Insolvency Law Reform Act 2016 (Cth)
Contents
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The Parliament of Australia enacts:
This Act may be cited as the
Insolvency Law Reform Act 2016 .
(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.
Sections 1 to 3 and anything in this Act not elsewhere covered by this table | The day this Act receives the Royal Assent. | 29 February 2016 |
Schedule 1 | A single day to be fixed by Proclamation. However, if the provisions do not commence within the period of 12 months beginning on the day this Act receives the Royal Assent, they commence on the day after the end of that period. | 1 March 2017 |
Schedule 2, items 1 to 93 | At the same time as the provisions covered by table item 2. | 1 March 2017 |
Schedule 2, item 94 | The later of:
However, the provisions do not commence at all if the event mentioned in paragraph (b) does not occur. | Never commenced |
Schedule 2, items 95 to 302 | At the same time as the provisions covered by table item 2. | 1 March 2017 |
Schedule 2, item 303 | The later of:
| 1 March 2017 (paragraph (a) applies) |
Schedule 2, items 304 to 322 | At the same time as the provisions covered by table item 2. | 1 March 2017 |
Schedule 3 | Immediately after the commencement of the provisions covered by table item 2. | 1 March 2017 |
Note: This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act.
(2) Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act.
Legislation that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.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 relating to the Insolvency Practice Schedule (Bankruptcy)
Insert:
Schedule 2 has effect.
Add:
Note: See section 4A.
(1) The object of this Schedule is to ensure that any person registered as a trustee:
(a) has an appropriate level of expertise; and
(b) behaves ethically; and
(c) maintains sufficient insurance to cover his or her liabilities in practising as a registered trustee.
(2) The object of this Schedule is also:
(a) to regulate the administration of regulated debtors’ estates consistently, unless there is a clear reason to treat a matter that arises in relation to a particular kind of estate differently; and
(b) to regulate the administration of regulated debtors’ estates to give greater control to creditors.
Registering trustees Under this Act, only the Official Trustee or a registered trustee can act as the trustee of a regulated debtor’s estate.
Part 2 of this Schedule sets out the process for registering trustees, and also deals with disciplining registered trustees.
Consistently regulating the administration of regulated debtors’ estates Part 3 of this Schedule sets out provisions to regulate the administration of regulated debtors’ estates consistently.
A regulated debtor is a bankrupt, a person whose property is subject to control under Division 2 of Part X, a debtor under a personal insolvency agreement or a deceased person whose estate is being administered under Part XI.
Other provisions There are other matters relevant to the administration of regulated debtors’ estates in this Act.
This Schedule also gives authority for a legislative instrument, the Insolvency Practice Rules, to deal with some matters.
Many of the terms in this Schedule are defined. The Dictionary in section 5‑5 contains a list of every term that is defined in this Schedule. Other terms are defined in section 5 of this Act.
Terms used in this Schedule are defined in the Dictionary. In some cases, the definition is a signpost to another provision of the Schedule in which the meaning of the term is explained.
Some of the key terms, the meaning of which is explained in this Division, are regulated debtor, regulated debtor’s estate and trustee of a regulated debtor’s estate.
In this Schedule:
adequate and appropriate fidelity insurance has a meaning affected by subsection 25‑1(2).
adequate and appropriate professional indemnity insurance has a meaning affected by subsection 25‑1(2).
administration account : see section 65‑5.
annual administration return means the return required to be lodged under subsection 70‑5(2).
annual trustee return means the return required to be lodged under subsection 30‑1(1).
committee of inspection for a regulated debtor’s estate means a committee appointed under sections 80‑10 to 80‑25 in relation to the administration of the estate.
creditor , when used in relation to a regulated debtor’s estate, means a creditor of the estate.
current conditions : see section 5‑10.
end of an administration of a regulated debtor’s estate means:
(a) in the case of a bankruptcy—the day on which the bankrupt is discharged or the bankruptcy is annulled, whichever happens first; and
(b) in the case of an administration under Part X—the day 3 years after the day on which a personal insolvency agreement made by the debtor for the administration of the debtor’s estate took effect; and
(c) in the case of an administration under Part XI—the day 3 years after the day on which the administration is taken to have commenced under section 247A.
financial interest : a person has afinancial interest in the administration of a regulated debtor’s estate in the circumstances set out in section 5‑30.
GST has the same meaning as in theA New Tax System (Goods and Services Tax) Act 1999 .
Insolvency Practice Rules means the rules made by the Minister under section 105‑1.
Insolvency Practice Schedule (Corporations) means Schedule 2 to theCorporations Act 2001 , and includes rules made under section 105‑1 of that Schedule.
March quarter means the period of 3 months beginning on 1 January.
maximum default amount for a trustee of a regulated debtor’s estate: see section 60‑15.
notified estate charge : see subsection 20‑75(7).
prescribed means prescribed by the Insolvency Practice Rules.
registered trustee means an individual who is registered as a trustee under Part 2 of this Schedule.
Register of Trustees means the register established and maintained by the Inspector‑General under section 15‑1.
regulated debtor : see section 5‑15.
regulated debtor’s estate : see section 5‑16.
remuneration determination , for a trustee of a regulated debtor’s estate, means a determination made:
(a) under section 60‑10 or 60‑11 in relation to the trustee; and
(b) in accordance with section 60‑12.
this Schedule includes the Insolvency Practice Rules.
trustee of a regulated debtor’s estate : see section 5‑20 and 5‑25.
(1) Each of the following is a
current condition imposed on a registered trustee:
(a) a condition that a committee decides that the registered trustee is to be subject to under subsection 20‑20(5) or (6), subject to any variation that a committee has decided should be made to the condition under section 20‑55;
(b) a condition imposed on all registered trustees, or on registered trustees of the trustee’s class, under section 20‑35;
(c) a condition imposed under subsection 40‑15(2) (direction not to accept further appointments);
(d) a condition that a committee decides that the registered trustee is to be subject to under paragraph 40‑55(1)(f) or (g) (conditions as a result of disciplinary action), subject to any variation that a committee has decided should be made to the condition under section 20‑55;
(e) a condition imposed on the registered trustee by the Court under section 45‑1.
(2) However, the
current conditions imposed on a registered trustee do not include:
(a) a condition that a committee has decided to remove under section 20‑55; or
(b) a condition that is removed under subsection 40‑15(4) (condition removed because a direction not to accept further appointments has been withdrawn); or
(c) a condition that the Court has ordered be removed under section 45‑1.
A person is a
regulated debtor if the person is:
(a) a bankrupt; or
(b) a person whose property is subject to control under Division 2 of Part X; or
(c) a debtor under a personal insolvency agreement; or
(d) a deceased person whose estate is being administered under Part XI.
An estate is a
regulated debtor’s estate if it is:
(a) in relation to a bankrupt—the estate of the bankrupt, other than any estate of the bankrupt administered under Part XI because the bankrupt is a deceased person; and
(b) in relation to a person whose property is subject to control under Division 2 of Part X—the estate of the person; and
(c) in relation to a debtor under a personal insolvency agreement—the estate of the debtor; and
(d) in relation to a deceased person whose estate is being administered under Part XI—the estate of the person being administered under that Part.
A person is the
trustee of a regulated debtor’s estate if the person is:
(a) in relation to a bankrupt—the trustee of the bankrupt’s estate; and
(b) in relation to a person whose property is subject to control under Division 2 of Part X—the controlling trustee; and
(c) in relation to a debtor under a personal insolvency agreement—the trustee of the agreement; and
(d) in relation to a deceased person whose estate is being administered under Part XI—the trustee administering the estate under that Part.
A reference in this Schedule to the trustee of a regulated debtor’s estate is to be read:
(a) in relation to a regulated debtor’s estate in respect of which there are 2 or more joint trustees—as a reference to all of the trustees; and
(b) in relation to a regulated debtor’s estate in respect of which there are 2 or more joint and several trustees—as a reference to all of the trustees or any one or more of the trustees.
A person has a
financial interest in the administration of a regulated debtor’s estate:
(a) if the person is one of the following:
(i) the regulated debtor;
(ii) a creditor;
(iii) the trustee; or
(b) in any other circumstances prescribed.
A provision of this Schedule does not apply to the Official Trustee unless the provision is expressed to apply to the Official Trustee.
Registering trustees An individual may apply to the Inspector‑General to be registered as a trustee. The Inspector‑General will refer the application to a committee who will consider the applicant’s qualifications, conduct and fitness and whether the applicant will take out appropriate insurance. Registration may be subject to conditions, is for 3 years and may be renewed.
A registered trustee must:
(a) lodge an annual return with the Inspector‑General that includes proof that the trustee has appropriate insurance; and
(b) give the Inspector‑General notice if the trustee’s circumstances change or if certain other events happen.
Disciplining registered trustees If a registered trustee fails to comply with certain requirements, such as the requirement to lodge a document or give information, the Inspector‑General may give directions that may result in the trustee being unable to accept further appointments. The Inspector‑General may also seek a Court order.
The Inspector‑General may suspend or cancel a trustee’s registration in certain circumstances. The Inspector‑General may also give the trustee a show‑cause notice. If such a notice is given and no sufficient explanation is given, the Inspector‑General may take further disciplinary action on the decision of a committee.
