House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Small Business, Assistant Treasurer, the Hon Kelly O'Dwyer MP and the Attorney-General, the Hon Senator George Brandis)

Chapter 1 - Introduction - Insolvency Practice Schedule (Bankruptcy)

Outline of chapter

1.1 Schedule 1 to this Bill inserts the Insolvency Practice Schedule (Bankruptcy) (the Schedule) as Schedule 2, to the Bankruptcy Act.

1.2 Part 1 of the Schedule contains an Introduction to the Schedule which sets out the object of the Schedule, a simplified outline of the Schedule and the Dictionary of definitions.

Context of amendments

1.3 Two of the key objectives of the Bill are to align and modernise the registration and disciplinary frameworks that apply to registered liquidators and registered trustees and also to align and modernise a range of specific rules relating to the handling of corporate external administrations and personal bankruptcy. This is achieved by introducing new Schedules into the Bankruptcy Act and the Corporations Act containing common rules in relation to these subject matters.

Summary of new law

1.4 The Schedule has three objectives:

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to ensure that any person registered as a trustee:

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has an appropriate level of expertise;

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behaves ethically; and

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maintains sufficient insurance to cover his or her liabilities in practising as a registered trustee;

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to ensure that the Inspector-General has the necessary powers to protect the integrity of the personal insolvency system; and

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to regulate the administration of bankruptcies and personal insolvency agreements to give greater control to creditors.

Comparison of key features of new law and current law

Detailed explanation of new law

1.5 A new section 4A is inserted into the Bankruptcy Act. The new section provides that the Insolvency Practice Schedule (Bankruptcy) (the Schedule) has effect. [Schedule 1, Part 1, item 1]

1.6 The Insolvency Practice Schedule (Bankruptcy) (the Schedule) is inserted into the Bankruptcy Act. [Schedule 1, Part 1, item 2]

1.7 The Dictionary defines terms used in the Schedule. In some cases, the definition is a signpost to another provision in the Schedule in which the meaning of the term is explained. [Schedule 1, Part 1, Division 2, Subdivision B, section 5-5]

1.8 Subdivision C of Division 2 defines: current conditions, regulated debtor, regulated debtor's estate, meaning of trustee of a regulated debtor's estate and references to the trustee of a regulated debtor's estate. [Schedule 1, Part 1, Division 2, Subdivision C, section 5-10, 5-15, 5-16, 5-20 and 5-25]

1.9 Subdivision C of Division 2 also provides a definition for the end of an administration of a regulated debtor's estate. This definition specifies when administration of a bankruptcy ends (that is, the date of discharge or annulment, whichever happens first) and where administrations under Part X and Part XI of the Bankruptcy Act end (that is, three years after the insolvency agreement took effect or the administration is taken to have commenced under section 247A). The end of administration triggers the retention period for books relating to the administration of the estate for the purposes of section 70-35. This definition for the end of administration is not intended to prevent a trustee from continuing to work on the administration of the bankruptcy after annulment or discharge, where necessary. [Schedule 1, Part 1, Division 2, Subdivision C, section 5-5 and Division 70, Subdivision C, section 70-35]

1.10 The Schedule refers to people with a financial interest in the administration of a regulated debtor's estate and provides a power for such persons to apply to the Court in relation to that administration. The Dictionary at section 5-5 signposts the definition financial interest, which is at section 5-30. It provides that such persons include: the regulated debtor, a creditor, the trustee or a person under 'any other circumstances prescribed'. Currently, there are no other prescribed circumstances under this definition. The inclusion of that phrase allows for the definition to extend to other persons, should there be a requirement in future. [Schedule 1, Part 1, Division 2, Subdivision C, section 5-5 and 5-30]

1.11 A provision of Schedule 2, does not apply to the Official Trustee unless the provision is expressed to apply to the Official Trustee. [Schedule 2, Part 1, Division 3, section 6-1]

Strict liability offences

1.12 Both Schedules create new strict liability offences and retain strict liability offences existing in the Bankruptcy Act and the Corporations Act. It is worth noting from the outset that the application of strict liability, as opposed to absolute liability, preserves the defence of honest and reasonable mistake of fact to be proved by the accused on the balance of probabilities. This defence maintains adequate checks and balances for individuals who may be accused of breaching such offences.

