Prime Capital Securities Pty Ltd v Papoutsakis

In the Federal Court of Australia, Justice Cameron heard an application by Prime Capital Securities Pty Ltd ("PCS") for the annulment of the bankruptcy of Mr Papoutsakis. PCS, the applicant, had been deregistered and did not participate in the proceedings. The trustee of Mr Papoutsakis's bankrupt estate, Robert Tenbensel, participated as an interested person and provided a report to the Court. The dispute arose from a debt of $26,606.63 allegedly incurred by Papou Pty Ltd, of which Mr Papoutsakis was a director, for application fees and expenses related to a proposed loan that did not proceed. Following an unpaid invoice, PCS obtained default judgment against Papou Pty Ltd and Mr Papoutsakis, leading to a bankruptcy notice and ultimately the sequestration of Mr Papoutsakis's estate on 21 May 2018.

The Court was required to determine whether the sequestration order ought not to have been made, pursuant to section 153B of the *Bankruptcy Act 1966* (Cth), and if so, whether to exercise its discretion to annul the bankruptcy. The trustee's report detailed significant difficulties in administering the bankrupt estate, including a lack of cooperation from Mr and Ms Papoutsakis in the sale of jointly owned properties and associated entities. The trustee also expressed the preliminary view that Papou Pty Ltd was significantly insolvent and that Mr Papoutsakis was likely insolvent at the time of the sequestration order, even if the debt to PCS was not valid.

Justice Cameron noted that the application for annulment had been subject to long and largely unexplained delay. Furthermore, no adequate proposal for paying the trustee's fees and expenses had been put forward, and it had not been demonstrated that Mr Papoutsakis was presently solvent. The Court also considered that creditors would not be in a better position if the bankruptcy were annulled. Consequently, even if the Court had concluded that the sequestration order ought not to have been made, it would not have exercised its discretion to annul the bankruptcy.

The application for the annulment of Mr Papoutsakis's bankruptcy was dismissed.