Industry bodies may notify the Inspector‑General where they suspect there are grounds for disciplinary action.
Court powers The Court has broad powers to make orders in relation to registered trustees (including imposing conditions on registration).
In performing his or her functions and exercising his or her powers under this Act in relation to persons who are, have been or may become both registered trustees under this Act and registered liquidators under the
Corporations Act 2001 , the Inspector‑General must work cooperatively with ASIC.
(1) The Inspector‑General must establish and maintain a Register of Trustees.
(2) The Register of Trustees may be kept in any form that the Inspector‑General considers appropriate.
(3) The Insolvency Practice Rules may provide for and in relation to the Register of Trustees.
(4) Without limiting subsection (3), the Insolvency Practice Rules may provide for and in relation to:
(a) the details to be entered on the Register of Trustees; and
(b) the parts of the Register that are to be made available to the public.
(5) Without limiting paragraph (4)(a), those details may include:
(a) details of any disciplinary action decided by a committee under section 40‑55; and
(b) details of persons who have had their registration as a trustee under this Act suspended or cancelled.
An individual may apply to the Inspector‑General to be registered as a trustee. The application will be referred to a committee, which will assess the application against specified criteria (the applicant’s qualifications, conduct and fitness and whether the applicant will take out appropriate insurance). The committee will report its decision to the Inspector‑General and, if the committee decides that the applicant should be registered, the Inspector‑General will register the applicant as a trustee.
A registration may be subject to conditions. Conditions may be imposed on a particular registered trustee by the committee, or on all registered trustees or a class of registered trustees by the Insolvency Practice Rules. A registered trustee may apply to the Inspector‑General to have a condition imposed by a committee removed or varied. That application will be referred to a committee.
Registration is for 3 years, but may be renewed. An application for renewal may be made to the Inspector‑General within specified time periods.
A decision of a committee about an application for registration or about a condition of registration is reviewable by the Administrative Appeals Tribunal (see Division 96 of this Schedule).
(1) An individual may apply to the Inspector‑General to be registered as a trustee.
(2) The application must be lodged with the Inspector‑General in the approved form.
(3) The application must be accompanied by the application fee determined by the Minister by legislative instrument.
(4) The application is properly made if subsections (2) and (3) are complied with.
(1) The Inspector‑General may convene a committee for the purposes of considering an application, or applications, for registration as a trustee.
(2) The committee must consist of:
(a) the Inspector‑General; and
(b) a registered trustee chosen by a prescribed body; and
(c) a person appointed by the Minister.
Note 1: Section 50‑5 sets out the knowledge and experience that a prescribed body must be satisfied a person has before making an appointment under paragraph (2)(b).
Note 2: Section 50‑10 sets out the matters of which the Minister must be satisfied before making an appointment under paragraph (2)(c).
(1) The Inspector‑General must refer an application for registration as a trustee that is properly made to a committee convened under section 20‑10 for consideration.
(2) The Inspector‑General must do so within 2 months after receiving the application.
Committee must consider referred applications
(1) If an application for registration as a trustee is referred to a committee, the committee must consider the application.
(2) For the purposes of considering the application, the committee:
(a) must interview the applicant; and
(b) may require the applicant to sit for an exam.
Decision of committee
(3) Within 45 business days after interviewing the applicant, the committee must decide whether the applicant should be registered as a trustee or not.
(4) The committee must decide that the applicant should be registered as a trustee if it is satisfied that the applicant:
(a) has the qualifications, experience, knowledge and abilities prescribed; and
(b) will take out:
(i) adequate and appropriate professional indemnity insurance; and
(ii) adequate and appropriate fidelity insurance;
against the liabilities that the applicant may incur working as a registered trustee; and
(c) has not been convicted, within 10 years before making the application, of an offence involving fraud or dishonesty; and
(d) is not, and has not been within 10 years before making the application, an insolvent under administration; and
(e) has not had his or her registration as a trustee under this Act cancelled within 10 years before making the application, other than in response to a written request by the applicant to have the registration cancelled; and
(f) has not had his or her registration as a liquidator under the
Corporations Act 2001 cancelled within 10 years before making the application, other than in response to a written request by the applicant to have the registration cancelled; and(g) is not disqualified from managing corporations under Part 2D.6 of the
Corporations Act 2001 , or under a law of an external Territory or a law of a foreign country; and(h) is otherwise a fit and proper person; and
(i) is resident in Australia or in another prescribed country.
(5) The committee may decide that the applicant should be registered even if the committee is not satisfied of a matter mentioned in paragraph (4)(a), (e), (f) or (i), provided the committee is satisfied that the applicant would be suitable to be registered as a trustee if the applicant complied with conditions specified by the committee.
Registration may be subject to conditions
(6) The committee may decide that the applicant’s registration is to be subject to any other conditions specified by the committee.
Spent convictions
(7) Nothing in this section affects the operation of Part VIIC of the
Crimes Act 1914 .Note: Part VIIC of the
Crimes Act 1914 includes provisions that, in certain circumstances, relieve persons from the requirement to disclose spent convictions and require persons aware of such convictions to disregard them.
The committee must give the applicant and the Inspector‑General a report setting out:
(a) the committee’s decision on the application; and
(b) the committee’s reasons for that decision; and
(c) if the committee decides under subsection 20‑20(5) or (6) that the applicant should be registered subject to a condition:
(i) the condition; and
(ii) the committee’s reasons for imposing the condition.
Registration as trustee
(1) The Inspector‑General must register the applicant as a trustee if:
(a) the committee has decided that the applicant should be registered; and
(b) the applicant has produced evidence in writing to the Inspector‑General that the applicant has taken out:
(i) adequate and appropriate professional indemnity insurance; and
(ii) adequate and appropriate fidelity insurance;
against the liabilities that the applicant may incur working as a registered trustee; and
(c) the applicant has paid the registration fee determined by the Minister by legislative instrument.
(2) The Inspector‑General registers an applicant by entering on the Register of Trustees the details relating to the applicant prescribed for the purposes of subsection 15‑1(3).
Registration subject to current conditions
(3) The registration is subject to the current conditions imposed on the registered trustee.
Certificate of registration
(4) After registering a person as a trustee, the Inspector‑General must give the person a certificate of registration.
(5) The certificate may be given electronically.
Period of registration
(6) The registration has effect for 3 years.
(1) The Insolvency Practice Rules may impose conditions on all registered trustees, or registered trustees of a specified class.
(2) Without limiting subsection (1), a condition may be imposed limiting the kinds of activity in which a trustee may engage, either for the duration of the registration or for a shorter period.
(1) If a committee has decided under this Schedule that a person’s registration as a trustee is to be subject to a condition, the person may apply to the Inspector‑General for the condition to be varied or removed.
(2) However, an application cannot be made:
(a) if the person’s registration as a trustee is suspended; or
(b) if the condition is of a prescribed kind; or
(c) in prescribed circumstances.
(3) The application must be lodged with the Inspector‑General in the approved form.
(4) The application is properly made if:
(a) an application can be made; and
(b) subsection (3) is complied with.
(5) A single application by a registered trustee may deal with more than one condition.
(1) The Inspector‑General may convene a committee for the purposes of considering an application, or applications, made under section 20‑40.
(2) The committee must consist of:
(a) the Inspector‑General; and
(b) a registered trustee chosen by a prescribed body; and
(c) a person appointed by the Minister.
Note 1: Section 50‑5 sets out the knowledge and experience that a prescribed body must be satisfied a person has before making an appointment under paragraph (2)(b).
Note 2: Section 50‑10 sets out the matters of which the Minister must be satisfied before making an appointment under paragraph (2)(c).
(1) The Inspector‑General must refer an application that is properly made under section 20‑40 to a committee convened under section 20‑45 for consideration.
(2) The Inspector‑General must do so within 2 months after receiving the application.
(1) If an application to vary or remove a condition of registration is referred to a committee, the committee must consider the application.
(2) Unless the applicant otherwise agrees, the committee must, for the purposes of considering the application, interview the applicant.
(3) The committee must, within 20 business days after interviewing the applicant or obtaining the agreement of the applicant as referred to in subsection (2):
(a) decide whether the condition to which the application relates should be varied or removed; and
(b) if a condition is to be varied, specify the way in which it is to be varied.
The committee must give the applicant and the Inspector‑General a report setting out:
(a) the committee’s decision on the application; and
(b) the committee’s reasons for that decision; and
(c) if the committee decides that a condition should be varied—the variation that is to be made.
If the committee decides that a condition imposed on a registered trustee is to be varied or removed, the condition is varied or removed in accordance with that decision.
(1) An individual may apply to the Inspector‑General to have the individual’s registration as a trustee renewed.
(2) The application must be lodged with the Inspector‑General, in the approved form, before the applicant’s registration as a trustee ceases to have effect.
Note: The Court may extend the time within which an application must be lodged: see paragraph 33(1)(c).
