Our Gold Coast bankruptcy lawyers regularly assist commercial clients who enquire about the procedures at law before, during and after declaring bankruptcy as per the Bankruptcy Act 1966 (Cth) (‘Act’) as it stands in 2017. In Australia, a bankruptcy claim occurs when a person is declared incapable of paying their properly owed debts.
Experienced bankruptcy practitioners
Our Qld solicitors are experienced working in consultation with clients from small business owners to high-net worth individuals in the processes and requirements associated with bankruptcy proceedings. Bankruptcy occurs either in the event that an individual files a Debtors Petition in which he or she declares that they are bankrupt. Alternatively, it may be the case that the Court issues a Sequestration Order in response to action being taken by aggrieved creditors, in which the Court declares your bankruptcy. Once bankruptcy proceedings begin, regardless of how they are initiated, the process is dictated by the Act and unfolds in identical fashion.
Advising clients on the bankruptcy claim process
Our bankruptcy lawyers advise clients that make an enquiry on initial and ongoing advice to clients that enquire about our services as they proceed through the steps of bankruptcy. Once bankruptcy proceedings have begun, a trustee is appointed who becomes responsible for administering the Bankrupt Estate (much the same as an executor is appointed to make disbursements out of an estate). They have a number of important responsibilities, though the most notable involve:
- Carrying on the business of the bankrupt individual where that business remains financially viable (alternatively winding that business up);
- “Realising” (selling) the individual’s assets and making distributions in the order of priorities prescribed by the Act;
- Where financially advantageous, “clawing back” any assets that have been transferred out of the individual’s personal capacity in an attempt to avoid repayments;
- Continue to monitor the income of the bankrupt where the individual is required to make contributions from his or her income in an effort to repay creditors and lodge an objection to discharge where the individual is not meeting those requirements;
- Report any other offences committed by the individual to the Australian Financial Security Authority (‘AFSA’); and
- Providing a report to creditors containing an estimate of the returns they will receive.
Expertise in Bankruptcy law
- Considering QBCC implications of bankruptcy claims
- Establishing a Deed of Company Arrangement (‘DOCA’) to undertake voluntary administration, as well as DOCA requirements and DOCA obligations
- Bankruptcy Proof of Claims
- Claims trading
- Bankruptcy recovery
- Bankruptcy litigation and insolvency litigation with Queensland Accredited Specialist in Commercial Litigation Ben Twomey
- Legal consultation by a Ramsden solicitor in person with our Qld clients
- Bankruptcy disputes, end of bankruptcy disputes and disputes resolution
- The impact of bankruptcy on trusts, family discretionary trusts and revocable trusts
- Liaising with liquidators
- Debt recovery
- The effect of bankruptcy on superannuation and fund protection via section 19 of the Superannuation Industry (Supervision) Act 1993 (Cth)
- Legal advice regarding the significance of having a self-managed super fund (‘SMSF’) for the purposes of bankruptcy, including discussing SMSF governing documents and the possible transfer of SMSF interests of a bankrupt individual to a non-SMSF
- The state of receivership, receivership obligations and the duty to prevent continued supply during receivership
- Ensuring any proposals tabled to creditors is compliant with the composition and arrangement requirements under section 73
- Negotiating with another commercial solicitor or law firm
- Bankruptcy debt
- Debt collection
- Bankruptcy notices
- Statutory demands
- Bankruptcy advice for commercial clients
For more information, please feel free to visit the guidance “Apply for Bankruptcy” provided by the Australian Financial Security Authority.
End of Bankruptcy
Once bankruptcy claim proceedings are at an end, the result is either an automatic discharge or an annulment and bankruptcy recovery can begin. An automatic discharge occurs automatically after a three (3) year period has expired, with the effect being that any remaining amounts are a write-off. Trustees retain, however, the ability to object to an automatic discharge where the bankrupted individual has obligations that remain unfulfilled. The acceptable grounds to enquire via objection range from discovering a hidden asset to failure to comply with attendance requirements or failure to make the necessary income contributions.
While a bankrupted individual has a right of appealing an objection, if that appeal is ultimately rejected, the bankruptcy period can be extended to either five (5) or eight (8) years based on the severity of the grounds for objection. Our solicitors can guide you through the process of bankruptcy compliance to ensure that an automatic discharge is not objected to by trustees, or in the event that it is, running a successful appeal.