1.13 Strict liability offences are appropriate in this area of commercial regulation, as it is necessary to strongly deter misconduct that can have serious consequences for affected parties. Strict liability offences also reduce non-compliance, which bolsters the integrity of the regulatory regime enforced by ASIC and AFSA. Strict liability is particularly beneficial to these regulatory bodies as they need to deal with offences expeditiously to maintain public confidence in their regulatory regimes.

1.14 With the exception of section 60-21 discussed in detail below, the strict liability offences in the Bill meet all the conditions listed in the Guide to Framing Commonwealth Offences (pages 23 and 24). For example, the fines for the offences do not exceed 60 penalty units for an individual.

1.15 The majority of strict liability offences relate to conduct by an insolvency practitioner. For example, Division 65 of the Schedule provides strict liability offences around payments into and out of an administration account. By providing a strict liability enforcement regime for duties of insolvency practitioners, the Bill significantly enhances the likelihood of compliance by practitioners.

1.16 Insolvency practitioners possess statutory powers they may use with a high level of discretion in the exercise of these powers. Further, given the financial responsibilities associated with their duties, the consequences of an abuse of power can have far-reaching and significant consequences. (For example, if a practitioner were to sell off a debtor's family home to benefit themselves). As such, practitioners should be subject to a higher level of scrutiny in the performance of their duties as registered trustees and liquidators. Insolvency practitioners should, therefore, not only refrain from consciously doing wrong but actively take steps to fulfil their obligations and uphold the professional standards imposed upon them. Any changes to practitioner rules and standards do not take effect until 2017. Practitioners will, therefore, have sufficient time to familiarise themselves with any new requirements and guard against the possibility of any contravention.

1.17 Further, many of the strict liability offences relate to conduct where a requirement for proof of intention would be difficult to establish and would render the offence unenforceable. For example, where the prosecution has to prove the accused intended to refrain from paying money into the appropriate administration account when he or she failed to do so. Further, a requirement to establish intent will draw a level of resources for investigation and prosecution from the regulators that cannot always be justified, especially for offences with such a low maximum penalty.

1.18 Some strict liability offences relate to creditor conduct (such as sections 80-55 and 80-60). For example, section 80-60 makes it an offence for a creditor to directly or indirectly become the purchaser of any part of the regulated debtor's estate, subject to certain exceptions. Strict liability is only imposed on non-practitioners for more serious misconduct that may have significant consequences for innocent third parties. Such as, people who purchase the property in good faith only to have the transaction set aside by the Court.

1.19 Section 60-21 creates an offence (in personal insolvency) for a person to offer an inducement to securing the appointment or nomination of their preferred trustee. It provides that a person commits an offence of strict liability with a penalty of 50 penalty units, or 3 months imprisonment, or both. This provision, and its corresponding penalty, is modelled on section 595 of the Corporations Act. The severity of the penalty recognises the importance of appointing an impartial trustee who would have significant power to determine the outcome of an estate for creditors and for the regulated debtor. The conduct described in this offence amounts to an abuse of the insolvency process that could see favourable treatment for the creditors involved in the breach at the expense of innocent creditors. Such conduct would significantly undermine the integrity of the insolvency regime and have far-reaching consequences for insolvency practitioners, debtors, creditors and financial institutions.

Consequential amendments to the Bankruptcy Act

Definitions

1.20 A new definition of approved form is inserted under section 6D of the Schedule. The definition of 'approved form' in subsection 5(1) is accordingly repealed. [Schedule 1, Part 2, item 3]. A new definition is inserted and incorporates the existing definition in paragraph 6D(1)(a), and also provides that an 'approved form' must satisfy additional requirements under paragraphs 6D(1)(b) and (c). [Schedule 1, Part 2, item 12]

1.21 Section 185 of the Bankruptcy Act contains a definition of bank, however this only applies to debt agreements in Part IX. A new definition of 'bank' is inserted to apply to the entire Act. The definition clarifies that 'bank' includes an authorised deposit-taking institution and any other bank [Schedule 1, Part 2, item 4]. The following sections are amended to repeal existing definitions of 'bank' which currently only have limited application within various provisions of the Bankruptcy Act:

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Subsection 125(3) [Schedule 1, Part 2, item 39]

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Section 185 [Schedule 1, Part 2, item 58]

1.22 The phrase 'working day' is currently used in the Bankruptcy Act. In view of updated drafting conventions, the Schedule replaces the phrase 'working day' with 'business day'. A new definition of business day is accordingly inserted in subsection 5(1) of the Bankruptcy Act [Schedule 1, Part 2, item 5]. The following consequential changes are made to delete 'working day' and insert 'business day' throughout the Act:

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Subsection 73(1A) [Schedule 1, Part 2, item 25]

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Section 139ZIB [Schedule 1, Part 2, item 41]

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Subparagraph 139ZIE(1)(a)(i) [Schedule 1, Part 2, item 42]

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Subsection 139ZIE(5) [Schedule 1, Part 2, item 43]

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Paragraph 139ZIF(1)(a) [Schedule 1, Part 2, item 44]

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Section 185 [Schedule 1, Part 2, item 61]

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Subsections 185LB(1), 185LC(1) and 185N(5) [Schedule 1, Part 2, item 62]

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Subsection 188(5) [Schedule 1, Part 2, item 70]

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Subsection 224A(5) [Schedule 1, Part 2, item 84]

1.23 Subsection 188(5A) and a subsection 224A(6) also provide additional constraints on the definition of 'working day', so these subsections are repealed by items 72 and 86 respectively. [Schedule 1, Part 2, item 72 and 85]

1.24 A definition of Insolvency Practice Rules is inserted. [Schedule 1, Part 2, item 6]

1.25 The definition of registered trustee is updated to refer to section 5-5 of the Schedule. [Schedule 1, Part 2, item 7]

1.26 The Schedule creates a 'Register of Trustees'. A definition of Register of Trustees is accordingly inserted to refer to section 15-1 of the Schedule. [Schedule 1, Part 2, item 8].

1.27 The definition of 'resolution' is currently contained in the Bankruptcy Act, however under paragraphs 75-50(2)(k) and 75-40(5)(b), a resolution may be prescribed under the Insolvency Practice Rules. Accordingly, the existing definition of resolution in the Bankruptcy Act is repealed and replaced to reflect the scope for further prescription in the Insolvency Practice Rules. [Schedule 1, Part 2, item 9]

1.28 The definition of 'special resolution' is currently contained in the Bankruptcy Act, however under paragraphs-50(2)(k) and 75-40(5)(b), a special resolution may be prescribed under the Insolvency Practice Rules. Accordingly, the existing definition of special resolution in the Bankruptcy Act is repealed and replaced to reflect the scope for further prescription in the Insolvency Practice Rules. [Schedule 1, Part 2, item 10]

1.29 The Schedule provides the Minister with the ability to make the Insolvency Practice Rules. The Bankruptcy Act therefore must include the Insolvency Practice Rules, so the definition of this Act in subsection 5(1) is amended to refer to the Insolvency Practice Rules. [Schedule 1, Part 2, item 11]

Administration

1.30 Subsection 12(4) of the Bankruptcy Act is repealed as the Inspector-General's right to attend and participate in meetings is now contained in section 75-30 of the Schedule. [Schedule 1, Part 2, item 13]

1.31 A new subsection 12(5) is inserted which provides that the Inspector-General may disclose information obtained by the Inspector-General in the course of exercising powers or performing functions under the Bankruptcy Act to any of the following bodies, if the Inspector-General is satisfied that the information will enable or assist the body to exercise any of its powers or perform any of its functions:

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a Commonwealth entity (within the meaning of the Public Governance, Performance and Accountability Act 2013); or

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a prescribed professional disciplinary body. [Schedule 1, Part 2, item 13]

1.32 Paragraph 19(1)(d) of the Bankruptcy Act is repealed because that paragraph overlaps with the duties to provide information imposed under the Schedule (see section 70-50). [Schedule 1, Part 2, item 14]

