined.
Negative Requirements ............................................ Error! Bookmark not defined.
DEBTOR ‘ABLE’ TO PAY ALL THE DEBTS .............. ERROR! BOOKMARK NOT DEFINED.
OTHER SUFFICIENT CAUSE ................................... ERROR! BOOKMARK NOT DEFINED.
Sufficient Cause ....................................................... Error! Bookmark not defined.
GOING BEHIND THE JUDGMENT ............................ ERROR! BOOKMARK NOT DEFINED.
COMMENCEMENT OF BANKRUPTSY ...................... ERROR! BOOKMARK NOT DEFINED.
EFFECT OF BANKRUPTCY UPON PROPERTY AND PROCEEDINGS
.......................................................................ERROR! BOOKMARK NOT DEFINED.
PROPERTY ............................................................ ERROR! BOOKMARK NOT DEFINED.
PROCEEDINGS ...................................................... ERROR! BOOKMARK NOT DEFINED.
PROPERTY AVAILABLE – RELATION BACK .....ERROR! BOOKMARK NOT
DEFINED.
PROPERTY ............................................................ ERROR! BOOKMARK NOT DEFINED.
EXEMPT PROPERTY .............................................. ERROR! BOOKMARK NOT DEFINED.
PROTECTED TRANSACTIONS................................. ERROR! BOOKMARK NOT DEFINED.
Transactions for market value, in good faith and in the ordinary course of
business (s123(1)) ................................................... Error! Bookmark not defined.
Certain Dispositions of Bankrupt’s Property to the Bankrupt or to the Bankrupt’s
Order (s124) ............................................................ Error! Bookmark not defined.
Payments of Fines and Penalties (s123(4))............. Error! Bookmark not defined.
Maintenance Agreements and Orders (s123(6)) ..... Error! Bookmark not defined.
Protection after Lapse of Time (s127)..................... Error! Bookmark not defined.
Protection for Things done under Part IX or X (ss125S, 209 and 224) ......... Error!
Bookmark not defined.
PROPERTY AVAILABLE – AFTER ACQUIRED ..ERROR! BOOKMARK NOT
DEFINED.
INCOME RECEIVED AFTER BANKRUPTSY .............. ERROR! BOOKMARK NOT DEFINED.
PROPERTY AVAILABLE – VOIDABLE TRANSACTIONS.................. ERROR!
BOOKMARK NOT DEFINED.
1. UNDERVALUED TRANSACTIONS (S 120)........... ERROR! BOOKMARK NOT DEFINED.
2. PAYMENTS AND TRANSFERS TO DEFEAT OR DELAY (S 121)..... ERROR! BOOKMARK
NOT DEFINED.
3. VOIDABLE PREFERENCES (S122)...................... ERROR! BOOKMARK NOT DEFINED.
Running Accounts: .................................................. Error! Bookmark not defined.
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Consideration .......................................................... Error! Bookmark not defined.
Good Faith .............................................................. Error! Bookmark not defined.
Examples ................................................................. Error! Bookmark not defined.
Good Faith - Knowledge of dishonoured cheques .. Error! Bookmark not defined.
Ordinary Course of Business .................................. Error! Bookmark not defined.
DISTRIBUTION .........................................ERROR! BOOKMARK NOT DEFINED.
DISCHARGE, EXTENSION AND ANNULMENT ...ERROR! BOOKMARK NOT
DEFINED.
1. AUTOMATIC DISCHARGE .................................. ERROR! BOOKMARK NOT DEFINED.
3 Years ..................................................................... Error! Bookmark not defined.
More than 3 years (Objections) .............................. Error! Bookmark not defined.
2. EARLY DISCHARGE .......................................... ERROR! BOOKMARK NOT DEFINED.
3. ANNULMENT OF BANKRUPTSY ......................... ERROR! BOOKMARK NOT DEFINED.
ALTERNATIVES TO BANKRUPTCY ...ERROR! BOOKMARK NOT DEFINED.
PART IX ............................................................... ERROR! BOOKMARK NOT DEFINED.
PART X ............................................................... ERROR! BOOKMARK NOT DEFINED.
DECEASED PERSONS’ ESTATES IN BANKRUPTCY .. ERROR! BOOKMARK
NOT DEFINED.
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PROPERTY AVAILABLE – RELATION BACK
A trustee is entitled to
- property belonging to the bankrupt at the “commencement” of the
bankruptcy; and
- property acquired by the bankrupt after the “commencement” of the
bankruptcy and before the date of bankruptcy.
unless within exceptions or protective provisions referred later
[s116(1)(a)].
Giving of security is wholly ineffective[Worrell]
Property
Property = real or personal property [s5]
Includes all forms of tangible property and also choses in action:
- Goodwill of deceased solicitor’s practice [Re Lazarus]
- Good will of medical practice: [Re Norris]
- Includes property abroad [s5]
Does not include
- Interest of a person in a super fund if covered by a “protective
trust” clause to the effect that interest is strictly personal and
cannot be assigned [Re Coram]
- Pensions, grants payable under Cth or State legislation to the
debtor personally.
Exempt property
Exemptions in s116(2).
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- Property the bankrupt held on trust [(a)]
- Household property – sufficient furniture and one TV set and
one VCR [(b), reg 6.03]
- Property for use in earning income by personal exertion – total
value not exceeding $2,600 [(c), reg 6.04(1)(b)]
- Car used by bankrupt primarily as means of transport not
exceeding $5,000 [(ca), reg 6.04(3)(b)]
- Life insurance policies in respect of life of bankrupt or spouse,
and proceedings [(d)]
- Interest in regulated super fund and payment from fund [(d)]
- Interest in Retirement saving accounts and payment from
account [(d)]
- Any right of the bankrupt, and damages, from personal injury or
death of family member [(g)]
Protected transactions
Transactions for market value, in good faith and in the ordinary
course of business [s123(1)]
Subject to ss118 to 122, a trustee cannot recover property of the
bankrupt from a person who acquired it by transaction before the date of
bankruptcy where [s123(1)]:
- The other party did not have notice of the presentation of a petition
against the debtor; and
- The transaction was in good faith and in the ordinary course of
business
Types of transactions [s123(1)]:
- Payment by the debtor to any of his creditors;
- Conveyance, transfer or assignment by the debtor for market value;
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- Contract, dealing or other transaction by or with the debtor for market
value; or
- Any transaction to the extent of a concurrent advance made by an
existing creditor.
Good Faith
Objective test:
Whether the transferee knew or suspected that conduct contrary to the
Act had taken place [Mitchell]
- No inference of absence of good faith where person making payment
or delivery had notice of an act of bankruptcy by that person: s123(4)
Ordinary Course of Business
- Transaction made according to the common flow of transactions in
affairs of business [Re Henbury]
- Part of the undistinguished common flow of business [Re Whitgift]
- Arising out of no special or particular situation [Re Whitgift]
Objective Test
Nature and effect of the transaction, not the state of mind of the debtor
[Re Whitgift]
Transactions not in the ordinary course of business if they are not
“business” transactions.
- However must be seen in light of all circumstances: Taylor
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