Bankruptcy Act 1966
View history note
Hide history notePt X heading substituted by No 80 of 2004, s 3 and Sch 1 item 44, effective 1 December 2004. No 80 of 2004, s 3 and Sch 1 items 212, 213 and 215 contained the following transitional provisions:
212 Transitional - pre-commencement deeds and compositions
(1)
For the purposes of this item, if a deed of assignment or a deed of arrangement was executed by a debtor and a trustee under Part X of the Bankruptcy Act 1966 before 1 December 2004, the deed is a pre-commencement deed .
(2)
For the purposes of this item, if a composition was accepted before 1 December 2004 by a special resolution of a meeting of creditors under section 204 of the Bankruptcy Act 1966 , the composition is a pre-commencement composition .
(3)
Despite the repeals and amendments made by Parts 1 and 2 of this Schedule:
(a) the Bankruptcy Act 1966 and regulations under that Act; and
(b) the Acts amended by Part 2 of this Schedule;continue to apply, in relation to:
(c) a pre-commencement deed; and
(d) a pre-commencement composition; and
(e) any matter connected with, or arising out of:
(i) a pre-commencement deed; or
(ii) a pre-commencement composition;as if those repeals had not happened and those amendments had not been made.
213 Transitional - pre-commencement authorities
(1)
For the purposes of this item, if:
(a) an authority given by a debtor under section 188 of the Bankruptcy Act 1966 became effective before 1 December 2004; and
(b) as at 1 December 2004, none of the following had happened:
(i) the execution by the debtor and the trustee of a deed of assignment under Part X of the Bankruptcy Act 1966 ;
(ii) the execution by the debtor and the trustee of a deed of arrangement under Part X of the Bankruptcy Act 1966 ;
(iii) the acceptance of a composition by a special resolution of a meeting of the debtor ' s creditors under section 204 of the Bankruptcy Act 1966 ;the authority is a pre-commencement authority .
(2)
Despite the repeals and amendments made by Parts 1 and 2 of this Schedule:
(a) the Bankruptcy Act 1966 and regulations under that Act; and
(b) the Acts amended by Part 2 of this Schedule;continue to apply, in relation to:
(c) a pre-commencement authority; and
(d) the control of the debtor ' s property following a pre-commencement authority becoming effective; and
(e) a meeting of the debtor ' s creditors called under a pre-commencement authority; and
(f) whichever of the following is applicable:
(i) a deed of assignment executed after 1 December 2004 by the debtor and the trustee under Part X of the Bankruptcy Act 1966 in accordance with a special resolution of such a meeting;
(ii) a deed of arrangement executed after 1 December 2004 by the debtor and the trustee under Part X of the Bankruptcy Act 1966 in accordance with a special resolution of such a meeting;
(iii) a composition accepted after 1 December 2004 by a special resolution of such a meeting; and
(g) any other matter connected with, or arising out of:
(i) a pre-commencement authority; or
(ii) a deed of assignment mentioned in subparagraph (f)(i); or
(iii) a deed of arrangement mentioned in subparagraph (f)(ii); or
(iv) a composition mentioned in subparagraph (f)(iii);as if those repeals had not happened and those amendments had not been made.
…
215 Transitional - regulations
(1)
The regulations may make provision for matters of a transitional nature arising from the amendments made by Parts 1 and 2 of this Schedule.
(2)
The Governor-General may make regulations for the purposes of subitem (1).
Part X heading formerly read:
PART X - ARRANGEMENTS WITH CREDITORS WITHOUT SEQUESTRATION
Div 6 repealed by No 80 of 2004, s 3 and Sch 1 item 156, effective 1 December 2004. For transitional provisions, see note under Part X heading. Div 6 formerly read:
SECTION 238 COMPOSITION TO BIND ALL CREDITORS
238(1)
A composition that has been accepted by a special resolution of a meeting of a debtor ' s creditors called in pursuance of an authority under section 188 (in this Division referred to as a composition under this Part) is binding on all the creditors of the debtor.
238(2)
Subject to subsections (3) and (4), it is not competent for a creditor, so long as a composition under this Part remains valid:
(a) to present a creditor ' s petition against the debtor, or to proceed with such a petition presented before the composition was accepted, in respect of a provable debt;
(b) to enforce any remedy against the property or person of the debtor in respect of a provable debt; or
(c) to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.HistoryS 238(2) amended by No 12 of 1980, s 132.
238(3)
Nothing in this section:
(a) affects the right of a secured creditor to realize or otherwise deal with his or her security; or
(b) prevents a creditor, after the final payment has been made under a composition, from taking any proceeding or enforcing any remedy in respect of a provable debt from which the debtor is not released by the operation of the composition.
238(4)
Nothing in this section shall be taken to prevent a creditor from enforcing any remedy against a debtor who has made a composition under this Part, or against any property of such a debtor that is not vested in the trustee of the composition, in respect of any liability of the debtor under a maintenance agreement or maintenance order (whether entered into or made, as the case may be, before or after the commencement of this subsection).HistoryS 238(4) inserted by No 12 of 1980, s 132.
SECTION 239 COURT MAY SET ASIDE COMPOSITION
239(1)
A creditor may, within 21 days from the date on which the special resolution accepting a composition under this Part was passed, apply to the Court for an order setting aside the composition and may also apply for the making of a sequestration order against the estate of the debtor.