1.33 Subsection 19(1) of the Bankruptcy Act is amended to clarify that the duties of the trustee of the estate of a bankrupt include duties imposed under the Schedule (section 70-40 of the Schedule provides that the Insolvency Practice Rules may prescribe circumstances in which it is, or is not, reasonable for a trustee to comply with a request of a kind mentioned in subsection 70-40(1)). [Schedule 1, Part 2, item 15]

1.34 Section 19B is inserted at the end of Division 1 of Part II to facilitate the Official Receiver's capacity to carry out inspections. [Schedule 1, Part 2, item 16]

Proceedings in connexion with bankruptcy

1.35 Details regarding the requirements for a resolution of creditors will now be contained in the Insolvency Practice Rules, so paragraph 40(1)(f) is amended to remove the requirement for a resolution 'of a majority of the creditors present at the meeting either in person or by attorney'. [Schedule 1, Part 2, item 17]

1.36 The reference to subsection 74(5) is repealed and replaced with subsection 74(1). This is because subsection 74(5) is being repealed and replaced by subsection 74(1). [Schedule 1, Part 2, item 18, 21 & 23]

1.37 Subsection 54(1) is amended to change the penalty units from 25 to 50 penalty units for failure to comply with subsection 54(1) of the Bankruptcy Act. Similarly, subsection 54(2) is amended to change the penalty unit amount from 5 to 50. The statement of affairs is a crucial document for the administration of a bankruptcy so it is reasonable to ensure that the penalties associated with non-compliance with subsections 54(1) and 54(2) reflect the seriousness of the offence. [Schedule 1, Part 2, item 19 and 20]

1.38 Subsection 56(1) is amended to change the penalty unit amount from 25 to 50. The statement of the member's affairs and statement of the affairs of the partnership are crucial documents. Accordingly, it is reasonable to ensure that the penalty associated with non-compliance with subsection 56F(1) reflects the seriousness of the offence. [Schedule 1, Part 2, item 223].

1.39 Divisions 5 and 5A of Part IV are repealed. This is because the substance of Division 5 has been moved to the Schedule (see section 75-50). The substance of Division 5A is reproduced in Division 80 (Committees of inspection) of the Schedule or may also be dealt with in regulations made in reliance on the regulation making power. [Schedule 1, Part 2, item 24].

1.40 Subsection 73(1B), subsections 73(2) to (5), sections 73A and 73C are repealed as the meeting rule-making powers will be used instead. The meeting rule-making powers (section 75-50) deal with the circumstances in which a meeting of the creditors may or must be called. [Schedule 1, Part 2, item 26, 27, 28 & 30]

1.41 Subsection 73B(4) is repealed as a consequence of the amendment to section 73. The requirement for a trustee to provide a declaration of relationships to creditors will be in the Insolvency Practice Rules. [Schedule 1, Part 2, Section 29]

1.42 Subsection 74(5) is amended to refer to the Insolvency Practice Rules instead of referring to subsection 73(4), which will be repealed by Schedule 1, Part 2, item 24. [Schedule 1, Part 2, item 31]

1.43 Subsection 74A(4) is amended to correct a cross-reference to section 64A in 74A(4). Subsection 74A(5) is to remain because the variation taking effect turns on the date specified in the notice of the meeting. [Schedule 1, Part 2, item 32]

1.44 The heading in section 76 of the Bankruptcy Act currently reads 'Application of Part VIII to trustee of a composition or arrangement' and is being repealed and substituted with 'Application of Part VIII and Schedule 2, to trustee of a composition or arrangement'. This amendment reflects the fact that parts of Part VIII have been replaced by the Schedule 2, of the Insolvency Law Reform Act. [Schedule 1, Part 2, item 33]

1.45 A composition or arrangement with creditors is a statutory process that is carried out under the Bankruptcy Act. Currently, there are different requirements for trustees regarding compositions and arrangements and the provisions relating to trustees apply to the extent possible. Subsection 76(1) is accordingly amended to refer to Schedule 2, which contains further detail regarding compositions and arrangements. [Schedule 1, Part 2, item 34]

1.46 Item 33 of Part 2 of the Schedule amends subsection 76(2) to include a reference to 'Schedule 2'. Part VIII is largely being replaced by the Insolvency Practice Rules, so a reference to Schedule 2, of the Insolvency Law Reform Act is necessary, as the power to make rules is contained in the Schedule. [Schedule 1, Part 2, item 35]

