Bankruptcy Legislation Amendment (Anti‑avoidance) Act 2006
No. 33, 2006
An Act to amend the Bankruptcy Act 1966, and for related purposes
Contents
1 Short title
2 Commencement
3 Schedule(s)
Schedule 1—Amendments
Bankruptcy Act 1966
Bankruptcy Legislation Amendment (Anti-avoidance) Act 2006
No. 33, 2006
An Act to amend the Bankruptcy Act 1966, and for related purposes
[Assented to 3 May 2006]
The Parliament of Australia enacts:
1 Short title
This Act may be cited as the Bankruptcy Legislation Amendment (Anti‑avoidance) Act 2006.
2 Commencement
(1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.
Commencement information |
Column 1 | Column 2 | Column 3 |
Provision(s) | Commencement | Date/Details |
1. Sections 1 to 3 and anything in this Act not elsewhere covered by this table | The day on which this Act receives the Royal Assent. | 3 May 2006 |
2. Schedule 1 | The 28th day after the day on which this Act receives the Royal Assent. | 31 May 2006 |
Note: This table relates only to the provisions of this Act as originally passed by the Parliament and assented to. It will not be expanded to deal with provisions inserted in this Act after assent.
(2) Column 3 of the table contains additional information that is not part of this Act. Information in this column may be added to or edited in any published version of this Act.
3 Schedule(s)
Each Act that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.
Schedule 1—Amendments
Bankruptcy Act 1966
1 Subsection 5(1) (definition of examinable period)
Repeal the definition, substitute:
examinable period has the meaning given by section 139CA.
2 At the end of section 77C
Add:
(3) Notes taken down and signed by a person who attends before the Official Receiver or an authorised officer under paragraph (1)(b), and the transcript of the evidence given by the person at the attendance:
(a) may be used in evidence in any proceeding under this Act whether or not the person is a party to the proceeding; and
(b) may be inspected:
(i) by the person, without fee; and
(ii) if the notes and evidence relate to matters concerning the bankruptcy of the person or of another person—by the trustee and a person who states in writing that he or she is a creditor, without fee; and
(iii) by any other person on payment of the fee prescribed by the regulations.
3 Paragraph 81(17)(a)
Omit “in which the person is a party”, substitute “whether or not the person is a party to the proceeding”.
4 Paragraph 116(1)(c)
After “section 139D”, insert “or 139DA”.
5 At the end of paragraph 116(1)(d)
Add…
Overview
The Bankruptcy Legislation Amendment (Anti-avoidance) Act 2006, enacted on 3 May 2006 by the Parliament of Australia, aims to amend the Bankruptcy Act 1966 to address issues of bankruptcy avoidance. The legislation introduces stricter measures to ensure that fraudulent transfers and concealments of assets are identified and addressed. It provides for the voiding of transfers that occur within certain periods before a bankruptcy, particularly if the transferor was insolvent at the time of the transfer, and introduces rebuttable presumptions of insolvency if the transferor did not maintain proper books and records. Additionally, it extends the application of certain sections to instances where consideration is given to third parties instead of directly to the transferor, thereby closing loopholes that may have otherwise facilitated bankruptcy avoidance.
The policy objective of the Act is to strengthen the integrity of the bankruptcy system by preventing individuals from evading their financial responsibilities through the illicit transfer of assets. By making it more difficult to hide assets or engage in transactions that could be construed as attempts to defraud creditors, the Act aims to ensure that bankruptcy proceedings are fair and that creditors receive what is rightfully owed to them. This is achieved through a combination of legislative amendments that introduce new definitions, extend the scope of existing provisions, and provide courts with the tools necessary to scrutinise and, where appropriate, invalidate certain transactions.
Scope and Application
The Bankruptcy Legislation Amendment (Anti-avoidance) Act 2006 applies to individuals who become bankrupt and the entities or individuals with whom they have conducted transactions. The Act specifically targets transactions that may be considered attempts to avoid the legal consequences of bankruptcy, such as the transfer of property to avoid creditors' claims. It applies across Australia as a Commonwealth Act, thereby affecting all states and territories. The Act does not explicitly state exclusions or exemptions, but the provisions concerning the voiding of transfers and rebuttable presumptions of insolvency are designed to target specific behaviours rather than broad categories of persons or entities. The Act's application can be extended or refined through subordinate instruments, such as regulations that might prescribe fees for inspecting notes and evidence under the amended provisions. This Act aims to strengthen the integrity of bankruptcy proceedings by preventing actions that could frustrate the fair treatment of creditors.
Key Provisions
- The Bankruptcy Legislation Amendment (Anti-avoidance) Act 2006 (C2006A00033) amends the Bankruptcy Act 1966 to introduce stricter measures against the avoidance of bankruptcy proceedings. The key provisions of this Act include significant changes to the definition of the "examinable period" (section 139CA), the admissibility of notes and transcripts from attendances before the Official Receiver or authorised officers (section 77C), and the criteria for voiding property transfers (sections 120 and 121). The Act also introduces new provisions for cases where consideration for a transfer is given to a third party (section 121A) and for orders in relation to property of entities controlled by the bankrupt or from which the bankrupt derived a benefit (Division 4A of Part VI).
- The Act imposes several obligations on the parties it governs. It mandates that notes and signed transcripts from attendances before the Official Receiver or authorised officers can be used in evidence in bankruptcy proceedings (section 77C). It also requires that certain conditions must be met to avoid voiding a property transfer, such as proving solvency at the time of the transfer if it occurred more than four years before the bankruptcy, or more than two years in other cases (section 120). Additionally, the Act introduces rebuttable presumptions of insolvency if the transferor had not kept proper books and records or failed to preserve them (sections 120(3A) and 121(4A)).
- Breaches of the provisions of this Act may result in significant civil consequences. For instance, property transfers that do not meet the criteria for avoiding voidance can be recovered by the trustee in bankruptcy (section 120). Furthermore, if a transfer is made to a third party, the trustee can recover the consideration as if it were a direct transfer by the transferor (section 121A). Failure to comply with the obligations under this Act could also lead to the courts making orders against entities that have benefited from the bankrupt's financial contributions during the examinable period (sections 139D, 139DA, 139E, and 139EA). The penalties for these offences are not explicitly stated in the Act, but they would likely include financial penalties and potential imprisonment, depending on the severity of the breach and the discretion of the court.
- Area of Law
- Bankruptcy Law
- Commercial Law
- Instrument
- Act
- Concepts
- Commencement Provisions
- Repeal & Amendment
- Offence Provisions
- Regulatory Standards
