Revised Explanatory Memorandum
(Circulated by authority of the Attorney-General, the Honourable Philip Ruddock MP)Schedule 1 - Amendments relating to the interaction between family law and bankruptcy law
Part 1 - Amendments
Schedule 1 proposes amendments to both the Bankruptcy Act 1966 (the Bankruptcy Act) and the Family Law Act 1975 (the Family Law Act).
The amendments proposed in this Schedule will give the Family Court additional jurisdiction to deal with bankruptcy matters where those matters run concurrently with matters under the Family Law Act. Item 1 proposes to amend section 27 to make it clear that the Federal Court and Federal Magistrates Court do not have exclusive jurisdiction in relation to bankruptcy in such cases.
Item 2 proposes to facilitate the trustee's involvement in Family Court proceedings. This is to ensure that where bankruptcy and family law matters are running concurrently, they can be dealt with together. By virtue of proposed new section 35, the Family Court has jurisdiction in bankruptcy in relation to any matter connected with, or arising out of, the bankruptcy of the bankrupt where a party to a marriage is a bankrupt, and the trustee of the bankrupt's estate is:
- (a)
- a party to property settlement proceedings in relation to either or both of the parties to the marriage; or
- (b)
- an applicant under section 79A of the Family Law Act for the variation or setting aside of an order made under section 79 of that Act in property settlement proceedings in relation to either or both of the parties to the marriage; or
- (c)
- a party to spousal maintenance proceedings in relation to the maintenance of a party to the marriage.
Proposed subsection 35(2) provides that subsection 35(1) does not limit the Family Court's jurisdiction under section 35A. That section provides for the transfer of bankruptcy proceedings from the Federal Court to the Family Court in certain circumstances.
Proposed subsection 35(3) provides that 'property settlement proceedings' has the same meaning as in the Family Law Act and that 'spousal maintenance proceedings' means proceedings under the Family Law Act with respect to the maintenance of a party to a marriage.
Item 3 proposes to insert new section 59A. This proposed new section provides that sections 58 and 59, dealing with the vesting of property upon bankruptcy and in a second or subsequent bankruptcy respectively, have effect subject to an order under Part VIII of the Family Law Act (which deals with property, spousal maintenance and maintenance agreements).
Item 4: Paragraph 116(2)(n) and Item 5: Paragraph 116(2)(p)
Items 4 and 5 are proposed technical amendments relating to Item 6.
Item 6: At the end of subsection 116(2)
Item 6 proposes to insert new paragraph 116(2)(q). The effect of this proposed amendment is that property will not be divisible amongst creditors of the bankrupt where the trustee is required to transfer such property to the spouse of the bankrupt under an order under Part VIII of the Family Law Act.
Item 6A: At the end of section 121
Item 6A was inserted in the Bill as a result of an amendment moved by the Opposition and passed in the Senate. Item 6A proposes to insert new section 121A in the Bankruptcy Act. These amendments would establish a rebuttable presumption of insolvency in two circumstances - firstly, where a bankrupt has made a transfer of property while they have an outstanding tax return, and secondly, where the bankrupt has made a transfer of property and has failed to keep adequate books, accounts and records for the purposes of section 270 of the Bankruptcy Act.
Item 7: At the end of section 140
Item 7 proposes to insert new subsection 140(11). By virtue of this proposed amendment, the declaration and distribution of dividends will be subject to any interlocutory injunction under section 114 of the Family Law Act (refer item 59).
Item 8: At the end of section 161
Item 8 inserts new subsections (3) and (4) in section 161, to deal with the impact on proceedings under the Family Law Act where a trustee who is party to those proceedings ceases to be the trustee and is replaced by another person. Proposed new subsection 161(3) provides that section 161 of the Bankruptcy Act (dealing with the circumstances where a trustee may act in the official name of trustee), applies to proceedings under the Family Law Act in a corresponding way to the way it applies to a suit. Proposed new subsection 161(4) provides that where a trustee (the first trustee) who is a party to proceedings under the Family Law Act ceases to be the trustee of the bankrupt's estate and another person becomes the first trustee's successor in office (the second trustee), the second trustee will be substituted for the first trustee in the relevant proceedings. This is to ensure that proceedings are not interrupted where there is a change of trustee.
