Explanatory Memorandum
(Circulated by authority of the Minister for Education, Training and Youth Affairs the Hon Dr David Kemp MP)Schedule 2 - Amendments relating to bankruptcy
Bankruptcy Act 1966
Add a note to subsections 82(1) and 153(1) to the effect that the operation of each section in relation to accumulated HEC debts and semester debts under the Higher Education Funding Act 1988 is affected by section 106YA of that Act.
Higher Education Funding Act 1988
Inserts a proposed new section 106YA to provide for the effects of bankruptcy on accumulated HEC debts and semester debts under the Act.
(NOTE: proposed section is abbreviated as ps)
Proposed subsection 106YA - Effect of bankruptcy
Proposed subsection106YA(1) specifies when the proposed section applies in relation to a bankruptcy.
Proposed subsection106YA(2) has the effect of providing that debts relating to the pre-bankruptcy period are provable debts for the purposes of the Bankruptcy Act 1966 . This includes the pre-bankruptcy part of the bankrupts accumulated HEC debt and the unpaid part of the semester debt, or of each of the semester debts.
Proposed subsection106YA(3) has the effect of providing that debts relating to the post-bankruptcy period are not provable debts for the purposes of the Bankruptcy Act 1966 . This includes the bankrupts accumulated HEC debt (apart from the pre-bankruptcy part of that debt) and any semester debt incurred by the bankrupt on or after the bankruptcy date.
Proposed subsection106YA(4) has the effect of providing that a dividend paid to the Commonwealth under the Bankruptcy Act 1966 in respect of the pre-bankruptcy part of the bankrupts accumulated HEC debt or a semester debt mentioned in subsection 106YA(1), is taken to be money that the bankrupt has directed to be applied in payment of that debt.
Proposed subsection106YA(5) provides that section 153 of the Bankruptcy Act 1966 does not operate to release the bankrupt from all or any part of the accumulated HEC debt or a semester debt mentioned in subsection 106YA(1).
Proposed subsection106YA(6) has the effect of providing that, if subsections 106YA(2) to (5) apply to an accumulated HEC debt (the old HEC debt) of the bankrupt (including because of a previous application of subsections 106YA(6) or (7)) and the old HEC debt is discharged under section 106O because the bankrupt incurred another accumulated HEC debt (the replacement HEC debt) under section 106N, those subsections apply (subject to any later application of subsection 106YA(6)) to the replacement HEC debt instead of the old HEC debt. A proof of debt under the Bankruptcy Act 1966 in relation to the pre-bankruptcy part of the old HEC debt (including because of a previous application of subsections 106YA(6) or (7)) is taken to relate to the pre-bankruptcy part of the replacement HEC debt to the extent of that proof. In addition, if at the time the old HEC debt is discharged under section 106O, a semester debt of the bankrupt is also discharged under that section, a proof of debt under the Bankruptcy Act 1966 in relation to the semester debt is taken to relate to the pre-bankruptcy part of the replacement HEC debt to the extent of that proof.
Proposed subsection106YA(7) has the effect of providing that, if immediately before the bankrupts bankruptcy date the bankrupt had one or more undischarged semester debts (an old semester debt), no undischarged accumulated HEC debt and on or after the bankruptcy date the unpaid part of an old semester debt is discharged under section 106O because the bankrupt incurred an accumulated HEC debt (the new HEC debt) under section 106N, then after the new HEC debt is incurred subsections 106YA(2) to (5) apply (subject to any later application of subsection 106YA(6)) to the new HEC debt instead of the old semester debt. In addition, a proof of debt under the Bankruptcy Act 1966 in relation to the old semester debt is taken to relate to the pre-bankruptcy part of the new HEC debt.
Proposed subsection106YA(8) has the effect of providing that, subject to subsection 106YA(9), the pre-bankruptcy part of a bankrupts accumulated HEC debt is the amount that would be the bankrupts relevant debt calculated in accordance with subsections 106Q(2) and (3) if that amount was calculated immediately before the bankrupts bankruptcy date and the reference in paragraph 106Q(2)(a) to the persons accumulated HEC debt referred to in paragraph 106Q(1)(b) were a reference to the persons accumulated HEC debt on the 1 June immediately preceding the bankruptcy date.
Proposed subsection106YA(9) has the effect of providing that, if immediately before the bankrupts bankruptcy date the bankrupt had one or more undischarged semester debts and at a time (the discharge time) on or after the bankruptcy date, the unpaid part of those debts (the discharged amount) was discharged because of the operation of section 106O, then if the bankrupt did not have an accumulated HEC debt immediately before the discharge time the pre-bankruptcy part of the bankrupt's accumulated HECS debt is equal to the discharged amount.. Otherwise the pre-bankruptcy part of the bankrupts accumulated HEC debt is taken to be increased at the discharge time by an amount equal to the discharged amount.
Proposed subsection106YA(10) defines certain terms used in the proposed section.
Has the effect of providing that that the amendments made by this Schedule apply to bankruptcies for which the date of the bankruptcy is on or after the day this Bill was introduced in the House of Representatives (the introduction day).
However, the amendments made by this Schedule do not apply to a bankruptcy where a declaration was presented by the debtor under section 54A and accepted under section 54C of the Bankruptcy Act 1966 on or before the introduction day and the date of the bankruptcy is after the introduction day but within 6 days after the day on which the declaration was accepted.
The amendments made by this Schedule are expressed not to affect the interpretation of the Bankruptcy Act 1966 or the Higher Education Funding Act 1988 where the date of the bankruptcy is before the introduction day.