(3) If an individual applies to have his or her registration as a trustee renewed, the individual must, at least 1 month before the registration ceases to have effect, pay the renewal fee determined by the Minister by legislative instrument. If the renewal fee is not paid at least 1 month before the registration ceases to have effect, an additional amount equal to 20% of the renewal fee is payable by the applicant by way of penalty.
(4) The application is properly made if subsection (2) is complied with.
Renewal of registration
(1) On application under section 20‑70, the Inspector‑General must renew the registration of the applicant as a trustee if:
(a) the application is properly made; and
(b) the applicant has produced evidence in writing to the Inspector‑General that the applicant maintains:
(i) adequate and appropriate professional indemnity insurance; and
(ii) adequate and appropriate fidelity insurance;
against the liabilities that the applicant may incur working as a registered trustee; and
(c) the applicant has complied with any condition dealing with continuing professional education to which the applicant is subject during the applicant’s current registration; and
(d) the applicant has paid the renewal fee determined by the Minister under subsection 20‑70(3), and any late payment penalty under that subsection; and
(e) the applicant does not owe more than the prescribed amount of notified estate charges.
(2) The Inspector‑General renews the registration of the applicant by entering, or maintaining, on the Register of Trustees the details relating to the applicant prescribed for the purposes of subsection 15‑1(3).
Registration subject to current conditions
(3) The renewed registration is subject to the current conditions imposed on the registered trustee.
Certificate of registration
(4) After renewing the registration of a person as a trustee, the Inspector‑General must give the person a certificate of registration.
(5) The certificate may be given electronically.
Period of registration
(6) The renewed registration has effect for 3 years, beginning on the day after the person’s immediately preceding registration as a trustee ceased to have effect.
When a notified estate charge is owed
(7) A person owes a
notified estate charge if:
(a) the person owes either of the following:
(i) a charge under the
Bankruptcy (Estate Charges) Act 1997 (theestate charge );(ii) a penalty under section 281 (late payment penalty) of this Act in respect of that charge; and
(b) the Inspector‑General notified the person of the unpaid estate charge at least one month and 10 business days before the person’s registration as a trustee ceases to have effect.
A person commits an offence if:
(a) the person makes a representation; and
(b) the representation is that the person is a registered trustee; and
(c) the representation is false.
Penalty: 30 penalty units.
Registered trustee must maintain insurance
(1) A registered trustee must maintain:
(a) adequate and appropriate professional indemnity insurance; and
(b) adequate and appropriate fidelity insurance;
against the liabilities that the trustee may incur working as a registered trustee.
(2) The Inspector‑General may, by legislative instrument, determine what constitutes adequate and appropriate professional indemnity insurance, and adequate and appropriate fidelity insurance, in relation to either or both of the following:
(a) specified circumstances;
(b) one or more specified classes of registered trustees.
Offence
(3) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person intentionally or recklessly fails to comply with the requirement.
Penalty: 1,000 penalty units.
(4) A person commits an offence of strict liability if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person fails to comply with the requirement.
Penalty: 60 penalty units.
Registered trustee must lodge annual return
(1) A person who is a registered trustee during all or part of a trustee return year for the person must, within 1 month after the end of that year, lodge with the Inspector‑General a return that conforms with subsection (3).
(2) Each of the following is a
trustee return year for a person who is or was registered as a trustee under section 20‑30:
(a) the period of 12 months beginning on the day on which that registration first began;
(b) each subsequent period of 12 months.
(3) A return under subsection (1) must:
(a) be in the approved form; and
(b) include evidence that the person has, during the whole of any period of the year during which the person was registered as a trustee, maintained:
(i) adequate and appropriate professional indemnity insurance; and
(ii) adequate and appropriate fidelity insurance;
against the liabilities that the person may incur working as a registered trustee.
(4) The Inspector‑General may, on the application of the registered trustee made before the end of the period for lodging a return under subsection (1), extend, or further extend, that period.
Offence
(5) A person commits an offence of strict liability if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person fails to comply with the requirement.
Penalty: 5 penalty units.
Note: See also section 277B (about infringement notices).
Registered trustee must lodge notice
(1) A registered trustee must lodge with the Inspector‑General a notice, in the approved form, if any of the following events occur:
(a) the trustee becomes an insolvent under administration;
(b) a bankruptcy notice is issued under this Act in relation to the trustee as debtor, or a corresponding notice is issued in relation to the trustee as debtor under a law of an external Territory or a law of a foreign country;
(c) the trustee is convicted of an offence involving fraud or dishonesty;
(d) the trustee is disqualified from managing corporations under Part 2D.6 of the
Corporations Act 2001 , or under a law of an external Territory or a law of a foreign country;(e) the trustee ceases to have:
(i) adequate and appropriate professional indemnity insurance; or
(ii) adequate and appropriate fidelity insurance;
against the liabilities that the trustee may incur working as a registered trustee;
(f) the trustee is issued with a notice under section 40‑40 of Schedule 2 to the
Corporations Act 2001 (a show‑cause notice) in relation to the trustee’s registration as a liquidator under that Act;(g) the trustee’s registration as a liquidator under the
Corporations Act 2001 is suspended or cancelled;(h) any other event prescribed.
The notice must be lodged within 5 business days after the registered trustee could reasonably be expected to be aware that the event has occurred.
Offence
(2) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person intentionally or recklessly fails to comply with the requirement.
Penalty: 100 penalty units.
Registered trustee must lodge notice
(1) A registered trustee must lodge with the Inspector‑General a notice, in the approved form, if any of the following events occur:
(a) information included in an annual trustee return, or in an annual administration return, prepared by or on behalf of the trustee is or becomes inaccurate in a material particular;
(b) any other event prescribed.
The notice must be lodged within 10 business days after the registered trustee could reasonably be expected to be aware that the event has occurred.
Offence
(2) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person intentionally or recklessly fails to comply with the requirement.
Penalty: 5 penalty units.
Note: See also section 277B (about infringement notices).
Remedying failure to lodge documents or give information or documents The Inspector‑General may direct a registered trustee to comply with a requirement to lodge a document, or give any information or document, to the Inspector‑General. If the trustee fails to comply with the direction, the Inspector‑General can direct that the trustee accept no further appointments or seek an order from the Court directing the trustee to comply.
Correcting and completing information given to the Inspector‑General If the Inspector‑General reasonably suspects that information that a registered trustee is required to give the Inspector‑General under this Act is incomplete or inaccurate, the Inspector‑General can direct the trustee to confirm, complete or correct the information. The Inspector‑General can also direct the trustee to tell someone about the defect in the information. If the trustee fails to comply with a direction, the Inspector‑General can direct that the trustee accept no further appointments or seek an order from the Court directing the trustee to comply.
Other grounds for a direction not to accept further appointments There are other grounds on which the Inspector‑General can issue a direction not to accept further appointments, for example, if the registered trustee fails to comply with a direction to convene a meeting.
Suspending or cancelling registration An individual’s registration as a trustee can be suspended or cancelled.
The registration is automatically cancelled if the registered trustee becomes an insolvent under administration or dies.
In some circumstances, the Inspector‑General can suspend or cancel the registration of a person as a trustee. The Inspector‑General can also give a registered trustee notice to show‑cause why the trustee should continue to be registered. If the Inspector‑General is not satisfied with the answer, the Inspector‑General can refer the matter to a committee which will make a decision on what action should be taken.
An industry body can give the Inspector‑General notice of possible grounds for disciplinary action.
If a registration is suspended, the trustee can apply to the Inspector‑General to have the suspension lifted or shortened.
A decision about the suspension or cancellation of the registration of a trustee is reviewable by the Administrative Appeals Tribunal (see Division 96 of this Schedule).
Application of this section
(1) This section applies if a registered trustee fails to comply with a requirement to lodge any document, or give any information or document, that the trustee is required under this Act to lodge with or give to the Inspector‑General.
Inspector‑General may give direction to comply
(2) The Inspector‑General may, in writing, direct the trustee to comply with the requirement within 10 business days after the notice is given.
(3) The Inspector‑General may, on the application of a registered trustee made before the end of the period referred to in subsection (2), extend, or further extend, that period.
Consequences for failing to comply
(4) If the trustee does not comply within the period, the Inspector‑General may do either or both of the following:
(a) give a direction under subsection 40‑15(1) (direction not to accept further appointments);
(b) apply to the Court for an order, under section 30 (general powers of Courts in bankruptcy), section 45‑1 of this Schedule or any other provision that is relevant, directing the trustee to comply with the requirement within such time as is specified in the order.
Direction is not a legislative instrument
(5) A direction under subsection (2) is not a legislative instrument.
Relationship with other laws
(6) Nothing in this section limits the operation of any other provision of this Act, or any other law, in relation to a person who fails to comply with a requirement to lodge a document with, or give information or a document to, the Inspector‑General.
Application of this section
(1) This section applies if the Inspector‑General reasonably suspects that information that a registered trustee is required under this Act to give the Inspector‑General (whether in a document lodged or given to the Inspector‑General or otherwise) is incomplete or incorrect in any particular.
Inspector‑General may give direction to correct information etc.