Item 9 would introduce a new definition in subsection 4(1) of what is a bankruptcy trustee. The bankruptcy trustee, in relation to a bankrupt, means the trustee of the bankrupt's estate.
Item 10 proposes to insert a definition in subsection 4(1) of what is meant by a debtor subject to a personal insolvency agreement. This definition refers to the new section 5 of the Family Law Act which is inserted by item 18.
Item 11: Subsection 4(1) (after paragraph (c) of the definition of matrimonial cause )
Item 11 proposes to insert a new paragraph (caa) in the definition of matrimonial cause. The new paragraph expands the definition, the effect of which is that a court can deal with a matrimonial cause which is proceedings between a party to a marriage and the bankruptcy trustee with respect to the maintenance of that party.
Item 12: Subsection 4(1) (after paragraph (ca) of the definition of matrimonial cause)
Item 12 would insert a new paragraph (cb) in the definition of matrimonial cause to include proceedings between a party to a marriage and the bankruptcy trustee with respect to the vested bankruptcy property (defined in item 17) of the bankrupt spouse.
Item 13 proposes to insert a new definition of personal insolvency agreement. This definition provides a cross-reference to the Bankruptcy Act which contains the relevant operative provisions. Such agreements would be recognised for the first time in the Family Law Act as a result of these proposed amendments. Personal insolvency agreements are agreements entered into by a debtor and creditors. This is different from when the debtor becomes a bankrupt. These agreements are dealt with under Part X of the Bankruptcy Act.
Item 14 proposes to insert a definition in subsection 4(1) of property settlement proceedings. Under the proposed amendment it is defined as proceedings with respect to the property of the parties to the marriage or with respect to vested bankruptcy property (this is defined in item 17 as 'property of the bankrupt that has vested in the bankruptcy trustee under the Bankruptcy Act') in relation to a bankrupt party to a marriage.
Item 15: Subsection 4(1) (after paragraph (a) of the definition of property settlement or spousal maintenance proceedings )
Item 15 would insert a new paragraph (aa) in the definition of property settlement and spousal maintenance proceedings to include vested bankruptcy property in relation to a bankrupt party to a marriage.
Item 16 proposes to insert a definition of trustee, in relation to a personal insolvency agreement, which provides that it has the same meaning as in the Bankruptcy Act.
Item 17 proposes to insert a new definition of vested bankruptcy property. This concept means property of the bankrupt that has vested in the bankruptcy trustee under the Bankruptcy Act. The definition also provides that, when determining whether the bankrupt spouse's property has vested in the bankruptcy trustee, property has the same meaning as in the Bankruptcy Act.
Item 18 would insert a new section 5 after section 4A which defines what a debtor subject to a personal insolvency agreement is. The proposed section provides that a person is a debtor subject to a personal insolvency agreement under the Family Law Act if a debtor executes a personal insolvency agreement and that agreement has not ended. Personal insolvency agreements are dealt with in Part X of the Bankruptcy Act.
Item 19: Subsections 44(3), (3A) and (3B)
Item 19 would amend subsections 44(3), (3A) and (3B) to substitute reference to "(ca)" with "(caa), (ca) or (cb)". Paragraphs 4(1)(caa) (refer item 11) and (cb) (refer item 12) are new paragraphs in the definition of matrimonial cause which are inserted by this Bill.
Item 20: After subsection 45(1)
Item 20 proposes to insert a new subsection (1A) in section 45 which is intended to extend a court's power to stay or transfer proceedings where a bankruptcy trustee applies for an order under section 139A of the Bankruptcy Act. Proceedings relating to that application are taken to be proceedings in relation to the marriage.
