Bankruptcy Act 1966
View history note
Hide history noteSubject to sections 118 to 122 (inclusive) and sections 128B and 128C , nothing in this Act invalidates, in any case where a debtor becomes a bankrupt: (a) a payment by the debtor to any of his or her creditors; (b) a conveyance, transfer or assignment by the debtor for market value; (c) a contract, dealing or other transaction by or with the debtor for market value; or (d) any transaction to the extent of a present advance made by an existing creditor;
if:
(e) the transaction took place before the day on which the debtor became a bankrupt; (f) the person, other than the debtor, with whom it took place, did not, at the time of the transaction, have notice of the presentation of a petition against the debtor; and (g) the transaction was in good faith and in the ordinary course of business.[ CCH Note: Modification Declaration FRLI No F2021L00261 ( Bankruptcy Regulations 2021 : FRLI No F2021L00261, registered on 19 March 2021 and effective from 1 April 2021.)
Subsection 123(1) of the Act is modified by substituting " has died, and the debtor ' s estate has become subject to administration under Part XI " for " becomes a bankrupt " , inserting " before the debtor died " after " debtor " in para (a) to (c) and substituting " on or before the day on which the debtor died " for " before the day on which the debtor became a bankrupt " in para (e).]
123(2)
The burden of proving the matters referred to in paragraphs (1)(e) , (f) and (g) in relation to a transaction lies upon the person who relies on the validity of the transaction.
123(3)
For the purposes of subsection (1) , a transaction shall not be deemed not to have been in good faith and in the ordinary course of business by reason only that, at the time of the transaction, the person, other than the debtor, with whom it took place had notice of the commission of an act of bankruptcy by the debtor.
123(4)
Nothing in this Act invalidates a payment by a debtor, on or before the date on which he or she became a bankrupt, of, or in respect of, a penalty or fine imposed on him or her by a court in respect of an offence against a law, whether a law of the Commonwealth or not.
[ CCH Note: Modification Declaration FRLI No F2021L00261 ( Bankruptcy Regulations 2021 : FRLI No F2021L00261, registered on 19 March 2021 and effective from 1 April 2021.)
Subsection 123(4) of the Act is modified by inserting " deceased " before " debtor " and substituting " died " for " became a bankrupt " .]
123(5)
(Omitted by No 32 of 1993, s 29, Sch 1.)
[ CCH Note: No 32 of 1993, s 30(2), provides:
]Despite the repeal of subsection 123(5) of the Bankruptcy Act 1966 , that subsection continues to apply in relation to a deduction in relation to which section 221P or 221YU of the Income Tax Assessment Act 1936 applies.
123(6)
Subject to sections 121 , 128B and 128C , nothing in this Act invalidates, in any case where a debtor becomes a bankrupt, a conveyance, transfer, charge, disposition, assignment, payment or obligation executed, made or incurred by the debtor, before the day on which the debtor became a bankrupt, under or in pursuance of a maintenance agreement or maintenance order.
[ CCH Note: Modification Declaration FRLI No F2021L00261 ( Bankruptcy Regulations 2021 : FRLI No F2021L00261, registered on 19 March 2021 and effective from 1 April 2021.)
Subsection 123(6) of the Act is modified by substituting " a deceased debtor before the debtor ' s death became " for " a debtor becomes " and inserting " deceased " before " debtor " (second and third occurring).]
123(7)
In this section:
payment
includes the drawing, making or indorsing of a bill of exchange, cheque or promissory note.
transaction
includes payment, delivery, conveyance, transfer, assignment, contract or dealing.
This information is provided by CCH Australia Limited Link opens in new window. View the disclaimer and notice of copyright.