1.47 Section 76A is repealed. Section 76A applied Division 5 of Part IV to meetings under Division 6. The new meetings rules in Division 74 (Meetings) of the Schedule apply to all meetings of creditors in relation to a regulated debtor's estate and so section 76A is now redundant. [Schedule 1, Part 2, item 36]

Administration of property

1.48 Paragraph 109(1)(a) is amended to omit 'section 175' and substitute 'section 70-15 or section 70-20 of Schedule 2'. This is because the rules in relation to an audit under section 175 are now contained in those provisions of the Schedule. [Schedule 1, Part 2, item 37]

1.49 Subsections 109(7) to (7B) are repealed because rules in relation to meetings are now contained in section 74-40 and the relevant Insolvency Practice Rules. [Schedule 1, Part 2, item 38]

1.50 Subsection 134(4) and the accompanying note are repealed because the Court's power to make orders in relation to the administration of an estate is now contained in section 90-15 of the Schedule. [Schedule 1, Part 2, item 40]

1.51 The Insolvency Practice Rules may set the powers and duties of the Inspector-General in conducting a review of a trustee's decision and may deal with issues relating to the review process. Subsection 139ZIO(2) requires the Inspector-General to review a reviewable decision if requested to do so by the Ombudsman. Subsections 139ZIO(2A) and (2B) outline how this requirement interacts with the Insolvency Practice Rules. Subsection 139ZIO(2) is accordingly amended to ensure that the operation of that subsection is subject to subsection 139ZIO(2A). For example, where a Court is exercising its power under section 90-15 the Inspector-General may refuse the Ombudsman's request to review the decision .[Schedule 1, Part 2, item 45]

1.52 As discussed above, the Insolvency Practice Rules may set the powers and duties of the Inspector-General in conducting a review and may deal with issues relating to the review process. Subsections 139ZIO(2A) and (2B) are inserted to clarify the interaction between the Inspector-General's power to review decisions as contained in section 139ZIO and the Insolvency Practice Rules. Specifically, subsection 139ZIO(2B) extends the time for the Inspector-General to review a decision, or decide not to review the trustee's decision, for the duration of any Court proceedings under sections 45-1, 90-5, 90-10 or 90-15 of Schedule 2. [Schedule 1, Part 2, item 46]

Debt Agreements

1.53 The definition of 'externally-administered body corporate' is deleted and replaced by the label Chapter 5 body corporate under the Insolvency Law Reform Bill. Accordingly, a new definition of 'Chapter 5 body corporate' is inserted in alignment with the Corporations Act [Schedule 1, Part 2, item 59] and the definition of 'externally-administered body corporate' is repealed. [Schedule 1, Part 2, item 60]

1.54 Paragraph 186A(1)(d) of the Bankruptcy Act provides that an individual does not pass the basic eligibility test (for registration as a debt agreement administrator) if during the 10 year period beforehand, their registration as a liquidator was cancelled under subsections 1292(2) and (3) of the Corporations Act. These subsections of the Corporations Act will be repealed by item 217 of Part 2 of Schedule 2. These references have, therefore, been replaced with a general reference to cancellation of registration as a liquidator under the Corporations Act. Cancellation of registration upon request by the individual has been intentionally excluded from this general reference to avoid voluntary cancellation preventing an individual's registration under section 186. [Schedule 1, Part 2, item 63]

1.55 References to section 155I and section 155H in paragraph 186A(1)(e) are deleted because these sections will be repealed by item 47 of Part 2 of Schedule 1. Similarly to the previous paragraph, these references have been replaced with a general reference to cancellation of registration as a trustee (except where the cancellation was voluntary). [Schedule 1, Part 2, item 64]

1.56 The definition of externally-administered body corporate is deleted and replaced by the label 'Chapter 5 body corporate' under the Insolvency Law Reform Bill. Accordingly, the reference to 'externally-administered body corporate' in paragraph 186A(3)(a) is substituted with 'a Chapter 5 body corporate'. [Schedule 1, Part 2, item 65]

1.57 The following cross-references are amended as follows, as the detail contained in the proceeding cross-reference is contained in the subsequent cross-reference:

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Subparagraph 186LA(1)(b)(ii): Omit '155H(1)', substitute 'section 40-40(1) of Schedule 2' [Schedule 1, Part 2, item 66]

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Paragraph 186LA(1)(c): Omit '155H(1)(fa)', substitute 'section 40-40(1)(m) of Schedule 2' [Schedule 1, Part 2, item 67]

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Subparagraph 186LB(1)(b)(ii): Omit '155H(1)', substitute 'section 40-40(1) of Schedule 2' [Schedule 1, Part 2, item 68]

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Paragraph 186LB(1)(c): Omit '155H(1)(fa)', substitute 'section 40-40(1)(m) of Schedule 2' [Schedule 1, Part 2, item 69]

1.58 Subsections 190(4A) and (4B) are repealed because the power of the controlling trustee to apply to the Court for directions have been subsumed within section 80-40 of the Schedule (see section 5-20 which includes 'controlling trustee' in the meaning of 'trustee', and section 90-20, which allows a trustee to apply for an order under section 80-40). [Schedule 1, Part 2, item 72]

1.59 Item 73 fixes a drafting error by omitting (1). The substance of (1) remains unchanged. [Schedule 1, Part 2, item 73]

1.60 Paragraph 190A(1)(b) is repealed from the Schedule because the detail in paragraph 190A(1)(b) is now contained in section 70-40, which allows a creditor to request information from a trustee. [Schedule 1, Part 2, item 74]

1.61 Paragraph (j) is added to subsection 190A(1) to ensure that any additional duties of the controlling trustee in Schedule 2, are included within the ambit of subsection 190A(1) [Schedule 1, Part 2, item 75].

1.62 Sections 194 to 196 are repealed for the following reasons:

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Section 194 deals with the timing of meetings. This requirement may be dealt with in the Insolvency Practice Rules.

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Section 194A deals with statements of affairs and declarations to be tabled at meetings. This requirement may be dealt with in the Insolvency Practice Rules.

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Section 195 deals with the debtor's obligation to attend meetings. This requirement may be dealt with in the Insolvency Practice Rules.

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Section 196 refers to the extent to which Part IV applies. Part IV is being repealed. Section 196 deals with the procedure for calling and holding meetings. This is now contained in Division 75 of the Schedule and in the Insolvency Practice Rules. [Schedule 1, Part 2, item 76]

1.63 The reference to 'in accordance with the regulations' in subsection 217(1) is omitted because the calling of meetings will be dealt with under section 75-50 of Division 75 of the Schedule, rather than in the Bankruptcy Regulations. The power for the Insolvency Practice Rules to deal with the calling of meetings is prescribed under section 75-50. [Schedule 1, Part 2, item 77]

1.64 Section 223 prescribes the trustee's and creditors' right to call meetings. This section is being repealed, so the creditor and/or debtor's right to call a meeting is prescribed at the end of subsection 220(1). [Schedule 1, Part 2, item 78]

1.65 The cross-reference in subsection 221A(3) to section 64A is deleted as it is no longer relevant given that section 64A is being repealed and replaced by the meetings regulation-making power in section 75-50. [Schedule 1, Part 2, item 89]

1.66 The cross-reference to subsection 194A(3) in paragraph 222(5)(f) is being substituted for a reference to Division 75, and the cross-reference to subsection 194A(5) in paragraph 222(5)(h) of the Bankruptcy Act is being substituted for a reference to Division 75, because section 194A is being repealed and the details relating to meetings will be contained in Division 75 of the Schedule. [Schedule 1, Part 2, item 80 and 81]

1.67 The cross-reference in subsection 222A(2) to section 64A is omitted as it is no longer relevant given that section 64A is being repealed and replaced by the meetings regulation-making power in section 75-50. [Schedule 1, Part 2, item 82].