Item 21: At the end of section 71A
Item 21 proposes to add a new subsection (2) to section 71A to make clear that the amendments contained in this Bill to various sections in Part VIII of the Family Law Act are to apply to proceedings under the new proposed paragraphs 4(1)(caa) and (cb) in the definition of matrimonial cause, notwithstanding the provisions of Part VIIIA of the Family Law Act dealing with financial agreements. This means that it is not possible for parties to use a binding financial agreement relating to property or financial resources that is the subject of those proceedings to prevent a court dealing with that property or financial resource in accordance with these amendments.
Item 22: At the end of section 72
Item 22 would add a new subsection (2) to section 72 providing that the liability of a bankrupt party to a marriage to maintain the other party may be satisfied, in whole or in part, by way of transfer of vested bankruptcy property in relation to the bankrupt party if the court makes an order under Part VIII of the Family Law Act.
Item 23: At the end of section 74
Item 23 proposes to amend section 74 which provides a court with the power to make spousal maintenance orders. Proposed new subsection (2) provides that the bankruptcy trustee must be joined as a party to the proceeding where the court is satisfied that the interests of the bankrupt's creditors may be affected by an order and the application for spousal maintenance was made whilst the party was a bankrupt or the party became a bankrupt after the application was made but before the proceedings were finally determined. The bankruptcy trustee must apply to become a party before the court can join the trustee as a party.
Proposed new subsection 74(3) provides that if the bankruptcy trustee is joined as a party under subsection (2) then the bankrupt is not entitled to make submissions to the court in the course of the spousal maintenance proceedings in connection with any of the vested bankruptcy property, except with the leave of the court. The reason for this is that the property that used to belong to the bankrupt has vested in the bankruptcy trustee in accordance with the Bankruptcy Act. It is therefore appropriate that the bankruptcy trustee make submissions to the court rather than the bankrupt. Proposed subsection (4) provides that the court may only grant leave to the bankrupt under subsection (3) to make submissions where there are exceptional circumstances, which would typically arise when the bankrupt has exclusive knowledge of facts or matters that are relevant to the proceedings.
Proposed new subsection (5) deals with a situation in which one of the parties to spousal maintenance proceedings is a debtor subject to a personal insolvency agreement. This subsection provides that a court must join the trustee of the agreement as a party to the proceedings where the trustee applies to be joined and where the court is satisfied that the interests of the debtor's creditors may be affected and: (a) when the application was made for an order under section 74, the party was a debtor subject to a personal insolvency agreement or (b) the party became a debtor after application was made but before it was finally determined. The new subsections (6) and (7) mirror the effect of subsections (3) and (4) in relation to debtors who are subject to personal insolvency agreements.
Proposed new subsection (8) states that an application for an order for spousal maintenance is taken to be finally determined for the purposes of subsections (2) and (5) when: (a) the application is withdrawn or dismissed or (b) an order (other than an interim order) is made as a result of the application.
Item 24: After paragraph 75(2)(h)
Item 24 would insert a new paragraph (ha) after paragraph 75(2)(h). This provides that a court making an order under section 74 (relating to spousal maintenance) must consider the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debts. This is intended to require the court specifically to consider any monies owed by a party to a creditor that the party has disclosed to the court in the proceedings, and the impact of any proposed spousal maintenance order on the ability of the creditor to recover any such debt.
By virtue of paragraph 79(4)(e), the matters referred to in subsection 75(2) are also matters that the court is required to take into account, so far as they are relevant, in considering what property adjustment order should be made under section 79. The matters mentioned in paragraph 75(2)(ha) will therefore become matters to be taken into account in family property proceedings, so far as those matters are relevant to the property proceedings.
Item 25: At the end of paragraph 75(2)(n)
Item 25 proposes to amend paragraph 75(2)(n) to require a court to consider, before making orders for spousal maintenance as well as any order made or proposed to be made under section 79 in relation to the property of the parties as is currently the case, to also consider any order made in relation to vested bankruptcy property of the bankrupt spouse.