(2) The Inspector‑General may, in writing, direct the trustee to do one or more of the following within a period of 10 business days after the direction is given:
(a) confirm to the Inspector‑General that the information is complete and correct;
(b) complete or correct the information (as the case requires);
(c) notify any persons specified by the Inspector‑General in the direction of the addition or correction.
(3) The Inspector‑General may, on the application of a registered trustee made before the end of the period referred to in subsection (2), extend, or further extend, that period.
Consequences for failing to comply
(4) If the trustee does not comply within the period, the Inspector‑General may do either or both of the following:
(a) give a direction under subsection 40‑15(1) (direction not to accept further appointments);
(b) apply to the Court for an order, under section 30 (general powers of Courts in bankruptcy), section 45‑1 of this Schedule or any other provision that is relevant, directing the trustee to comply with the requirement within such time as is specified in the order.
Direction is not a legislative instrument
(5) A direction under subsection (2) is not a legislative instrument.
Relationship with other laws
(6) Nothing in this section limits the operation of any other provision of this Act, or any other law, in relation to a person giving incomplete or incorrect information.
Inspector‑General may give direction not to accept further appointments
(1) The Inspector‑General may, in writing, direct a registered trustee not to accept any further appointments as a trustee, or not to accept any further appointments as a trustee during a period specified in the direction, if:
(a) the trustee has failed to comply with a direction given to the trustee under section 40‑5 (direction to remedy failure to lodge documents, or give information or documents); or
(b) the trustee has failed to comply with a direction given to the trustee under section 40‑10 (direction to correct inaccuracies); or
(c) a committee has decided under paragraph 40‑55(1)(d) that the Inspector‑General should give the direction referred to in that paragraph; or
(d) the trustee has failed to comply with a direction given to the trustee under section 70‑70 (direction to give relevant material); or
(e) the trustee has failed to comply with a direction given to the trustee under subsection 75‑20(1) or (2) (direction to convene a meeting of creditors or comply with requirements in relation to such a meeting).
Condition of registration to comply with direction
(2) If the Inspector‑General gives a direction to a registered trustee under subsection (1), it is a condition of the trustee’s registration that the trustee must comply with the direction.
Withdrawal of direction
(3) The Inspector‑General may withdraw a direction given under subsection (1).
(4) The condition is removed from the trustee’s registration if the Inspector‑General withdraws the direction.
Direction is not a legislative instrument
(5) A direction under subsection (1) is not a legislative instrument.
Relationship with other laws
(6) Nothing in this section limits the operation of any other provision of this Act, or any other law, in relation to:
(a) a person who fails to comply with a requirement to lodge a document with, or give information or a document to, the Inspector‑General; or
(b) a person giving incomplete or incorrect information; or
(c) any matter in relation to which a committee makes a decision under subsection 40‑55(1).
(7) Nothing in this section limits the power of the Inspector‑General under this Act, or any other law, to apply to the Court for an order in relation to a failure to comply with a direction mentioned in subsection (1).
(1) The registration of a person as a trustee is cancelled if:
(a) the person becomes an insolvent under administration; or
(b) the person dies.
(2) The cancellation takes effect on the day the event mentioned in subsection (1) happens.
(1) The Inspector‑General may suspend the registration of a person as a trustee if:
(a) the person is disqualified from managing corporations under Part 2D.6 of the
Corporations Act 2001 , or under a law of an external Territory or a law of a foreign country; or(b) the person ceases to have:
(i) adequate and appropriate professional indemnity insurance; or
(ii) adequate and appropriate fidelity insurance;
against the liabilities that the person may incur working as a registered trustee; or
(c) the person’s registration as a liquidator under the
Corporations Act 2001 has been cancelled or suspended, other than in compliance with a written request by the person to cancel or suspend the registration; or(d) the person owes more than the prescribed amount of notified estate charges; or
(e) if the Court has made an order under section 90‑15 that the person repay remuneration—the person has failed to repay the remuneration; or
(f) the person has been convicted of an offence involving fraud or dishonesty; or
(g) the person lodges a request with the Inspector‑General in the approved form to have the registration suspended.
(2) Nothing in this section affects the operation of Part VIIC of the
Crimes Act 1914 .Note: Part VIIC of the
Crimes Act 1914 includes provisions that, in certain circumstances, relieve persons from the requirement to disclose spent convictions and require persons aware of such convictions to disregard them.
(1) The Inspector‑General may cancel the registration of a person as a trustee if:
(a) the person is disqualified from managing corporations under Part 2D.6 of the
Corporations Act 2001 , or under a law of an external Territory or a law of a foreign country; or(b) the person ceases to have:
(i) adequate and appropriate professional indemnity insurance; or
(ii) adequate and appropriate fidelity insurance;
against the liabilities that the person may incur working as a registered trustee; or
(c) the person’s registration as a liquidator under the
Corporations Act 2001 has been cancelled, other than in compliance with a written request by the person to cancel the registration; or(d) the person owes more than the prescribed amount of notified estate charges; or
(e) if the Court has made an order under section 90‑15 that the person repay remuneration—the person has failed to repay the remuneration; or
(f) the person has been convicted of an offence involving fraud or dishonesty; or
(g) the person lodges a request with the Inspector‑General in the approved form to have the registration cancelled.
(2) Nothing in this section affects the operation of Part VIIC of the
Crimes Act 1914 .Note: Part VIIC of the
Crimes Act 1914 includes provisions that, in certain circumstances, relieve persons from the requirement to disclose spent convictions and require persons aware of such convictions to disregard them.
Application of this section
(1) This section applies if the Inspector‑General decides under section 40‑25 or 40‑30 to suspend or cancel the registration of a person as a trustee.
Inspector‑General must give notice of decision
(2) The Inspector‑General must, within 10 business days after making the decision, give the person a written notice setting out the decision, and the reasons for the decision.
When decision comes into effect
(3) The decision comes into effect on the day after the notice is given to the person.
Failure to give notice does not affect validity of decision
(4) A failure by the Inspector‑General to give the notice under subsection (2) within 10 business days does not affect the validity of the decision.
(1) The Inspector‑General may give a registered trustee notice in writing asking the trustee to give the Inspector‑General a written explanation why the trustee should continue to be registered, if the Inspector‑General believes that:
(a) the trustee no longer has the qualifications, experience, knowledge and abilities prescribed under paragraph 20‑20(4)(a); or
(b) the trustee has committed an act of bankruptcy within the meaning of this Act or a corresponding law of an external Territory or a foreign country; or
(c) the trustee is disqualified from managing corporations under Part 2D.6 of the
Corporations Act 2001 , or under a law of an external Territory or a law of a foreign country; or(d) the trustee has ceased to have:
(i) adequate and appropriate professional indemnity insurance; or
(ii) adequate and appropriate fidelity insurance;
against the liabilities that the person may incur working as a registered trustee; or
(e) the trustee has breached a current condition imposed on the trustee; or
(f) the trustee has contravened a provision of this Act; or
(g) the trustee’s registration as a liquidator under the
Corporations Act 2001 has been cancelled or suspended, other than in compliance with a written request by the trustee to cancel or suspend the registration; or(h) the trustee owes more than the prescribed amount of notified estate charges; or
(i) if the Court has made an order under section 90‑15 that the trustee repay remuneration—the trustee has failed to repay the remuneration; or
(j) the trustee has been convicted of an offence involving fraud or dishonesty; or
(k) the trustee is permanently or temporarily unable to perform the functions and duties of a trustee because of physical or mental incapacity; or
(l) the trustee has failed to carry out adequately and properly (whether in Australia or in an external Territory or in a foreign country):
(i) the duties of a trustee; or
(ii) any other duties or functions that a registered trustee is required to carry out under a law of the Commonwealth or of a State or Territory, or under the general law; or
(m) if the trustee is or was the administrator of a debt agreement—the trustee has failed to carry out adequately and properly (whether in Australia or in an external Territory or in a foreign country) the duties of an administrator in relation to a debt agreement; or
(n) the trustee is not a fit and proper person; or
(o) the trustee is not resident in Australia or in another prescribed country; or
(p) the trustee has failed to comply with a standard prescribed for the purposes of subsection (4).
(2) A notice under subsection (1) is not a legislative instrument.
(3) Nothing in this section affects the operation of Part VIIC of the
Crimes Act 1914 .Note: Part VIIC of the
Crimes Act 1914 includes provisions that, in certain circumstances, relieve persons from the requirement to disclose spent convictions and require persons aware of such convictions to disregard them.(4) The Insolvency Practice Rules may prescribe standards applicable to the exercise of powers, or the carrying out of duties, of registered trustees.
(1) The Inspector‑General may convene a committee to make a decision of a kind mentioned in section 40‑55 in relation to a registered trustee, or registered trustees.
(2) The committee must consist of:
(a) the Inspector‑General; and
(b) a registered trustee chosen by a prescribed body; and
(c) a person appointed by the Minister.
Note 1: Section 50‑5 sets out the knowledge and experience that a prescribed body must be satisfied a person has before making an appointment under paragraph (2)(b).
Note 2: Section 50‑10 sets out the matters of which the Minister must be satisfied before making an appointment under paragraph (2)(c).