1.68 Sections 223 and 223A are repealed for the following reasons:

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The trustee's and creditor's right to call meeting (as contained in section 223) is now dealt with in Division 75. The creditor and/or debtor's right to call a meeting is to be prescribed at the end of subsection 220(1). [Schedule 1, Part 2, item 78]

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Section 223A deals with the extent to which Division 5 of Part IV and section 195 apply in relation to meetings. These provisions are being repealed, and meetings are instead dealt with in Division 75 of the Schedule and the Insolvency Practice Rules. [Schedule 1, Part 2, item 83]

1.69 The references to sections 70, 71 and 72 in subsection 231(3) are omitted because the sections appear in Division 5A of Part IV, which is being repealed. [Schedule 1, Part 2, item 86]

Deceased estates

1.70 Subsection 248(1) refers to Division 5 of Part IV and sections 70 to 76. Division 5 of Part IV and sections 70, 71 and 72 are being repealed, so these references are omitted. [Schedule 1, Part 2, item 87]

Offences

1.71 The definition of voting document contained in subsection 263C(2) currently refers to section 64D, which is being repealed and the substance of which is being moved into subsection 263C(2). The practical effect of the definition and section 64D remain largely the same. [Schedule 1, Part 2, item 88]

1.72 The table at subsection 277B(2) provides for the penalty amounts payable as an alternative to prosecution under infringement notices (as per subsection 277B(1)). Items 6 to 11 of the table at subsection 277B(2) are repealed because they refer to sections 155J, 168, 170A, 173, 175 and 182 (respectively) and these sections have been repealed. [Schedule 1, Part 2, item 89] Additionally, penalty amounts relating to new offences (established by the Schedule) have been added to the table at subsection 227B(2). [Schedule 1, Part 2, item 90]

Provisions relating to the Bankruptcy (Estate Charges) Act 1997

1.73 The current definition of 'trustee account' in subsection 280(5) refers to section 169 of the Bankruptcy Act. Section 169 is being repealed and the substance of this section has been moved to section 65-10. The existing definition is accordingly repealed and a new definition of trustee account is inserted which refers to section 65-10. [Schedule 1, Part 2, item 91]

1.74 Subsection 306B(1) refers to subsections 155A(6), 155F(2) and 155I(4) of the Bankruptcy Act. These subsections contain details regarding the appointment of trustees which are now contained in Division 20 (Registering trustees) of the Insolvency Law Reform Bill. The cross-references in subsection 306B(1) are updated accordingly. [Schedule 1, Part 2, item 92]

1.75 Section 312 is repealed because the details regarding the retention and return or destruction of books are now located in section 70-35 and section 70-36 [Schedule 1, Part 2, item 93]

1.76 Paragraph 315(2)(i) provides that the Bankruptcy Regulations may indicate the manner in which committees referred to in Division 1 of Part VIII are to perform their functions. This is now dealt with in section 50-20 so paragraph 315(2)(i) is repealed. [Schedule 1, Part 2, item 94]

1.77 The Register of Trustees is no longer part of the National Personal Insolvency Index so a separate reference to the Register of Trustees is inserted in subparagraphs 315(2)(j)(ii) and (iii). [Schedule 1, Part 2, item 95]

1.78 The cap in setting penalty units for breaches of offences under the Bankruptcy Regulations in paragraph 315(2)(k) are now considered inadequate. The cap is increased from 10 to 50 penalty units in the Schedule to reflect the gravity of a breach of offences under the Bankruptcy Regulations. [Schedule 1, Part 2, item 96]

1.79 Paragraph 316(1)(a) contains reference to paragraphs 154A(3)(b), 155C(1)(b) and 155D(1)(b). These paragraphs have been repealed, so the reference is now irrelevant and is accordingly removed. [Schedule 1, Part 2, item 97]

1.80 Section 316 permits the Minister to make legislative instruments determining the amounts of fees. Cross references to relevant subsections of the Schedule under which the Minister may make legislative instruments to determine fees accordingly need to be updated to refer to subsection 20-5(3), paragraph 20-30(1)(c) and subsection 20-70(3). [Schedule 1, Part 2, item 98] Consequential amendments to the Bankruptcy Estate Charges Act 1997

1.81 Subsection 5(1) of Bankruptcy (Estate Charges) Act 1997 refers to subsection 169(1B) of the Bankruptcy Act, which is being repealed. The relevant details are now contained in subsection 65-31(1) of the Insolvency Law Reform Bill, so this cross reference is updated. [Schedule 1, Part 2, item 99]