Item 26: At the end of section 75
Item 26 proposes to insert a new subsection (4) in section 75 to clarify that reference to a party for the purposes of the section means a party to the marriage concerned and does not include a bankruptcy trustee or trustee of a personal insolvency agreement.
Item 27 proposes to amend subsection 79(1). Paragraph (a) replicates the existing law. Paragraph (b) provides that a court can alter the interests of the bankruptcy trustee in the vested bankruptcy property. Paragraphs (c) and (d) largely replicate the existing law, although a new paragraph (d)(ii) provides that a court can make an order against the relevant bankruptcy trustee (if any) to make such settlement or transfer of property as the court determines for the benefit of either party to the marriage, or child of the marriage.
Item 28 would amend subsection 79(1A) to refer to the new definition of property settlement proceedings (refer item 14) which includes proceedings with respect to vested bankruptcy property.
Item 29 proposes to amend subsection 79(1A) to make clear that an order made under subsection (1) may be enforced after the death of a party to the marriage. It is appropriate to omit 'party to the proceedings' because, under these amendments, a bankruptcy trustee could be a party. The Bankruptcy Act deals with the position of a bankruptcy trustee who dies.
Item 30 would amend subsection 79(1B) to refer to the expanded definition of property settlement proceedings (refer item 14) which includes proceedings with respect to vested bankruptcy property.
Item 31 proposes to amend subsection 79(1B) to omit 'parties to the proceedings' and replace (wherever occurring) with 'parties to the marriage' because under these amendments, a bankruptcy trustee could be a party and the proceedings referred to in paragraphs (a), (b) and (c) of the subsection are intended to apply only to parties to a marriage.
Item 32 proposes to amend subsection 79(1C) to refer to the expanded definition of property settlement proceedings (refer item 14) which includes proceedings with respect to vested bankruptcy property.
Item 33 would narrow the reference in paragraph 79(1C)(a) to 'the parties to the marriage' because a bankruptcy trustee would not be a party to proceedings for principal relief (or divorce and validity of marriage proceedings).
Item 34 proposes to narrow the reference in paragraph 79(1C)(c) to the parties 'to the marriage' because a bankruptcy trustee would not be a party to proceedings for a legal separation under a law of an overseas country.
Item 35 would expand the reference in subsection 79(1C) to 'a party' to provide a neutral reference to a party to proceedings. This is to allow for the possibility that a bankruptcy trustee maybe a party to proceedings.
Item 36 would amend subsection 79(4) so that it refers to the concept of property settlement proceedings, which is defined at item 14.
Item 37: At the end of paragraphs 79(4)(a), (b), (c), (d) and (e)
Item 37 proposes to add 'and' at the end of paragraphs 79(4)(a), (b), (c), (d) and (e) to make clear that these paragraphs are to be considered conjunctively.
Item 38 proposes to amend subsection 79(5) so that it refers to the concept of property settlement proceedings, which is defined at item 14.
Item 39 proposes to insert a new paragraph 79(5)(b). The new paragraph is a restructured version of the old paragraph, but contains new references in subparagraphs (ii) and (iv) to the vested bankruptcy property in relation to a bankrupt party to the marriage.
Item 40 would insert a reference to the relevant bankruptcy trustee (if any) in subsection 79(5) to make clear that he or she may be a party to an application under section 79 and thus have standing, alongside either party to the marriage, to seek an adjournment.
Item 41 would insert a reference to the relevant bankruptcy trustee in subsection 79(5) to make clear that he or she may be a party to an application under section 79 and thus have standing, alongside either party to the marriage, to seek an adjournment.
Item 42 proposes to add the concept of vested bankruptcy property as being a category of property about which a court may make interim orders under subsection 79(6).
Item 43 would amend subsection 79(8) so that it refers to the concept of property settlement proceedings, which is defined at item 14.
Item 44 proposes to amend subsection 79(8) to make clear that it applies to a party to a marriage, and not more generally to a party to the proceedings which could include a bankruptcy trustee.