The Inspector‑General may refer a registered trustee to a committee convened under section 40‑45 if the Inspector‑General:
(a) gives the trustee a notice under section 40‑40 (a show‑cause notice); and
(b) either:
(i) does not receive an explanation within 20 business days after the notice is given; or
(ii) is not satisfied by the explanation.
(1) If a registered trustee is referred to a committee under section 40‑50, the committee must decide one or more of the following:
(a) that the trustee should continue to be registered;
(b) that the trustee’s registration should be suspended for a period, or until the occurrence of an event, specified in the decision;
(c) that the trustee’s registration should be cancelled;
(d) that the Inspector‑General should direct the trustee not to accept any further appointments as trustee, or not to accept any further appointments as trustee during the period specified in the decision;
(e) that the trustee should be publicly admonished or reprimanded;
(f) that a condition specified in the decision should be imposed on the trustee;
(g) that a condition should be imposed on all other registered trustees that they must not allow the trustee to carry out any of the functions or duties, or exercise any of the powers, of a trustee on their behalf (whether as employee, agent, consultant or otherwise) for a period specified in the decision of no more than 10 years;
(h) that the Inspector‑General should publish specified information in relation to the committee’s decision and the reasons for that decision.
(2) Without limiting paragraph (1)(f), conditions imposed under that paragraph may include one or more of the following:
(a) a condition that the trustee engage in, or refrain from engaging in, specified conduct;
(b) a condition that the trustee engage in, or refrain from engaging in, specified conduct except in specified circumstances;
(c) a condition that the trustee publish specified information;
(d) a condition that the trustee notify a specified person or class of persons of specified information;
(e) a condition that the trustee publish a specified statement;
(f) a condition that the trustee make a specified statement to a specified person or class of persons.
(3) In making its decision, the committee may have regard to:
(a) any information provided to the committee by the Inspector‑General; and
(b) any explanation given by the trustee; and
(c) any other information given by the trustee to the committee; and
(d) if the trustee is or was also a registered liquidator under the
Corporations Act 2001 —any information in relation to the trustee given to the committee by ASIC or a committee convened under the Insolvency Practice Schedule (Corporations); and(e) any other matter that the committee considers relevant.
The committee must give the registered trustee and the Inspector‑General a report setting out:
(a) the committee’s decision in relation to the trustee; and
(b) the committee’s reasons for that decision; and
(c) if the committee decides under paragraph 40‑55(1)(f) that the trustee should be registered subject to a condition:
(i) the condition; and
(ii) the committee’s reasons for imposing the condition; and
(d) if the committee decides under paragraph 40‑55(1)(g) that a condition should be imposed on all other registered trustees in relation to the trustee:
(i) the condition; and
(ii) the committee’s reasons for imposing the condition.
The Inspector‑General must give effect to the committee’s decision.
Application of this section
(1) This section applies if a person’s registration as a trustee has been suspended.
Suspended trustee may apply to the Inspector‑General
(2) The person may apply to the Inspector‑General:
(a) for the suspension to be lifted; or
(b) for the period of the suspension to be shortened.
(3) The application must be lodged with the Inspector‑General in the approved form.
(4) The application is properly made if subsection (3) is complied with.
(1) The Inspector‑General may convene a committee for the purposes of considering an application, or applications, made under section 40‑70.
(2) The committee must consist of:
(a) the Inspector‑General; and
(b) a registered trustee chosen by a prescribed body; and
(c) a person appointed by the Minister.
Note 1: Section 50‑5 sets out the knowledge and experience that a prescribed body must be satisfied a person has before making an appointment under paragraph (2)(b).
Note 2: Section 50‑10 sets out the matters of which the Minister must be satisfied before making an appointment under paragraph (2)(c).
(1) The Inspector‑General must refer an application that is properly made under section 40‑70 to a committee convened under section 40‑75 for consideration.
(2) The Inspector‑General must do so within 2 months after receiving the application.
(1) If an application is referred to a committee, the committee must consider the application.
(2) Unless the applicant otherwise agrees, the committee must interview the applicant for the purposes of considering the application.
(3) Within 10 business days after interviewing the applicant or obtaining the agreement of the applicant as referred to in subsection (2), the committee must:
(a) decide whether the suspension should be lifted, or the period of the suspension shortened; and
(b) if the period of the suspension is to be shortened—specify when the suspension is to end.
The committee must give the applicant and the Inspector‑General a report setting out:
(a) the committee’s decision on the application; and
(b) the committee’s reasons for that decision; and
(c) if the committee decides that the period of the suspension should be shortened—when the suspension is to end.
If the committee decides that a suspension is to be lifted or shortened, the suspension is lifted or shortened in accordance with the decision.
Industry body may lodge notice
(1) An industry body may lodge with the Inspector‑General a notice in the approved form (an
industry notice ):
(a) stating that the body reasonably suspects that there are grounds for the Inspector‑General:
(i) to suspend the registration of a registered trustee under section 40‑25; or
(ii) to cancel the registration of a registered trustee under section 40‑30; or
(iii) to give a registered trustee a notice under section 40‑40 (a show‑cause notice); or
(iv) to impose a condition on a registered trustee under another provision of this Schedule; and
(b) identifying the registered trustee; and
(c) including the information and copies of any documents upon which the suspicion is founded.
Inspector‑General must consider information and documents
(2) The Inspector‑General must consider the information and the copies of any documents included with the industry notice.
Inspector‑General must give notice if no action to be taken
(3) If, after such consideration, the Inspector‑General decides to take no action in relation to the matters raised by the industry notice, the Inspector‑General must give the industry body written notice of that fact.
45 business days to consider and decide
(4) The consideration of the information and the copies of any documents included with the industry notice must be completed and, if the Inspector‑General decides to take no action, a notice under subsection (3) given, within 45 business days after the industry notice is lodged.
Inspector‑General not precluded from taking action
(5) The Inspector‑General is not precluded from:
(a) suspending the registration of a registered trustee under section 40‑25; or
(b) cancelling the registration of a registered trustee under section 40‑30; or
(c) giving a registered trustee a notice under section 40‑40 (a show‑cause notice); or
(d) imposing a condition on a registered trustee under another provision of this Schedule;
wholly or partly on the basis of information or a copy of a document included with the industry notice, merely because the Inspector‑General has given a notice under subsection (3) in relation to the matters raised by the industry notice.
Notice to industry body if Inspector‑General takes action
(6) If the Inspector‑General does take action of the kind mentioned in subsection (5) wholly or partly on the basis of information or a copy of a document included with the industry notice, the Inspector‑General must give the industry body notice of that fact.
Notices are not legislative instruments
(7) A notice under subsection (3) or (6) is not a legislative instrument.
(1) An industry body is not liable civilly, criminally or under any administrative process for giving a notice under subsection 40‑100(1) if:
(a) the body acted in good faith in giving the notice; and
(b) the suspicion that is the subject of the notice is a reasonable suspicion.
(2) A person who, in good faith, makes a decision as a result of which the industry body gives a notice under subsection 40‑100(1) is not liable civilly, criminally or under any administrative process for making the decision.
(3) A person who, in good faith, gives information or a document to an industry body that is included, or a copy of which is included, in a notice under subsection 40‑100(1) is not liable civilly, criminally or under any administrative process for giving the information or document.
The Insolvency Practice Rules may prescribe
industry bodies for the purposes of this Subdivision.
(1) The Court may make such orders as it thinks fit in relation to a registered trustee.
(2) The Court may exercise the power under subsection (1):
(a) on its own initiative, during proceedings before the Court; or
(b) on application under subsection (3).
(3) Each of the following persons may apply for an order under subsection (1):
(a) the registered trustee;
(b) the Inspector‑General.
(4) Without limiting the matters which the Court may take into account when making orders, the Court may take into account:
(a) whether the registered trustee has faithfully performed, or is faithfully performing, the registered trustee’s duties; and
(b) whether an action or failure to act by the registered trustee is in compliance with this Act and the Insolvency Practice Rules; and
(c) whether an action or failure to act by the registered trustee is in compliance with an order of the Court; and
(d) whether any person has suffered, or is likely to suffer, loss or damage because of an action or failure to act by the registered trustee; and
(e) the seriousness of the consequences of any action or failure to act by the registered trustee, including the effect of that action or failure to act on public confidence in registered trustees as a group.
(5) This section does not limit the Court’s powers under any other provision of this Act, or under any other law.
(1) Without limiting section 45‑1, the Court may make orders in relation to a registered trustee that deal with the costs of a matter considered by the Court.
(2) Those orders may include an order that:
(a) the registered trustee is personally liable for some or all of those costs; and
(b) the registered trustee is not entitled to be reimbursed by a regulated debtor’s estate or creditors in relation to some or all of those costs.
(3) This section does not limit the Court’s powers under any other provision of this Act, or under any other law.
This Division sets out common rules for committees established under this Part.
If a prescribed body appoints a person to a committee, that person must have the prescribed knowledge or experience or, if no knowledge or experience is prescribed, the knowledge and experience necessary to carry out the functions to be performed. If the Minister appoints a person to a committee, that person must have knowledge or experience in a field such as business, law (including the law of bankruptcy) or public policy relating to bankruptcy.
