Bankruptcy Rules (Amendment)

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Explanatory Statement

Bankruptcy Rules Amendment

Statutory Rules 1988 No. 342

The Bankruptcy Rules Amendment Statutory Rules No. of 1988 amend the Bankruptcy Rules to provide a procedure for a debtor who is contemplating voluntary bankruptcy to avail himself or herself of the optional seven day pre-bankruptcy moratorium period inserted into the Bankruptcy Act 1966 (the Act) by the Bankruptcy Amendment Act 1987 (the Amendment Act). The Amendment Act inserted Division 2A into Part IV of the Act. Division 2A of Part IV is entitled ‘Declaration of Intention to present Debtor’s Petition’. A debtor is able to present a declaration to a Registrar in Bankruptcy, and if the Registrar accepts the declaration, the debtor’s creditors are stayed from enforcement action for 7 days, and the debtor is accorded the opportunity to consider possible alternatives to bankruptcy such as an arrangement without sequestration under Part X of the Act. These rules prescribe the form of declaration of intention, and the form of seal to be used by the Registrar in Bankruptcy in endorsing the declaration.

The Amendment Act inserted into the Act a new section 19AA defining the investigatory powers of trustees and Official Receivers in relation to bankrupts. The investigatory powers were formerly set out in section 19 of the Act. These rules make a consequential amendment to rule 31A of the Bankruptcy Rules, substituting a reference to subsection 19AA(2) for the reference in that rule to paragraph 19(1)(c) of the Act.

These rules are made pursuant to subsection 4(1) of the Acts Interpretation Act 1901 and come into operation on the same day that the relevant provisions of the Amendment Act are proclaimed to commence, which is 3 January 1989.

Details of the rules are as follows.


Rule 1

Rule 1 inserts a new Division 4A into Part II of the Bankruptcy Rules. Division 4A is entitled ‘Declaration of Intention to Present Debtor’s Petition’ and comprises rules 19A and 19B.

Section 54A of the Act provides that a debtor may present to the Registrar in Bankruptcy a declaration of his or her intention to present a debtor’s petition, the declaration being in accordance with the prescribed form. Rule 19A prescribes Form 7B as the form of declaration.

Subrule 19B(1) provides that where the Registrar accepts a declaration of intention to present a debtor’s petition from a debtor, the Registrar shall give a signed and sealed copy of the declaration to the debtor. Under the pre-bankruptcy moratorium in the Act, the debtor must produce the signed and sealed copy of the declaration to a creditor in order to obtain the benefit of the limited stay on enforcement action. Subparagraph 54C(a)(ii) of the Act requires the Registrar to sign and seal a declaration which he or she accepts. Subrule 19B(2) prescribes the form of seal to be used by the Registrar in sealing copies of declarations. The seal is in the form of 2 concentric circles with the words ‘Commonwealth of Australia - Registrar in Bankruptcy’ inscribed in the inner circle.

Rule 2

Rule 31A of the Bankruptcy Rules requires a registered trustee who has prepared and filed with the Registrar a report on an investigation of a bankrupt’s affairs to send a copy of the report to the Official Receiver. The obligation to prepare and file the report was contained in paragraph 19(1)(c) of the Act. After the commencement of the Amendment Act, the reporting requirement will be set out in subsection 19AA(2) of the Act. The amendment to rule 31A made by rule 2 is consequential upon this amendment to the Act.


Rule 3

Rule 3 amends Schedule 1 of the Bankruptcy Rules by inserting Form 7B which is the prescribed form of declaration of intention by a debtor to present a debtor’s petition under rule 19A of the Bankruptcy Rules as inserted by rule 1 of these rules.

Rule 4

Section 19 of the Act as in force immediately before the commencement of the Amendment Act will continue to apply in relation to bankruptcies in respect of which the date of bankruptcy occurred before the date of that commencement. The new section 19AA applies only in relation to bankruptcies occurring after the date of its commencement. Rule 4 mirrors this arrangement in relation to the amendment to rule 31A of the Bankruptcy Rules made by rule 3 of these rules, so that rule 31A as in force immediately before the commencement of these rules will continue to apply in relation to bankruptcies in respect of which the date of bankruptcy occurred before that commencement.