Item 45 proposes to add the concept of vested bankruptcy property to subsection 79(8) as being a category of property about which a court may make orders where one of the parties to a marriage dies before property settlement proceedings are completed.
Item 46 would amend subsection 79(9) so that it refers to the concept of property settlement proceedings, which is defined at item 14.
Item 47: At the end of section 79
Item 47 proposes to insert new subsections (11) to (17) after section 79. These amendments provide the circumstances for the bankruptcy trustee or the trustee of a personal insolvency agreement to be made a party to proceedings to alter property interests under the Family Law Act where a party to the marriage is bankrupt. The effect of this is that the bankruptcy trustee or trustee of a personal insolvency agreement steps into the shoes of the bankrupt spouse in making submissions to the court about vested bankruptcy property. Where the bankrupt trustee has become a party the bankrupt spouse can only make submissions in relation to this property in exceptional circumstances. This reflects the reality that the bankrupt spouse no longer has ownership of property that has vested in the bankruptcy trustee or trustee of a personal insolvency agreement.
The proposed new subsection 79(11) provides that the bankruptcy trustee must be joined as a party to the proceeding upon application by the bankruptcy trustee where the court is satisfied that the interests of the bankrupt's creditors may be affected by an order and the application was made whilst the party was a bankrupt or the party became a bankrupt after the application was made but before the proceedings were finally determined.
Proposed subsection 79(12) provides that if the bankruptcy trustee is joined as a party under subsection (11) then the bankrupt is not entitled to make submissions to the court in the course of the property proceedings in connection with any of the vested bankruptcy property, except with the leave of the court. The reason for this is that the property that used to belong to the bankrupt has vested in the bankruptcy trustee in accordance with the Bankruptcy Act. It is therefore appropriate that the bankruptcy trustee make submissions to the court rather than the bankrupt. Proposed subsection 79(13) provides that the court may only grant leave under subsection (12) where there are exceptional circumstances, which would typically arise when the bankrupt has exclusive knowledge of facts or matters that are relevant to the proceedings.
The proposed new subsections 79(14) to (16) mirror the provisions described above in relation to debtors who are subject to personal insolvency agreements.
Proposed subsection 79(17) provides a meaning of what is an application which is finally determined for the purposes of the new subsections (11) and (14), which is the same meaning as item 23.
Item 48: Subsections 79A(1) and (1A)
Item 48 would amend subsections 79A(1) and (1A) so that they refer to the concept of property settlement proceedings, which is defined at item 14.
Item 49 proposes to amend subsection 79A(1B) to make clear that the reference to the death of a party to the proceedings is a reference only to the parties to the marriage and does not include a reference to the bankruptcy trustee.
Item 50 proposes to amend subsection 79A(1C) to make clear that the reference to the death of a party to the proceedings is a reference only to the parties to the marriage and does not include a reference to the bankruptcy trustee.
Item 51: At the end of section 79A
Item 51 proposes to insert new subsections (5) to (7) in section 79A. Proposed subsection (5) makes clear that a bankruptcy trustee is a person whose interests are affected by an order under section 79 where either a party to the marriage was a bankrupt at the time the order was made, or the party became a bankrupt after the order was made. On establishing this, the bankruptcy trustee will have standing under section 79A to make an application to the court to vary the order, set aside the order or make another order.
Proposed subsection (6) makes clear that the bankruptcy trustee is a person whose interests are affected by an order under section 79 where (a) a party is bankrupt and (b) the order was made with respect to vested bankruptcy property. On establishing this, the bankruptcy trustee will have standing under section 79A to make an application to the court to vary the order, set aside the order or make another order.
Proposed subsection (7) replicates the effect of subsections (5) and (6) in relation to debtors subject to a personal insolvency agreement. This subsection gives the trustee standing to make an application to the court to vary the order, set aside the order or make another order.
Item 52 proposes to insert 3 new notification sections: section 79G, section 79H and section 79J.