A single committee may consider more than one matter. The consideration of a matter is not affected by a change in the membership of the committee. A matter may be adjourned or transferred to another committee. The Insolvency Practice Rules may prescribe procedures and make other rules for committees.
The use and disclosure of information given to a committee is restricted to listed purposes.
Application of this section
(1) This section applies if a prescribed body is to appoint a person to a committee under this Part.
Prescribed body must only appoint a person with appropriate knowledge and experience
(2) The prescribed body is to appoint a person as a member of the committee only if the prescribed body is satisfied that the person has:
(a) if any knowledge or experience is prescribed in relation to appointments of the kind to be made—that knowledge or experience; or
(b) if no knowledge or experience is prescribed in relation to appointments of the kind to be made—the knowledge and experience necessary to carry out the person’s functions as a member of the committee if appointed.
Application of this section
(1) This section applies if the Minister is to appoint a person to a committee under this Part.
Matters of which the Minister must be satisfied before appointing
(2) The Minister is to appoint a person as a member of the committee only if the Minister is satisfied that the person is qualified for appointment by virtue of his or her knowledge of, or experience in, one or more of the following fields:
(a) business;
(b) law, including the law relating to bankruptcy;
(c) economics;
(d) accounting;
(e) public policy relating to bankruptcy.
A single committee may be convened under this Part to consider one or more of the following:
(a) a matter or matters relating to one applicant for registration as a trustee;
(b) a matter or matters relating to more than one applicant for registration as a trustee;
(c) a matter or matters relating to one registered trustee;
(d) a matter or matters relating to more than one registered trustee.
If a committee is convened under this Part to consider a matter:
(a) the committee’s powers, functions and duties in relation to the matter are not affected by a change in the membership of the committee; and
(b) the committee may adjourn its consideration of the matter, and may do so more than once; and
(c) the matter may be transferred to another committee with powers, functions and duties under this Part in relation to matters of that kind.
The Insolvency Practice Rules may provide for and in relation to:
(a) the manner in which the committees convened under this Part are to perform their functions, including:
(i) meetings of committees; and
(ii) the number of committee members required to constitute a quorum; and
(iii) disclosure of interests in a matter before a committee; and
(iv) the manner in which questions are to be decided by the committee; and
(b) the reconstitution of a committee; and
(c) the termination of the consideration of a matter by a committee, and the transfer of matters to another committee.
(1) A member of a committee convened under this Part is entitled to receive the remuneration that is determined by the Remuneration Tribunal. If no determination of that remuneration by the Tribunal is in operation, the member is entitled to receive such remuneration as the Minister determines in writing.
(2) A member is entitled to receive such allowances as the Minister determines in writing.
(3) This section has effect subject to the
Remuneration Tribunal Act 1973 .
Offence
(1) A person commits an offence if:
(a) the person is or was a member of a committee convened under this Part; and
(b) information or a document is or was disclosed to the person for the purposes of exercising powers or performing functions as a member of the committee; and
(c) the person uses or discloses the information or document.
Penalty: 50 penalty units.
Exception—information or document disclosed to ASIC or another committee etc.
(2) Subsection (1) does not apply if the information or document:
(a) is used or disclosed by the person for the purposes of exercising powers or performing functions as a member of the committee mentioned in subsection (1); or
(b) is disclosed:
(i) to ASIC to assist ASIC to exercise its powers or perform its functions under Chapter 5 of the
Corporations Act 2001 or the Insolvency Practice Schedule (Corporations); or(ii) to a committee convened under Part 2 of the Insolvency Practice Schedule (Corporations) to assist the committee to exercise its powers or perform its functions under that Part; or
(iii) to another committee convened under this Part to assist the committee to exercise its powers or perform its functions under this Part; or
(iv) to enable or assist a body prescribed for the purposes of this paragraph to perform its disciplinary function in relation to its members; or
(v) in order to enable or assist an authority or person in a State or Territory, or a foreign country, to perform or exercise a function or power that corresponds, or is analogous, to any of the committee’s or the Inspector‑General’s functions and powers; or
(vi) to a court or tribunal in relation to proceedings before the court or tribunal.
Note 1: A defendant bears an evidential burden in relation to the matter in subsection (2) (see subsection 13.3(3) of the
Criminal Code ).Note 2: Chapter 5 of the
Corporations Act 2001 deals with external administration of companies.
This Part sets out requirements for conducting the administration of a regulated debtor’s estate.
The main provisions deal with:
(a) the remuneration of the trustee; and
(b) the duties of the trustee in handling the money and other property of the estate; and
(c) conflicts of interest; and
(d) the duties of the trustee to keep appropriate records, to report to the Inspector‑General and to give information, documents and reports to creditors and others; and
(e) creditor meetings; and
(f) the creation and conduct of a committee to monitor the administration (called a committee of inspection); and
(g) the rights of creditors to review the administration; and
(h) the rights of creditors to remove the trustee and appoint another; and
(i) the review of the administration by the Court.
There are additional rules that apply to the administration of a regulated debtor’s estate (for example, about appointment of the trustee) in this Act.
Remuneration The trustee of a regulated debtor’s estate is entitled to receive remuneration for necessary work properly performed by the trustee in relation to the administration.
The amount of remuneration will usually be set under a remuneration determination. Remuneration determinations are made in most cases by the creditors or the committee of inspection (if there is one).
However, if there is no remuneration determination, the trustee will be entitled to receive a reasonable amount for the work. The maximum amount that the trustee may receive in this way is $5,000 (exclusive of GST and indexed).
The Court may review the remuneration of the trustee of a regulated debtor’s estate and may also make orders under Division 90 about remuneration (including ordering repayment of remuneration).
Other benefits The trustee of a regulated debtor’s estate must not:
(a) employ a related entity, unless certain requirements are met; or
(b) purchase any assets of the estate; or
(c) get any other benefits or profits from the administration of the estate.
Remuneration in accordance with remuneration determinations
(1) The trustee of a regulated debtor’s estate is entitled to receive remuneration for necessary work properly performed by the trustee in relation to the administration of the regulated debtor’s estate, in accordance with the remuneration determinations (if any) for the trustee (see sections 60‑10 and 60‑11).
Remuneration for trustees if no remuneration determination made
(2) If no remuneration determination is made in relation to necessary work properly performed by a trustee in relation to the administration of the regulated debtor’s estate, the trustee is entitled to receive reasonable remuneration for the work. However, that remuneration must not exceed the maximum default amount.
Remuneration to be paid from the funds in the estate
(3) The remuneration is to be paid from the funds in the regulated debtor’s estate.
A determination, specifying remuneration that a trustee of a regulated debtor’s estate is entitled to receive for necessary work properly performed by the trustee in relation to the administration of the estate, may be made:
(a) by resolution of the creditors; or
(b) if there is a committee of inspection and a determination is not made under paragraph (a)—by the committee of inspection.
(1) The Inspector‑General may, in prescribed circumstances, make a determination specifying remuneration that a trustee of a regulated debtor’s estate is entitled to receive for necessary work properly performed by the trustee in relation to the administration of the estate.
(2) The Inspector‑General must have regard to any matter prescribed in making a determination under subsection (1).
(3) Insolvency Practice Rules made for the purposes of subsection (2) may provide for and in relation to:
(a) a matter referred to in section 60‑12; or
(b) any other matter.
Manner in which remuneration may be specified
(1) A determination under section 60‑10 or 60‑11 may specify remuneration that the trustee is entitled to receive in either or both of the following ways:
(a) by specifying an amount of remuneration;
(b) by specifying a method for working out an amount of remuneration.
Remuneration on a time‑cost basis
(2) If a determination under section 60‑10 or 60‑11 specifies that the trustee is entitled to receive remuneration worked out wholly or partly on a time‑cost basis, the determination must include a cap on the amount of remuneration worked out on a time‑cost basis that the trustee is entitled to receive.
Remuneration on a percentage basis
(3) If a determination under section 60‑10 or 60‑11 specifies that the trustee is entitled to receive remuneration worked out wholly or partly on the basis of a specified percentage of money received by the trustee in respect of the regulated debtor’s estate:
(a) the determination must specify the money to which the specified percentage applies; and
(b) the specified percentage must not be greater than the percentage prescribed for the purposes of this paragraph.
More than one remuneration determination may be made
(4) To avoid doubt, more than one determination under section 60‑10 or 60‑11 may be made in relation to a particular trustee and a particular regulated debtor’s estate.
Maximum default amount
(1) The
maximum default amount for a trustee is an amount (exclusive of GST) worked out as follows:
(a) if the trustee is appointed as the trustee of the regulated debtor’s estate during the financial year beginning on 1 July 2016—$5,000;
(b) if the trustee is appointed as the trustee of the regulated debtor’s estate during a financial year beginning on or after 1 July 2017—the greater of:
(i) the amount worked out by multiplying the indexation factor for the financial year (worked out under subsections (3) and (4)) by the maximum default amount for a trustee appointed as the trustee of a regulated debtor’s estate during the previous financial year; and
(ii) the amount (if any) prescribed for the purposes of this subparagraph.
