Mandri v Nicholls as trustee for the Bankrupt Estate of Mandri

This matter came before Judge A Kelly in the Federal Court of Australia. The dispute concerned the obligations of a trustee in bankruptcy, Mr. Nicholls, to convene a meeting of creditors to consider a proposal lodged by the bankrupt, Mr. Mandri, and to provide a report to creditors regarding that proposal.

The court was required to determine whether the trustee had a right to refuse to call a meeting of creditors to consider a proposal lodged under section 73 of the *Bankruptcy Act 1966* (Cth) and whether the trustee was obligated to furnish a report in such circumstances. The court also considered the overarching duties of a trustee in administering a bankrupt estate efficiently and in the interests of all creditors.

The court reasoned that nothing in section 73 of the Act, the Insolvency Practice Schedule, or the Insolvency Practice Rules conferred an express right on a trustee to refuse to call a meeting to consider a proposal. The court drew an analogy from *Arcuri v Jones*, where it was held that provisions concerning remuneration for past work were intended to safeguard a trustee's entitlement without imposing further work or expense. The court also noted the trustee's duties under section 19 of the Act to administer the estate efficiently and avoid unnecessary expense. Ultimately, the court found that section 30 of the Act reserves a discretion in the court to order the convening of a creditors' meeting and the preparation of a report, with the central consideration being whether the proposal is in the interests of all creditors generally. This assessment involves a calculus of factors, including the need for further investigation, potential creditor domination, the triviality of the proposal, and the relativity of distributions under bankruptcy versus the proposed composition.