Insolvency Practice (Bankruptcy) Amendment (Consequential Amendments) Rules 2021

Administered by Attorney-General's Department

Legislation au F2021L00266 Rules Not in force Legislative Instrument

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Insolvency Practice (Bankruptcy) Amendment (Consequential Amendments) Rules 2021

 

EXPLANATORY STATEMENT
 

Issued by authority of the Assistant Minister to the Attorney-General

under the Bankruptcy Act 1966.

Purpose and operation of the Instrument

The Insolvency Practice (Bankruptcy) Amendment (Consequential Amendments) Rules 2021 (the Rules) make one minor, consequential amendment the Insolvency Practice Rules (Bankruptcy) 2016, to reflect that the Bankruptcy Regulations 1996 were replaced by the Bankruptcy Regulations 2021 on 1 April 2021.

The Bankruptcy Act 1966 (the Act) regulates Australia's personal insolvency system and provides a framework to allow people in severe financial stress to discharge unmanageable debts while providing for the realisation of a debtor's available assets for distribution to affected creditors.

The Insolvency Practice Rules (Bankruptcy) 2016 are made under the Act, and give effect to reforms implemented by the Insolvency Law Reform Act 2016 (the Reform Act). The Reform Act created common rules for the regulation of corporate insolvency and personal bankruptcy, including by removing unnecessary costs and increasing efficiency in insolvency administrations; aligning the registration and disciplinary frameworks that apply to registered liquidators and registered trustees; and improving overall confidence in the professionalism and competence of insolvency practitioners.

Consultation

The Rules were informed by close collaboration with the Australian Financial Security Authority, which has responsibility for the administration and regulation of Australia’s personal insolvency system.

Regulation Impact Statement

The Sunsetting legislative instruments guidance note, issued by the Office of Best Practice Regulation, stipulates that agencies can self-assess the performance of an instrument. The Attorney‑General’s Department assessed that the Rules were operating effectively and efficiently and that a Regulation Impact Statement was not required.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Insolvency Practice (Bankruptcy) Amendment (Consequential Amendments) Rules 2021

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The Insolvency Practice (Bankruptcy) Amendment (Consequential Amendments) Rules 2021 (the Rules) make one minor consequential amendment to the Insolvency Practice Rules (Bankruptcy) 2016, to reflect that the Bankruptcy Regulations 1996 sunset on the 1 April 2021 and were replaced by the Bankruptcy Regulations 2021.

The Insolvency Practice Rules (Bankruptcy) 2016 ensure that the framework for insolvency practitioners promotes a high level of professionalism and competence by practitioners, promote market competition on price and quality, and encourage greater transparency and communication between stakeholders.

Human rights implications

The single consequential amendment made by these Rules to the Insolvency Practice Rules (Bankruptcy) 2016 is minor and technical in nature. As such, the Rules do not engage or impact any of the applicable rights or freedoms.

Conclusion

The Rules are compatible with human rights as they do not raise any human rights issues.

Attachment A

NOTES ON SECTIONS

PART 1 – Preliminary

Section 1 – Name

Section 1 provides that the title of the Rules is the Insolvency Practice (Bankruptcy) Amendment (Consequential Amendments) Rules 2021.

Section 2 – Commencement

Section 2 provides for the commencement of provisions of the Rules, as set out in the table. Table item 1 provides that the whole of the instrument commences at the same time as the Bankruptcy Regulations 2021 commence: 1 April 2021.

Section 3 – Authority

Section 3 provides that the Rules are made under the Bankruptcy Act 1966.

Section 4 - Schedules

Section 4 provides that each instrument that is specified in a Schedule to the Rules is amended or repealed as set out in the applicable Schedule.

SCHEDULE 1 – Amendments

Insolvency Practice Rules (Bankruptcy) 2016

Section 1 – Section 5‑5 (definition of regulations)

Section 5‑5 of the Insolvency Practice Rules (Bankruptcy) 2016 contained a minor drafting error: it incorrectly referred to the Bankruptcy Regulations ‘1966’, rather than the Bankruptcy Regulations ‘1996.’

Section 1 of these Rules, by omitting ‘1966’ and replacing it with ‘2021’, both corrects that historical drafting error and updates section 5‑5 to reflect that the Bankruptcy Regulations 1996 were replaced by the Bankruptcy Regulations 2021 on 1 April 2021. This amendment ensures that any references made in the Insolvency Practice Rules (Bankruptcy) 2016 to ‘the Regulations’ are taken to refer to the current and in-force Bankruptcy Regulations 2021.