Proposed subsection 79G(1) provides that the Rules of Court for courts exercising jurisdiction under these provisions (called the 'applicable Rules of Court' and defined in section 4 of the Family Law Act) may make provision for a bankrupt who becomes a party to a proceeding for an application under section 74 (power of court in spousal maintenance proceedings), section 78 (declaration of interests in property), section 79 (alternation of property interests) or section 79A (setting aside of orders altering property interests) to give notice of the application to the bankruptcy trustee.
Similarly, proposed subsection (2) provides that the applicable Rules of Court may also make provision for a debtor subject to a personal insolvency agreement who becomes party to a proceeding for an application under section 74, 78, 79 or 79A to give notice of the application to the trustee of the agreement.
Proposed section 79H provides that the applicable Rules of Court may make provision to notify a court exercising jurisdiction under the Family Law Act that a person has become a bankrupt (subsection (1)) or where a person has become a debtor subject to a personal insolvency agreement (subsection (2)).
The circumstances in which the bankrupt or debtor subject to the personal insolvency agreement may be required by the applicable Rules of Court to notify the court is where that person:
- (a)
- is a party to a marriage, and
- (b)
- is a party to a proceeding for an application under section 74, 78, 79 or 79A, and
- (c)
- becomes a bankrupt or debtor subject to a personal insolvency agreement before that application is finally determined.
Proposed subsection (3) provides that the applicable Rules of Court may make provision for notification where a person who is a party to a marriage and is a party to proceedings for an application under section 74, 78, 79 or 79A and before the application is finally determined, becomes a party to a proceeding before the Federal Court or the Federal Magistrates Court under the Bankruptcy Act that relates to the bankruptcy of the person or the person's capacity as a debtor subject to a personal insolvency agreement. The applicable Rules of Court may provide that person must notify a court exercising jurisdiction under the Family Law Act of those proceedings.
Proposed subsection (4) provides that the applicable Rules of Court may make provision for the bankruptcy trustee of a bankrupt party to a marriage to notify a court exercising jurisdiction under the Family Law Act of the making of an application under section 139A of the Bankruptcy Act.
Proposed subsection (5) defines 'finally determined' for the purposes of this section as being when the application is withdrawn or dismissed, or an order (but not an interim order) is made as a result of the application.
Proposed subsection (6) defines 'finally determined' for the purposes of this section in relation to an application for a declaration under section 78, as when the application for a declaration under section 78 is withdrawn or dismissed, or a declaration is made as a result of the application.
Proposed section 79J provides that the applicable Rules of Court may provide for a bankruptcy trustee to notify the non-bankrupt spouse about an application under section 139A of the Bankruptcy Act.
Item 53: At the end of section 80
Item 53 proposes to add in new subsections (4) - (6) to section 80. Section 80 sets out the general powers of courts exercising jurisdiction under the Family Law Act when exercising its powers under Part VIII of that Act. Paragraph 80(1)(d) provides that the court may make an order to execute any necessary deed or instrument that is necessary to carry out an order made by the court under this Part.
Proposed subsection (4) provides that if the bankruptcy trustee is a party to a proceeding before a court, a court may make an order under paragraph 80(1)(d) directed to the bankrupt.
Proposed subsection (5) provides that if the trustee of a personal insolvency agreement is a party to a proceeding before the court, the court may make an order under paragraph 80(1)(d) directed to the debtor subject to the agreement.
For the avoidance of doubt, proposed subsection (6) provides that proposed subsection (4) and (5) do not limit paragraph 80(1)(d).
Item 54 would amend subsection 83(1). Section 83 provides for the modification of spousal maintenance orders. The wording of subsection (1) is amended to reflect that this Bill provides for the bankruptcy trustee to be a party to spousal maintenance proceedings and that the proceedings may not just be between the parties to the marriage.