1.82 Subsection 5(2) refers to the extent to which subsection 169(1B) of the Bankruptcy Act applies. Given that this subsection is being repealed, subsection 5(2) is no longer necessary and is accordingly repealed. [Schedule 1, Part 2, item 100]

Application and transitional provisions

Definitions

1.83 The Dictionary defines terms used in Part 3 of the Schedule, in relation to transitional provisions. In some cases, the definition is a signpost to another provision in the Schedule in which the meaning of the term is explained [Schedule 1, Part 3, Division 1, section 102]

1.84 Commencement day means the day on which this Schedule commences. [Schedule 1, Part 3, Division 1, section 102]

1.85 Old Act means the Bankruptcy Act, as in force immediately before the commencement day and includes the old Regulations. [Schedule 1, Part 3, Division 1, Subdivision A, section 102]

Application of other consequential amendments

1.86 In circumstances where proposals are put to creditors in a meeting, the repeal and substitution of the definitions of resolution and special resolution in subsection 5(1) of the Bankruptcy Act by the Schedule apply in relation to proposals put at a meeting where the requirement to hold the meeting arises on or after the commencement day. Similarly, in circumstances of proposals without meetings, the repeal and substitution of the definitions of resolution and special resolution in subsection 5(1) of the Bankruptcy Act by the Schedule apply in relation to proposals put to creditors on or after the commencement day. [Schedule 1, Part 3, Division 5, section 168]

1.87 Section 6D of the Bankruptcy Act (as inserted by the Schedule) applies to documents made, given or lodged on or after the commencement day. [Schedule 1, Part 3, Division 5, section 169]

1.88 Subsection 12(5) of the Bankruptcy Act (as inserted by the Schedule) applies whether or not the information was obtained, or is in relation to events that occurred, before, on or after the commencement day. [Schedule 1, Part 3, Division 5, section 170]

1.89 Section 19B of the Bankruptcy Act (as inserted by the Schedule applies) whether or not the books were made before, on or after the commencement day [Schedule 1, Part 3, Division 5, section 171]

1.90 The amendments of subsections 54(1), 54(2) and 56F(1) of the Bankruptcy Act made by the Schedule apply in relation to offences committed on or after the commencement day. [Schedule 1, Part 3, Division 5, section 172]

1.91 The repeal of section 72 of the Bankruptcy Act by this Schedule applies in relation to property purchased before the commencement day. [Schedule 1, Part 3, Division 5, section 173]

1.92 If a person is required to do something within a period of time after a particular event, the amendment to subsection 73(1A), subparagraph 139ZIE(1)(a)(i), subsection 139ZIE(5) and paragraph 139ZIF(1)(a) applies if the event occurs on or after the commencement day. [Schedule 1, Part 3, Division 5, section 174]

1.93 If, before the commencement day, the Inspector-General has asked a person under subsection 155H(1) of the Bankruptcy Act to provide written explanation as to why the person should continue to be registered as a trustee, sections 186LA and 186LB of the old Act continue to apply on and after the commencement day in relation to the bank with which the person holds or held an account as if the amendments to those sections made by the Schedule had not been made. [Schedule 1, Part 3, Division 5, section 175]

1.94 Items 6 to 11 under the table in subsection 277B(2) of the Bankruptcy Act continue to apply in relation to offences committed before the commencement day (despite the repeal of those items under that table). [Schedule 1, Part 3, Division 5, section 176]

1.95 Despite the amendments and repeals made by the Schedule, subsection 306B(1) of the Bankruptcy Act continues to apply in relation to reports given under subsections 155A(6), 155F(2) or 155I(4) of the Bankruptcy Act. [Schedule 1, Part 3, Division 5, section 177]

1.96 The Governor-General may make regulations prescribing matters of a transitional nature (including prescribing any saving or application provisions) relating to the amendments and repeals made by the Schedule. This will allow for the creation of any transitional provisions that may have been overlooked by Part 3 of the Schedule. The regulations may provide that certain provisions of the Schedule are taken to be modified as set out in the regulations. Those provisions then have effect as if they were so modified. The provisions of the Schedule that provide for regulations to deal with matters do not limit each other [Schedule 1, Part 3, Division 6, section 1178]