Bankruptcy Amendment Act 1985

Overview

The Bankruptcy Amendment Act 1985 (No. 21 of 1985) was enacted to amend the Bankruptcy Act 1966, addressing various issues and gaps within the existing bankruptcy framework. The Act was assented to on 7 May 1985 by the Queen, in accordance with the legislative process of the Commonwealth of Australia, involving the Senate and the House of Representatives. One of the key policy objectives of the Act is to enhance the oversight and administration of bankruptcy proceedings, particularly by expanding the functions and powers of the Inspector-General, improving the management of the Official Trustee in Bankruptcy, and introducing new requirements for registered trustees. The Act also seeks to provide clearer guidelines for the priority of payments in bankruptcy, ensuring that certain debts, such as those owed to employees and workers' compensation claims, are addressed more effectively. Furthermore, the legislation aims to update and clarify various procedural aspects of bankruptcy, including the processes for creditor petitions, the examination of bankrupts, and the management of bankrupts' property, thereby improving the overall efficiency and fairness of the bankruptcy system.

Scope and Application

The Bankruptcy Amendment Act 1985 amends the Bankruptcy Act 1966, which applies to the Commonwealth of Australia, including its territories. The amendment act applies to natural persons, entities such as trustees and Official Receivers, and to the conduct and administration of bankruptcies, compositions, and schemes of arrangement. The act specifies that the functions of the Inspector-General now include making inquiries and investigations into the conduct, trade dealings, property, and affairs of bankrupts, and it mandates that registered trustees provide reports to the Inspector-General upon request. The act also modifies the conditions under which a creditor may petition for bankruptcy, raising the threshold amount from $1,000 to $1,500. Furthermore, the act expands the scope of the Official Trustee in Bankruptcy and Official Receivers in conducting examinations and investigations of bankrupts. It also includes provisions for the payment of debts due to employees in the event of bankruptcy and modifies the conditions for the registration of natural persons as trustees. This legislation extends the application of the principal act through subordinate instruments, thereby ensuring comprehensive oversight and administration of bankruptcies within the Australian jurisdiction.

Key Provisions

• The Bankruptcy Amendment Act 1985 amends the Bankruptcy Act 1966, introducing various changes to the administration and enforcement of bankruptcy proceedings in Australia. The Act includes several new sections and amendments to existing provisions, with the primary objective of enhancing the efficiency and effectiveness of the bankruptcy system. Key provisions include amendments to the functions and powers of the Inspector-General, the role of the Official Trustee, the administration of bankruptcy estates, and the rights and obligations of creditors and debtors.
• The Inspector-General is granted broader investigative powers, allowing inquiries into the conduct of trustees, bankrupts, and other related parties. Additionally, the Inspector-General is now required to file reports with the Registrar on the results of any investigations conducted. The Act also expands the functions of the Official Trustee, enabling them to perform various duties and responsibilities typically associated with trustees. The Official Trustee is empowered to make applications for the examination of bankrupts and take part in public examinations.
• The Act modifies the conditions under which creditors may petition for a debtor's bankruptcy, increasing the minimum debt threshold from $1,000 to $1,500. It also revises the procedures for the discovery of a bankrupt's property, granting the Official Receiver and the trustee joint authority to conduct searches and investigations. Furthermore, the Act introduces new provisions regarding priority payments, including costs related to audits and workers' compensation claims.
• The Bankruptcy Amendment Act 1985 imposes several obligations on trustees, creditors, and other parties involved in bankruptcy proceedings. Trustees are required to provide reports to the Inspector-General, advertise examination dates, and ensure bankrupts comply with certain provisions. Creditors must meet the new minimum debt threshold to petition for a debtor's bankruptcy. The Registrar is mandated to notify the Official Receiver and relevant trustees upon a debtor's bankruptcy and provide copies of statements of affairs.
• Breaches of the provisions in the Bankruptcy Amendment Act 1985 may result in various consequences, including civil and criminal penalties. Trustees who fail to comply with their obligations, such as providing required reports or ensuring bankrupts adhere to specified provisions, may face disciplinary actions, including suspension or cancellation of their registration. Additionally, individuals found guilty of fraudulent or dishonest conduct related to bankruptcy proceedings may be subject to criminal charges and penalties, such as fines and imprisonment. The Act also provides for the recovery of property and expenses related to litigation indemnities, with the Court having the authority to make orders for the distribution of recovered property and expenses.

Legal classification tags

Area of Law

Bankruptcy Law

Insolvency Law

Instrument

Act

Concepts

Definitions & Interpretation

Commencement Provisions

Repeal & Amendment

Licensing & Registration

Reporting & Disclosure Obligations

Enforcement Powers

Protection in respect of reports

Civil Penalty Provisions