Rounding
(2) Amounts worked out under subsection (1) must be rounded to the nearest whole dollar (rounding 50 cents upwards).
Indexation factor
(3) Subject to subsection (4), the
indexation factor for a financial year is the number worked out by dividing the index number for the March quarter immediately preceding that financial year by the index number for the March quarter immediately preceding that first‑mentioned March quarter.(4) If an indexation factor worked out under subsection (3) would be less than 1, the indexation factor is to be increased to 1.
Changes to CPI index reference period and publication of substituted index numbers
(5) In working out the indexation factor:
(a) use only the index numbers published in terms of the most recently published index reference period for the Consumer Price Index; and
(b) disregard index numbers published in substitution for previously published index numbers (except where the substituted numbers are published to take account of changes in the index reference period).
Definition—index number
(6) In this section:
index number , in relation to a quarter, means the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Statistician in respect of that quarter.
Deriving profit or advantage from the estate
(1) A trustee of a regulated debtor’s estate must not directly or indirectly derive any profit or advantage from the administration of the estate.
Circumstances in which profit or advantage is taken to be derived
(2) To avoid doubt, a trustee of a regulated debtor’s estate is taken to derive a profit or advantage from the administration of the estate if:
(a) the trustee directly or indirectly derives a profit or advantage from a transaction (including a sale or purchase) entered into for or on account of the estate; or
(b) the trustee directly or indirectly derives a profit or advantage from a creditor of the estate; or
(c) a related entity of the trustee directly or indirectly derives a profit or advantage from the administration of the estate.
Exceptions
(3) Subsection (1) does not apply to the extent that:
(a) another provision of this Act, or of another law, requires or permits the trustee to derive the profit or advantage; or
(b) the Court gives leave to the trustee to derive the profit or advantage.
Note: Subsection (1) would not, for example, prevent the trustee from recovering remuneration for necessary work properly performed by the trustee in relation to the administration of the estate, as the trustee is permitted to do so under other provisions of this Act.
(4) Despite paragraph (2)(c), subsection (1) does not apply to the extent that:
(a) the profit or advantage arises because the trustee employs or engages a person to provide services in connection with the administration of the regulated debtor’s estate; and
(b) the person is a related entity of the trustee; and
(c) one of the following is satisfied:
(i) the trustee does not know, and could not reasonably be expected to know, that the person employed or engaged is a related entity of the trustee;
(ii) the creditors, by resolution, agree to the related entity being employed or engaged;
(iii) it is not reasonably practicable in all the circumstances to obtain the agreement, by resolution, of the creditors to the related entity being employed or engaged and the cost of employing the related entity is reasonable in all the circumstances.
(5) Subsection (1) does not apply to the extent that the profit or advantage is a payment that:
(a) is made to the trustee by or on behalf of the Commonwealth or an agency or authority of the Commonwealth; and
(b) is of a kind prescribed.
Offence
(6) A person commits an offence of strict liability if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person fails to comply with the requirement.
Penalty: 50 penalty units.
Note: A defendant bears an evidential burden in relation to the matters in subsections (3), (4) and (5) (see subsection 13.3(3) of the
Criminal Code ).
Effect of contravention of this section
(7) A transaction or any other arrangement entered into in contravention of this section may be set aside by the Court.
(1) A person must not give, or agree or offer to give, to another person any valuable consideration with a view to:
(a) securing the first person’s appointment or nomination as a trustee of a regulated debtor’s estate; or
(b) securing or preventing the appointment or nomination of a third person as a trustee of a regulated debtor’s estate.
Strict liability offence
(2) A person commits an offence of strict liability if a person contravenes subsection (1).
Penalty: 50 penalty units or imprisonment for 3 months, or both
.
No payments for performance of trustee’s ordinary duties by another person
(1) If a trustee of a regulated debtor’s estate receives remuneration for his or her services, a payment in respect of the performance by another person of the ordinary duties that are required by this Act to be performed by the trustee is not allowed in the trustee’s accounts.
Exception
(2) Subsection (1) does not apply to a payment if the payment was authorised by resolution of:
(a) the creditors; or
(b) the committee of inspection (if any).
Offence
(3) A person commits an offence of strict liability if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person fails to comply with the requirement.
Penalty: 50 penalty units.
Note: A defendant bears an evidential burden in relation to the matter in subsection (2) (see subsection 13.3(3) of the
Criminal Code ).
The trustee of a regulated debtor’s estate has duties to:
(a)
(1) The Governor‑General may make regulations prescribing matters of a transitional nature (including prescribing any saving or application provisions) relating to the amendments and repeals made by Schedule 2 to the
Insolvency Law Reform Act 2016 .(2) The regulations may provide that certain provisions of Schedule 2 to the
Insolvency Law Reform Act 2016 are taken to be modified as set out in the regulations. Those provisions then have effect as if they were so modified.(3) The provisions of Schedule 2 to the
Insolvency Law Reform Act 2016 that provide for regulations to deal with matters do not limit each other.
Repeal the subsection, substitute:
(3) Within 5 business days after the beginning of the administration, the administrator may give to the owner or lessor a notice that:
(a) specifies the property; and
(b) states that the company does not propose to exercise rights in relation to the property; and
(c) if the administrator:
(i) knows the location of the property; or
(ii) could, by the exercise of reasonable diligence, know the location of the property;
specifies the location of the property.
Insert:
Director to notify administrator
(1) If a director of a company that is subject to a deed of company arrangement becomes aware that:
(a) there has been a material contravention of the deed by a person bound by the deed (who may be the director); or
(b) there is likely to be a material contravention of the deed by a person bound by the deed (who may be the director);
the director must, as soon as practicable after becoming aware of the contravention or likely contravention, give notice of the contravention or likely contravention to the administrator of the deed of company arrangement. The notice must be in the prescribed form.
Administrator to notify company’s creditors
(2) If the administrator of a deed of company arrangement becomes aware that:
(a) there has been a material contravention of the deed by a person bound by the deed (who may be the administrator); or
(b) there is likely to be a material contravention of the deed by a person bound by the deed (who may be the administrator);
the administrator must, as soon as practicable after becoming aware of the contravention or likely contravention, give notice of the contravention or likely contravention to as many of the company’s creditors as reasonably practicable. The notice must be in the prescribed form.
Insert:
(da) any notice that has been given to the administrator of the deed of company arrangement or the company’s creditors under section 445HA (notification of contravention of deed of company arrangement);
After “11,”, insert “11AA,”.
Omit “, (ii), (iii), (v) or (vi)”.
Omit “subparagraph (1)(b)(iv)”, substitute “subparagraph (1)(b)(ii), (iii), (iv), (v) or (vi)”.
Repeal the subsection, substitute:
(6) The Court may only grant leave under subsection (3) on the application of:
(a) if subparagraph (1)(b)(ii) applies—the liquidator of the company; or
(b) if subparagraph (1)(b)(iii) applies—the administrator of the company; or
(c) if subparagraph (1)(b)(iv) applies—the administrator of the deed of company arrangement; or
(d) if subparagraph (1)(b)(v) applies—the managing controller; or
(e) if subparagraph (1)(b)(vi) applies—the receiver.
(6A) As soon as practicable after applying for leave under subsection (3), the applicant must lodge with ASIC a notice stating that the application has been made. The notice must be in the prescribed form.
Add “or 446AA”.
Insert:
Scope
(1) This section applies if a company has executed a deed of company arrangement and:
(a) the Court, at a particular time, makes an order under section 445D terminating the deed of company arrangement; or
(b) both:
(i) the deed of company arrangement specifies circumstances in which the deed is to terminate and the company is to be wound up; and
(ii) those circumstances exist at a particular time.
Resolution that company be wound up voluntarily (2) The company is taken:
(a) to have passed, at the time referred to in paragraph (1)(a) or subparagraph (1)(b)(ii), as the case may be, a special resolution under section 491 that the company be wound up voluntarily; and
(b) to have done so without a declaration having been made and lodged under section 494.
Information about company’s affairs
(3) Section 497 is taken to have been complied with in relation to the winding up.
Notice of resolution
(4) The liquidator must:
(a) within 5 business days after the day on which the company is taken to have passed the resolution, lodge with ASIC a written notice in the prescribed form:
(i) stating that the company is taken because of this section to have passed such a resolution; and
(ii) specifying that day; and
(b) cause the notice to be published, within 5 business days after that day, in the prescribed manner.
Power to stay or terminate winding up
(5) Section 482 applies in relation to the winding up as if it were a winding up in insolvency or by the Court.
Note: Section 482 empowers the Court to stay or terminate a winding up and give consequential directions.
(6) An application under section 482 as applying because of subsection (5) may be made:
(a) despite section 198G (exercise of directors’ powers while company under external administration), by the company pursuant to a resolution of the board; or
(b) by the liquidator; or
(c) by a creditor; or
(d) by a contributory.
Note: See also section 499 (appointment of liquidator).
After “(7)”, insert “and 446AA(2) to (6)”.
Repeal the subsection, substitute:
(2) However, subsection (1) does not apply to the company if:
(a) section 446A or 446AA applies in relation to the company; or
(b) regulations made for the purposes of section 446B have the effect that the company is taken to have passed a special resolution under section 491 that the company be wound up voluntarily.
