Bankruptcy Flashcards
What Act covers the Bankruptcy Process
Bankruptcy Act 1966 (Cth)
Who is the creditor?
A party needing to be paid by the bankrupt
Who is the Debtor
A party owing monies to the bankrupt
Which courts have jurisdiction over Bankruptcy?
Federal Court and the Federal Circuit Court
What is the starting point of a bankruptcy order?
A petition for bankruptcy following the prescribed form per the Act
Does the Act cover Corporations?
No, the corporations act deals with insolvency of corportate entities when they become insolvent
What is the process of bankruptcy
The transfer of a parties property to a trustee, for the payment of creditors and their dues.
What is the most common act of bankruptcy?
Failure to follow The Bankruptcy Notice as served
What is the process for Bankruptcy under a notice of bankruptcy?
1) Notice Of Bankruptcy Filled
2) NOB, not followed
3) Petition by creditor served as an act of bankruptcy
4) Party declared a bankrupt
5) Trustee appointed
What are the effects of a Sequestration Order?
- The debtor becomes a bankrupt and continues as such until he/she is discharged or the sequestration order is annulled: s 43(2)
* The bankrupt’s property vests in the Official Trustee in Bankruptcy or, if a registered trustee has consented to act as trustee of the bankrupt’s estate, it vests in the registered trustee
* After-acquired property of the bankrupt vests, as soon as it is acquired by or devolves on the bankrupt, in the Official Trustee or the registered trustee: s 58(1)
* No creditor can enforce any remedy against the person or property of the bankrupt, nor commence any legal proceeding without the leave of the court: s 58(3)
What is the order of events after a sequestration order?
Statement of affairs
Meetings of creditors
discovery of the bankrupts property and examination
What are the duties of a bankrupt?
Full disclosure and cooperation with the trustee. Per s 77 of the Act.
What is the reason for a proof of debts statement?
To formally establish the debts due to creditors, to the satisfaction of the trustee
What section of the act determines what property isn’t available to creditors?
Section 116
(a) property held by the bankrupt in trust for another person;
(b) the bankrupt’s household property that is:
(i) of a kind prescribed by the regulations; or
(ii) identified by a resolution passed by the creditors before the trustee realises the property;
(ba) personal property of the bankrupt that:
(i) has sentimental value for the bankrupt; and
(ii) is of a kind prescribed by the regulations; and
(iii) is identified by a special resolution passed by the creditors before the trustee realises the property;
(c) the bankrupt’s property that is for use by the bankrupt in earning income by personal exertion and:
(i) does not have a total value greater than the limit prescribed by the regulations; or
(ii) is identified by a resolution passed by the creditors; or
(iii) is identified by an order made by the Court on an application by the bankrupt;
What is the definition of bankruptcy?
When an entity it declared by the courts as unable to pay their debts. Trustees take all property and divide the worth between creditors.