Schedule

The Schedule to the rules contains Form 7B, the form of declaration of intention to present a debtor’s petition, inserted into Schedule 1 of the Bankruptcy Rules by rule 3 of these rules.

Authorised by the Minister for Consumer Affairs

Overview

The Bankruptcy Rules Amendment Statutory Rules 1988 No. 342 were enacted to address the need for a clear and formalised procedure for debtors contemplating voluntary bankruptcy to consider alternatives to sequestration. This was achieved through the introduction of a seven-day pre-bankruptcy moratorium period by the Bankruptcy Amendment Act 1987. The moratorium allows debtors to halt enforcement actions by creditors for a limited time, thereby providing them with the opportunity to explore other options such as debt arrangements without sequestration. The Bankruptcy Rules Amendment Statutory Rules 1988 were made pursuant to the Acts Interpretation Act 1901 and came into effect on 3 January 1989, aligning with the commencement of the relevant provisions of the Amendment Act. The primary policy objective is to ensure that debtors have sufficient time and information to make informed decisions about their financial futures, potentially avoiding the more drastic step of bankruptcy.

Scope and Application

The Bankruptcy Rules Amendment Statutory Rules 1988 No. 342 amends the Bankruptcy Rules to implement a procedure for a debtor contemplating voluntary bankruptcy to utilise an optional seven-day pre-bankruptcy moratorium period, introduced by the Bankruptcy Amendment Act 1987. This provision allows debtors to present a declaration of intention to a Registrar in Bankruptcy, who may accept it and thereby stay creditors from enforcement action for seven days. This period provides debtors with the opportunity to explore alternatives to bankruptcy, such as arrangements under Part X of the Bankruptcy Act 1966. The rules detail the form of the declaration and the seal to be used by the Registrar. Additionally, the rules amend rule 31A of the Bankruptcy Rules to reflect changes to the investigatory powers of trustees and Official Receivers in relation to bankrupts, as defined in the new section 19AA of the Act. These rules apply to bankruptcies occurring after the commencement of the relevant provisions of the Amendment Act on 3 January 1989, and they are made pursuant to subsection 4(1) of the Acts Interpretation Act 1901.

Key Provisions

The operative sections of these rules (Bankruptcy Rules Amendment Statutory Rules No. 342 of 1988) primarily concern the establishment of a pre-bankruptcy moratorium and the amendment of investigatory powers under the Bankruptcy Act 1966 (the Act). Section 54A of the Act allows a debtor to present a declaration of intention to the Registrar in Bankruptcy, which must be in the prescribed form as per rule 19A (Rule 1). When the Registrar accepts the declaration, they must provide the debtor with a signed and sealed copy, which is necessary for the enforcement stay under section 54C of the Act (Rule 19B(1) and (2)). These rules also modify the investigatory powers of trustees and Official Receivers by updating the reference from section 19 of the Act to section 19AA (Rule 2). These rules impose several obligations on the parties they govern. A debtor contemplating bankruptcy must present a declaration of intention to the Registrar in Bankruptcy, ensuring it is in the prescribed form (Form 7B) (Rule 1). The Registrar, upon accepting the declaration, must sign and seal a copy and provide it to the debtor (Rule 19B(1) and (2)). Trustees and Official Receivers must adhere to the updated investigatory powers as set out in section 19AA of the Act, which includes the obligation to prepare and file a report on the investigation of a bankrupt’s affairs (Rule 2). Additionally, registered trustees must send a copy of this report to the Official Receiver (Rule 31A). There are no explicit offences or penalties mentioned in these rules themselves, but any failure to comply with the prescribed procedures or the obligations outlined in the Act may lead to legal consequences. For example, if a debtor does not present the required declaration in the correct form, they may not be granted the pre-bankruptcy moratorium, thus not halting enforcement actions as intended. Similarly, if a trustee or Official Receiver fails to adhere to the investigatory powers and reporting obligations, they could face legal repercussions. The penalties for such breaches would be determined by the Bankruptcy Act and any other applicable legislation, rather than these specific rules.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.