Corporations and Other Legislation Amendment (Insolvency Law Reform) Regulation 2016 (F2016L01926)

Schedule 1   Amendments relating to the Insolvency Law Reform Act 2016

Part 2   Amendments commencing 1 September 2017

Bankruptcy Regulations 1996

54   Part 8

Repeal the Part, substitute:

Part 8 - Trustees

Division 1 - Consent to act, and appointment, as trustee of estate

8.01 Consent to act as trustee - subsection 156A(1) of the Act

A trustee who signs an instrument under subsection 156A(1) of the Act in relation to a debtor must file the instrument with the Official Receiver:

(a) if the Court makes a sequestration order against the debtor's estate - not later than 2 business days after the day on which the order is made; or

(b) otherwise - as soon as practicable after signing it.

8.02 Certificate of appointment under subsection 156A(3) of the Act

Where a registered trustee becomes, under subsection 156A(3) of the Act, the trustee of an estate or of joint and separate estates, the Official Receiver may give the registered trustee a certificate to that effect.

Division 2 - Controlling trustees other than Official Trustee or registered trustees

8.35 Eligibility of controlling trustees, other than Official Trustee or registered trustees

(1) For the purposes of subsection 188(2A) of the Act, a person (other than the Official Trustee or a registered trustee) is not eligible to act as a controlling trustee if the person:

(a) is convicted of a criminal offence involving fraud or dishonesty, or was so convicted within the 10 years before the proposed authorisation; or

(b) is not insured against the liabilities the person may become subject to as a controlling trustee; or

(c) is a solicitor who no longer holds a practising certificate; or

(d) is an undischarged bankrupt or insolvent under administration, or became a party (as debtor) to a debt agreement or a Part X administration within the 10 years before the proposed authorisation; or

(e) is a person who the Inspector-General decides under subregulation (3) has failed to properly exercise powers or carry out duties or to cooperate with an inquiry or investigation, or in relation to whom such a decision was made within the 3 years before the proposed authorisation; or

(f) either:

(i) is not a full member of the Australian Restructuring Insolvency and Turnaround Association; or

(ii) has not satisfactorily completed a course in insolvency approved by the Inspector-General.

(2) The Inspector-General may approve a course in insolvency by notice published on the Australian Financial Security Authority's website.

(3) In addition to subregulation (1), a person who is, or has been, a controlling trustee is not eligible to act as a controlling trustee if the Inspector-General determines that the person:

(a) has failed to properly exercise the powers, or carry out the duties, of a controlling trustee; or

(b) has refused, or failed to cooperate with the Inspector-General in an inquiry or investigation under paragraph 12(1)(b) of the Act.

(4) If the Inspector-General forms an opinion of the kind mentioned in paragraph (3)(a) or (b), the Inspector-General must:

(a) by written notice, tell the person; and

(b) invite the person to respond within 28 days or such longer time as is specified in the notice.

(5) After the expiry of the time mentioned in paragraph (4)(b), the Inspector-General may, having regard to the response (if any) of the person, make a determination under subregulation (3).

(6) If the Inspector-General makes a determination under subregulation (3), the Inspector-General must give the person a written notice of the determination, setting out the reasons.

8.40 Review by Tribunal of determination

Applications may be made to the Administrative Appeals Tribunal for review of decisions of the Inspector-General under subregulation 8.35(3).

8.45 Official Trustee to perform duties

(1) This regulation applies if a controlling trustee becomes ineligible to act as a controlling trustee under regulation 8.35.

(2) The Official Trustee must perform the duties of the controlling trustee unless and until the debtor appoints a controlling trustee who is eligible to so act.

Division 3 - Registered trustee ceasing to be trustee of an estate

8.50 Notice of removal of trustee of estate

(1) This regulation applies if the trustee of a regulated debtor's estate is removed from the office of trustee of the estate by the Court or by the creditors.

(2) Notice must be given in writing to the Official Receiver stating the name of the trustee, the fact and the date of the removal and whether the removal was by the Court or the creditors.

(3) The notice must be given:

(a) in the case of removal by the Court - by the applicant to the Court for the removal, as soon as practicable after the making of the order for removal; or

(b) in the case of removal by the creditors - by the new trustee of the regulated debtor's estate appointed by the creditors under section 90-35 of Schedule 2 to the Act, as soon as practicable after the appointment.

(4) An offence against this regulation is an offence of strict liability.

Penalty: 1 penalty unit.

8.55 Notice of finalisation of administration and entry on the Index

(1) The trustee of a regulated debtor's estate must, within 5 working days of finalising the administration of the estate, give notice in writing of the finalisation to the Official Receiver.

Penalty: 1 penalty unit.

(2) The Official Receiver must promptly enter on the Index the fact that the administration of an estate has been finalised, where:

(a) the Official Receiver receives notice under subregulation (1); or

(b) the estate was administered by the Official Trustee.

(3) An offence against subregulation (1) is an offence of strict liability.

Penalty: 1 penalty unit.