Insert:
(2D) If section 446AA applies in relation to the company because of paragraph 446AA(1)(a):
(a) the Court may, immediately after it makes the order referred to in that paragraph, appoint a person to be the liquidator for the purpose of winding up the affairs and distributing the property of the company; and
(b) if no appointment is made under paragraph (a) of this subsection:
(i) the company is taken to have appointed the administrator of the deed of company arrangement referred to in section 446AA to be the liquidator for the purpose of winding up the affairs and distributing the property of the company; and
(ii) the appointment takes effect at the time referred to in paragraph 446AA(1)(a).
(2E) If section 446AA applies in relation to the company because of paragraph 446AA(1)(b):
(a) the company is taken to have appointed the administrator of the deed of company arrangement referred to in section 446AA to be the liquidator for the purpose of winding up the affairs and distributing the property of the company; and
(b) the appointment takes effect at the time referred to in subparagraph 446AA(1)(b)(ii).
(2F) If regulations made for the purposes of section 446B have the effect that a company under administration is taken to have passed a special resolution under section 491 that the company be wound up voluntarily:
(a) the company is taken to have appointed the administrator of the company to be the liquidator for the purpose of winding up the affairs and distributing the property of the company; and
(b) the appointment takes effect when the resolution is taken to have been passed.
(2G) If regulations made for the purposes of section 446B have the effect that a company subject to a deed of company arrangement is taken to have passed a special resolution under section 491 that the company be wound up voluntarily:
(a) the company is taken to have appointed the administrator of the deed to be the liquidator for the purpose of winding up the affairs and distributing the property of the company; and
(b) the appointment takes effect when the resolution is taken to have been passed.
Add “or”.
Insert:
(da) if the resolution is taken to have been passed under section 446AA because of:
(i) the making of an order under section 445D by the Court terminating a deed of company arrangement executed by the company; or
(ii) the existence of circumstances that are specified in a deed of company arrangement executed by the company to be circumstances in which the deed is to terminate and the company is to be wound up;
on the section 513C day in relation to the administration that ended when the deed was executed; or
Omit “513B(c) and (d)”, substitute “513B(c), (d) and (da)”.
Omit “Subsection 446A(2)”, substitute “Subsections 446A(2) and 446AA(2)”.
Repeal the definition, substitute:
relation‑back day has the meaning given by section 91.
Insert:
For the purposes of this Act, the following table sets out the meaning of
relation‑back day in relation to a winding up of a company or Part 5.7 body.
1 | in the case of a company:
| the section 513C day in relation to the administration. |
2 | in the case of a company:
| the day on which that application was filed. |
3 | in the case of a company:
| the section 513C day in relation to that administration. |
4 | in the case of a company:
| the day on which that application was filed. |
5 | in the case of a company:
| the section 513C day in relation to the administration. |
6 | in the case of a company:
| the section 513C day in relation to the administration. |
7 | in the case of a company:
| the day on which that application was filed. |
8 | in the case of a company, the company is taken to have passed a special resolution that it be wound up voluntarily because, at a meeting convened by the administrator of a deed of company arrangement executed by the company, the company’s creditors:
and either:
| the section 513C day in relation to the administration that ended when the deed was executed. |
9 | in the case of a company, the company is taken to have passed a special resolution that it be wound up voluntarily because, at a meeting convened by the administrator of a deed of company arrangement executed by the company, the company’s creditors:
and both:
| the day on which that application was filed. |
10 | in the case of a company, the company is taken to have passed a special resolution that it be wound up voluntarily because the Court made an order under section 445D terminating a deed of company arrangement executed by the company, and either:
| the section 513C day in relation to the administration that ended when the deed was executed. |
11 | in the case of a company:
| the day on which that application was filed. |
12 | in the case of a company, the company is taken to have passed a special resolution that it be wound up voluntarily because:
and either:
| the section 513C day in relation to the administration that ended when the deed was executed. |
13 | in the case of a company, the company is taken to have passed a special resolution that it be wound up voluntarily because:
and both:
| the day on which that application was filed. |
14 | because of Division 1A of Part 5.6, the winding up is taken to have begun on the day when an order that the company or body be wound up was made; | the day on which the application for the order was filed. |
15 | any other case applies; | the day on which the winding up is taken, because of Division 1A of Part 5.6, to have begun. |
19 Section 9 (definition of civil penalty disqualification ) Repeal the definition.
Add:
(4) In this section:
senior manager does not include a receiver and manager.
Repeal the paragraph, substitute:
(h) if the company is a general insurer (within the meaning of the
Insurance Act 1973 )— management of the general insurer vests in a judicial manager of the company appointed by the Federal Court under Part VB of theInsurance Act 1973 ; or(i) if the company is a life company (within the meaning of the
Life Insurance Act 1995 )—management of the life company vests in a judicial manager of the life company appointed by the Federal Court under Part 8 of theLife Insurance Act 1995 .
Insert:
(4A) As soon as practicable after making a declaration under subsection (2), the administrator must lodge a copy of the declaration with ASIC.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).
Insert:
(6A) As soon as practicable after making a replacement declaration under subsection (5), the administrator must lodge a copy of the replacement declaration with ASIC.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).
Omit “of the company”.
Insert:
(4A) As soon as practicable after making a declaration under subsection (2), the administrator must lodge a copy of the declaration with ASIC.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).
Insert:
(6A) As soon as practicable after making a replacement declaration under subsection (5), the administrator must lodge a copy of the replacement declaration with ASIC.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).
Omit “so far as is necessary for the beneficial disposal or winding up of that business”, substitute “so far as is, in the opinion of the liquidator, required for the beneficial disposal or winding up of that business”.
Omit “lodge a printed copy of the resolution”, substitute “lodge with ASIC, in the prescribed form, a notice setting out the text of the resolution”.
Insert:
(3) As soon as practicable after making a declaration under subsection (2), the administrator must lodge a copy of the declaration with ASIC.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).
Insert:
(6) As soon as practicable after making a replacement declaration under subsection (4), the administrator must lodge a copy of the replacement declaration with ASIC.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).
Add:
(3) If the Court makes an order under subsection (1), the applicant for the order must:
(a) lodge with ASIC a notice setting out the text of the order; and
(b) do so within 2 business days after the making of the order.
The notice must be in the prescribed form.
Add:
(3) If the Court makes an order under subsection (2), the applicant for the order must:
(a) lodge with ASIC a notice setting out the text of the order; and
(b) do so within 2 business days after the making of the order.
The notice must be in the prescribed form.
Add:
(5) If the Court makes an order under subsection (2), the applicant for the order must:
(a) lodge with ASIC a notice setting out the text of the order; and
(b) do so within 2 business days after the making of the order.
The notice must be in the prescribed form.
(6) If the Court makes a declaration under subsection (3), the applicant for the declaration must:
(a) lodge with ASIC a notice setting out the text of the declaration; and
(b) do so within 2 business days after the making of the declaration.
The notice must be in the prescribed form.
(7) If the Court makes an order under subsection (4) on the application of a person, the applicant for the order must:
(a) lodge with ASIC a notice setting out the text of the order; and
(b) do so within 2 business days after the making of the order.
The notice must be in the prescribed form.
Omit “Court”, substitute “court”.
Add:
(1) The amendment made by Part 1 of Schedule 3 to the
Insolvency Law Reform Act 2016 applies in relation to the administration of a company that begins on or after the commencement of that Schedule.(2) The amendment made by Part 2 of Schedule 3 to the
Insolvency Law Reform Act 2016 applies in relation to material contraventions, and likely material contraventions, of a deed of company arrangement that occur on or after the commencement of that Schedule, regardless of when the deed was executed.(3) The amendment made by item 9 of Part 4 of Schedule 3 to the
Insolvency Law Reform Act 2016 applies in relation to deeds of company arrangement that are terminated on or after the commencement of that Schedule.(4) The amendments made by Part 5 of Schedule 3 to the
Insolvency Law Reform Act 2016 apply for the purposes of working out the relation‑back day in relation to a winding up of a company or Part 5.7 body starting on or after the commencement of that Schedule.(5) The amendments made by items 22, 23, 25, 26, 29 and 30 of Part 6 of Schedule 3 to the
Insolvency Law Reform Act 2016 apply in relation to declarations made after the commencement of that Schedule.(6) The amendment made by item 28 of Part 6 of Schedule 3 to the
Insolvency Law Reform Act 2016 applies in relation to resolutions passed on or after the commencement of that Schedule.(7) The amendments made by items 31 and 32 of Part 6 of Schedule 3 to the
Insolvency Law Reform Act 2016 apply in relation to orders made on or after the commencement of that Schedule.(8) The amendment made by item 33 of Part 6 of Schedule 3 to the
Insolvency Law Reform Act 2016 applies in relation to orders and declarations made on or after the commencement of that Schedule.(9) The amendment made by item 34 of Part 6 of Schedule 3 to the
Insolvency Law Reform Act 2016 applies whether the payment of an amount in respect of a liability was made before, on or after the commencement of that Schedule.
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