Item 55: After subsection 83(1)
Item 55 would insert proposed subsection 83(1A). This proposed provision sets out the circumstances in which the court's jurisdiction to modify spousal maintenance orders under subsection 83(1) may be exercised, that is:
- (a)
- in any case where there are proceedings with respect to the maintenance of a party to the marriage, or
- (b)
- on the application of the bankruptcy trustee where there is a bankrupt party to the marriage, or
- (c)
- where a party to the marriage is a debtor subject to a personal insolvency agreement - on the application of the trustee of the agreement.
Item 56 proposes to make a minor amendment to subsection 83(5A) to include the bankruptcy trustee of a party to the marriage.
Item 57: After subsection 106B(1)
Item 57 proposes to insert new subsections 106B(1A) and (1B). Section 106B currently deals with the power of the court to make orders to prevent transactions to defeat an existing or anticipated order.
Proposed subsection 106B(1A) extends the court's power where one party to the marriage is a bankrupt. It provides that where a party to a marriage is a bankrupt and the bankruptcy trustee is a party to proceedings, the court may set aside or restrain the making of an instrument or a disposition designed to defeat an existing or anticipated order (whether intentionally or not) which is made or proposed to be made by or on behalf of, or by direction or in the interest, of the bankrupt.
Similarly, proposed subsection 106B(1B) extends the court's power where one party to a marriage is a debtor subject to a personal insolvency agreement. It provides that where a party to a marriage is a debtor subject to a personal insolvency agreement and the trustee of the agreement is a party to proceedings, the court may set aside or restrain the making of an instrument or disposition to defeat an existing or anticipated order (whether intentionally or not) which is made by or on behalf of, or by direction or in the interest of, the debtor.
Item 58 is a technical amendment to subsection 106B(2) consequent on the inclusion of new subsections 106B(1A) and 106B(1B) by item 57.
Item 59: At the end of section 114
Item 59 would insert new subsections 114(4) to (7). Section 114 deals with injunctions. These provisions deal with the court's power to grant injunctions to prevent the distribution of dividends amongst a bankrupt's creditors and to restrain the trustee of a personal insolvency agreement disposing of property subject to that agreement.
Proposed subsection (4) provides that where a party to a marriage is a bankrupt, a court may, on the application of the other party to the marriage, grant an injunction under subsection (3) restraining the bankruptcy trustee from declaring and distributing dividends amongst the bankrupt's creditors.
For the avoidance of doubt, proposed subsection (5) provides that new subsection (4) does not limit subsection (3).
Proposed subsection (6) provides that where a party to a marriage is a debtor subject to a personal insolvency agreement, a court may on the application of the other party to the marriage grant an injunction restraining the trustee of the agreement from disposing of property subject to the agreement.
For the avoidance of doubt, proposed subsection (7) provides that new subsection (6) does not limit subsection (3).
Part 2 - Application provisions
Item 60: Application of amendments
Item 60 sets out when the proposed amendments made by this Schedule apply.
Generally, the proposed amendments apply to bankruptcies for which the date of the bankruptcy is after the commencement of the item. The exceptions to this rule are set out in sub items (2) and (3). The proposed amendments apply to personal insolvency agreements executed before, at or after the commencement of the Bill. But as is the case with sub items (2) and (3) in relation to bankruptcies the amendments will only apply where the family law proceedings are commenced after commencement of the Bill. This will allow the bankruptcy and family law proceedings to be brought together which is the intention of the Bill.
Sub item (2) provides that for the provisions set out in the sub item (which relate to spousal maintenance), they apply to family law proceedings instituted after the commencement of the item, whether the date of the bankruptcy is before, on or after the date of commencement of the item. This is appropriate given the intention of the provision is to allow bankruptcy and family law proceedings to be brought together so that all issues can be dealt with at the same time.
Sub item (3) provides that for the provisions set out in the sub item (which relate to joining the bankruptcy trustee as a party to proceedings for alteration of property interests under section 79), they apply to family law proceedings instituted after the commencement of the item, whether the date of the bankruptcy is before, on or after the date of the commencement of the item. This is appropriate given the intention of the provision is to allow bankruptcy and family law proceedings to be brought together so that all issues can be dealt with at the same time.