Who administers the bankruptcy law

 

Bankruptcy law operates in all Australian states and territories. The Bankruptcy Act creates the roles of Inspector-General in Bankruptcy, Official Receiver and Official Trustee in Bankruptcy. The Australian Financial Security Authority (AFSA) undertakes each of these roles.

The Bankruptcy Act is a Commonwealth Act; therefore it applies in all states and territories. The relevant courts are the Federal Court (General Division) and the Federal Circuit Court. The Family Court of Australia also has jurisdiction under the Bankruptcy Act where the trustee is a party to family law property or spousal maintenance proceedings. Furthermore, both the Federal Court and the Federal Circuit Court are empowered to transfer proceedings to the Family Court under the Bankruptcy Act (ss 35, 35A).

Federal Court of Australia

Owen Dixon Commonwealth Law Courts Building, 305 William Street, Melbourne Vic 3000

Tel: 8600 3333

Email: vicreg@fedcourt.gov.au

Web: www.fedcourt.gov.au

Federal Circuit Court of Australia

Owen Dixon Commonwealth Law Courts Building, 305 William Street, Melbourne Vic 3000

Tel: 8600 3333

Email: vicreg@fedcourt.gov.au

Web: www.federalcircuitcourt.gov.au

The Bankruptcy Act creates the roles of Inspector-General in Bankruptcy, Official Receiver and Official Trustee in Bankruptcy. The Australian Financial Security Authority (AFSA) undertakes each of these roles. When a person becomes bankrupt all their “divisible property” (seeDivisible property”) vests in (ownership rights are moved to) the Official Trustee in Bankruptcy or in the registered trustee if there is a private trustee. The trustee can require a bankrupt to provide all financial documents and any other information relevant to the bankruptcy. The trustee might require the bankrupt to hand over their passport. A trustee in bankruptcy also has the power to:

investigate the conduct and dealings of the bankrupt and the reason for bankruptcy; and

seize and sell certain assets and distribute the proceeds.

AFSA in its role as the Official Trustee in Bankruptcy is the trustee of around 80% of bankruptcies, the remainder are under the control of private registered trustees.

Australian Financial Security Authority (AFSA)

GPO Box 2851, Melbourne Vic 3001

Tel: 1300 364 785

Web: www.afsa.gov.au

The AFSA website is very useful: it includes legislation, statutory forms, indexable amounts, statistics and comment on recent events.

AFSA as trustee vs a private trustee

A non-business bankrupt with no assets who has bankrupted via a debtor’s petition usually has AFSA as their trustee rather than having a private registered trustee.

A private registered trustee usually becomes trustee at the request of a petitioning creditor or debtor before the debtor becomes bankrupt. In some cases the creditor can ask for a private registered trustee to replace AFSA as the trustee after the debtor becomes bankrupt (ss 156A, 157).

For bankruptcies entered into after 1 December 2010 private trustees can (and usually do) charge a bankrupt a minimum administration fee of $5,000 (indexed). However private trustees can only recover this fee if there are any funds in the bankrupt estate.

Complaints about independent trustees

Anybody with a concern about a trustee or any other aspect of their bankruptcy administration can make a complaint to the Regulation and Enforcement area of AFSA, which reports directly to the Inspector-General. AFSA Regulation and Enforcement will investigate complaints against private trustees and against AFSA itself.

To lodge a complaint, visit the AFSA website and use the online enquiry/feedback/complaint form, write a letter, or telephone AFSA and ask to speak to someone in AFSA Regulation and Enforcement. (For more information on the Bankruptcy Regulation and Enforcement area and its complaints procedures, visit AFSA’s website at www.afsa.gov.au).