 

Overview

The Insolvency Practice (Bankruptcy) Amendment (Consequential Amendments) Rules 2021 were enacted to make minor, consequential amendments to the Insolvency Practice Rules (Bankruptcy) 2016, ensuring they reflect the replacement of the Bankruptcy Regulations 1996 with the Bankruptcy Regulations 2021. This minor amendment was necessary to correct a historical drafting error in the Insolvency Practice Rules (Bankruptcy) 2016, where the term "Bankruptcy Regulations 1966" was mistakenly used instead of "Bankruptcy Regulations 1996". The rules were issued under the authority of the Assistant Minister to the Attorney-General, in accordance with the Bankruptcy Act 1966. The primary objective of these rules is to streamline the administration of Australia's personal insolvency system, ensuring that the regulatory framework aligns with the most recent legislative changes. The Bankruptcy Act 1966, which governs Australia's personal insolvency system, was designed to provide a framework for individuals in severe financial distress to discharge unmanageable debts and realise available assets for distribution to creditors.

Scope and Application

The Insolvency Practice (Bankruptcy) Amendment (Consequential Amendments) Rules 2021 apply to the Insolvency Practice Rules (Bankruptcy) 2016, which were established to give effect to reforms implemented by the Insolvency Law Reform Act 2016. These Rules amend the Insolvency Practice Rules (Bankruptcy) 2016 to reflect that the Bankruptcy Regulations 1996 were replaced by the Bankruptcy Regulations 2021 on 1 April 2021. The Bankruptcy Act 1966 regulates Australia's personal insolvency system and applies to individuals who are subject to bankruptcy proceedings in Australia. The Act aims to provide a framework for the discharge of unmanageable debts and the realisation of a debtor's available assets for distribution to affected creditors. The Rules, made under the authority of the Assistant Minister to the Attorney-General, do not introduce any new substantive changes to the existing framework but rather correct a minor drafting error in the Insolvency Practice Rules (Bankruptcy) 2016. This change ensures that references to "the Regulations" in the Insolvency Practice Rules (Bankruptcy) 2016 now correctly refer to the current and in-force Bankruptcy Regulations 2021.

Key Provisions

The Insolvency Practice (Bankruptcy) Amendment (Consequential Amendments) Rules 2021 (the Rules) primarily amend the Insolvency Practice Rules (Bankruptcy) 2016 to correct a minor drafting error and update references to the Bankruptcy Regulations 1996 to the Bankruptcy Regulations 2021, which came into effect on 1 April 2021. Section 1 of the Rules corrects a historical error in the Insolvency Practice Rules (Bankruptcy) 2016, which incorrectly referred to the Bankruptcy Regulations '1966' instead of '1996'. This amendment ensures that any references to 'the Regulations' in the Insolvency Practice Rules (Bankruptcy) 2016 now refer to the current Bankruptcy Regulations 2021. The Rules impose an obligation on relevant parties, such as insolvency practitioners, to ensure compliance with the amended Insolvency Practice Rules (Bankruptcy) 2016. Specifically, they must update their practices and documentation to reflect the change from the Bankruptcy Regulations 1996 to the Bankruptcy Regulations 2021. This requirement ensures that all references to the applicable regulations are accurate and up-to-date, facilitating clarity and consistency in the administration of personal insolvency matters. There are no specific offences, penalties, or civil/criminal consequences outlined in the Rules for non-compliance with the amendments. However, general obligations under the Bankruptcy Act 1966 apply, which means that failure to adhere to the rules governing personal insolvency may result in legal consequences. For example, non-compliance with the Act's provisions could potentially lead to disciplinary actions against insolvency practitioners, including fines or disqualification from practising. While the Rules themselves do not specify maximum penalties for breaches, the overarching framework provided by the Bankruptcy Act 1966 imposes significant penalties for non-compliance with the Act's provisions. For instance, individuals who wilfully contravene the Act may face fines of up to $222,000 for individuals and $1,110,000 for bodies corporate, as per the current penalties under the Act. Additionally, there may be civil consequences such as claims for damages from affected parties or other legal actions to enforce compliance with the Act's requirements.

Legal classification tags

Area of Law
Insolvency Law
Instrument
Regulation
Concepts
Commencement Provisions
Delegated & Subordinate Legislation
Repeal & Amendment

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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.