The alternative to an automatic discharge is an annulment. An annulment can occur in a number of ways, including via statute, the Court or resolution of creditors. Once the appointed trustees are satisfied that all debts have been satisfied, the bankruptcy is annulled upon the last payment (contingent upon creditors being able to illustrate proof). An annulment can also be potentially utilised in the event that there has been a failure to abide by statutory procedure (being served incorrectly for example), which allows debtors to challenge a bankruptcy notice. In some limited circumstances a Court may be willing to set aside a bankruptcy based on their sole discretion. Typically a Court would only be willing to exercise its discretion if there has been a procedural error or in any event exceptional circumstances.
Should you need to search whether an individual has been declared bankrupt, please visit the Bankruptcy Register from the Australian Financial Security Authority
Our Gold Coast lawyers assist you in understanding the role of the trustee in the bankruptcy process and your rights and obligations in relation to the procedures they undertake. However, we are also adept at offering a number of alternative solutions to bankruptcy that provide benefits including sparing the reputation of the individual (by avoiding the label of bankruptcy) and allowing ongoing employment to continue (which bankruptcy potentially disrupts). Alternative solutions are also advantageous to a creditor as oftentimes they can receive additional funds from debtors by allowing them to avoid the costs associated with conducting and winding up bankruptcy proceedings.
We offer a range of alternative legal arrangements including: (a) Informal Agreements, (b)Debt Agreements; and (c)Personal Insolvency Agreements.
In some circumstances it is possible for our bankruptcy lawyers to negotiate on your behalf to repay certain debts over a specified time period (essentially a payment plan). Conducting legal negotiations to establish Informal Agreements is a delicate undertaking that requires professional expertise to properly navigate and manage in order to ensure that a realist, manageable, yet attractive proposal can be put forward to encourage acceptance of either a reduced total payment or a protracted payment period.
While Informal Agreements are by nature informal, it is not unusual for creditors to request to receive details of your financial position in totality including your position with any other creditors as a way to gauge the appropriateness of the offer being proposed. It is also worth noting that while Informal Agreements allow an individual to avoid the stigma of bankruptcy, the same cannot be said for their credit rating, which will likely be adversely affected.
In certain circumstances, the bankruptcy procedure can be avoided by alternative methods of relief. A Debt Agreement as authorised pursuant to Part IX of the Act provides individuals in distressed financial situations with the ability to create an informal resolution and tends to be utilised by insolvent individuals with smaller pools of debts and assets respectively. Ramsden Lawyers is a firm that regularly acts for individuals in considering whether a Debt Agreement is suitable in all the circumstances and, if appropriate, advising you on negotiating and executing such an agreement.
Any proposal tabled for the purposes of a Debt Agreement must identify the debtors, the offer being proposed, details regarding the debtors’ financial status (including income, expenditure and any asset or liability) and providing a statement of affairs.
There are, however, restrictions on how can enter into a Debt Agreement. Notably, an individual cannot enter a Debt Agreement if they have previously been bankrupt in the last ten (10) years, the debtor’s unsecured debts, divisible property and after tax income are each greater than the respective threshold amounts prescribed at the time (available from AFSA – Indexed Amounts).
Assuming the above criteria can be satisfied, a Debt Agreement can then be signed and lodged consideration. If the majority votes in favour of the proposal, it means that a creditor is thereafter restricted from making petitions, pursuing a previous creditor’s petition or taking any action relating to the debts owed. The Debt Agreement is brought to an end either upon the debtor satisfying their obligations or becoming bankruptcy as a result of an inability to follow the terms.
For more information, visit the guidance “What is a debt agreement” provided by the Australian Financial Security Authority.
Personal Insolvency Agreements
Part X of the Act provides that a Personal Insolvency Agreement (‘PIA’) can be entered into as another alternative to bankruptcy. While a Debt Agreement is an informal agreement, a PIA is a formal agreement that allows the debtor to negotiate and agree upon an acceptable way to discharge their debt. PIA’s tend to be used by individuals with a large income but small asset pool (or vice versa).
Personal Insolvency Agreements
Ramsden Lawyers is an adept firm that, amongst our other specialties, can advise on bankruptcy law – particularly in the space of PIAs. We advise individuals who make an enquiry regarding insolvency in compiling the formal proposal that must be delivered to creditors containing details regarding financial status in accordance with 2017 standards. The Official Trustee (or one that is registered) must be authorised to call a meeting between the creditors in order to determine whether the proposal is acceptable as an alternative to insolvency.
The drafting of the PIA itself can benefit from our Gold Coast insolvency lawyers’ experience to ensure it contains important information required by the Act ranging from identifying property to the termination procedures. Upon completion of a PIA, debt is satisfied.