239(2)
If the Court, on such an application, considers that the terms of the composition are unreasonable or are not calculated to benefit the creditors generally or that for any other reason the composition ought to be set aside, it may make an order setting it aside and, if it thinks fit, may forthwith make the sequestration order sought.
239(3)
The Court may, if it thinks fit, dispense with service on the debtor of notice of an application under this section, either unconditionally or subject to conditions.
239(4)
The making of an application for a sequestration order against the estate of a debtor under this section shall, for the purposes of this Act, be deemed to be equivalent to the presentation of a creditor ' s petition against the debtor, but the provisions of subsection 43(1), sections 44 and 47, subsections 52(1) and (2) and Part XIA do not apply in relation to such an application.HistoryS 239(4) amended by No 122 of 1970, s 14.
SECTION 240 RELEASE OF PROVABLE DEBTS
240(1)
Subject to this section, a composition under this Part operates, unless set aside, declared void or terminated under this Part, to release the debtor from all provable debts, other than those (if any) that would not be released by his or her discharge from bankruptcy if he or she had become a bankrupt on the day on which the composition was accepted.
240(2)
Subsection (1) does not affect the right of a secured creditor, or any person claiming through or under him or her, to realize or otherwise deal with his or her security:
(a) if the secured creditor has not proved in the composition for any part of the secured debt - for the purposes of obtaining payment of the secured debt; or
(b) if the secured creditor has proved in the composition for part of the secured debt - for the purposes of obtaining payment of the part of the secured debt for which he or she has not proved in the composition;and, for the purposes of enabling the secured creditor or a person claiming through or under him or her so to realize or deal with his or her security, but not otherwise, the secured debt, or the part of the secured debt, as the case may be, shall be deemed not to have been released.
240(3)
A composition does not release from any liability a person who, at the date on which the composition was accepted, was a partner or a co-trustee with the debtor or was jointly bound or had made a joint contract with him or her, or a person who was surety or in the nature of a surety for the debtor.
SECTION 240A VARIATION OF COMPOSITION
240A(1) Variation by special resolution of creditors.The creditors, with the written consent of the debtor, may vary a composition by special resolution at a meeting called for the purpose.
240A(2) Variation by trustee.The trustee, with the written consent of the debtor, may, in writing, propose a variation of a composition.
240A(3)
The trustee must give notice of the proposed variation to all the creditors who would be entitled under section 64A (as that section applies in accordance with sectionn 223A) to receive notice of a meeting of creditors.
240A(4)
The notice must:
(a) include a statement of the reasons for the variation and the likely impact it will have on creditors (if it takes effect); and
(b) specify a date (at least 14 days after the notice is given) from which it is proposed that the variation will take effect; and
(c) state that any creditor may, by written notice to the trustee at least 2 days before the specified date, object to the variation taking effect without there being a meeting of creditors.
240A(5)
If no creditor lodges a written notice of objection with the trustee at least 2 days before the specified date, then the proposed variation takes effect on the date specified in the notice.
240A(6)
A certificate signed by the trustee stating any matter relating to a proposed variation under subsection (2) is prima facie evidence of the matter.HistoryS 240A inserted by No 131 of 2002, s 3 and Sch 1 items 178 and 212, effective 5 May 2003.
Act No 131 of 2002 contains the following transitional provision:
212(1)
The amendment applies to compositions, schemes of arrangement and deeds of arrangement that are made after 5 May 2003.
212(2)
For the purposes of this item:
(a) a composition or scheme of arrangement is made when it is accepted by the creditors; and
(b) a deed of arrangement is made when it is executed.
SECTION 240B TERMINATION OF COMPOSITION BY TRUSTEE
240B(1)
The trustee may, in writing, propose the termination of a composition if the trustee is satisfied that the debtor is in default.
240B(2)
The trustee must give notice of the proposed termination to all the creditors who would be entitled under section 64A (as that section applies in accordance with section 223A) to receive notice of a meeting of creditors.
240B(3)
The notice must:
(a) include a statement of the reasons for the termination and the likely impact it will have on creditors (if it takes effect); and
(b) specify a date (at least 14 days after the notice is given) from which it is proposed that the termination will take effect; and
(c) state that any creditor may, by written notice to the trustee at least 2 days before the specified date, object to the termination taking effect without there being a meeting of creditors.
240B(4)
If:
(a) the debtor is in default; and
(b) no creditor lodges a written notice of objection with the trustee at least 2 days before the specified date;then the proposed termination takes effect on the date specified in the notice.
240B(5)
For the purposes of this section, the debtor is in default if, and only if:
(a) the debtor has failed to carry out or comply with a term of the composition; or
(b) if the debtor has died, the debtor or the person administering the estate of the debtor has failed to carry out or comply with a term of the composition.
240B(6)
A certificate signed by the trustee stating any matter relating to a proposed termination under this section is prima facie evidence of the matter.HistoryS 240B inserted by No 131 of 2002, s 3 and Sch 1 items 178 and 212, effective 5 May 2003.
Act No 131 of 2002 contains the following transitional provision:
212(1)
The amendment applies to compositions, schemes of arrangement and deeds of arrangement that are made after 5 May 2003.
212(2)
For the purposes of this item:
(a) a composition or scheme of arrangement is made when it is accepted by the creditors; and
(b) a deed of arrangement is made when it is executed.
SECTION 241 TERMINATION OF COMPOSITION BY CREDITORS
241(1)
Where a debtor has failed to carry out or comply with a term of composition under this Part, the creditors may, by special resolution at a meeting called for the purpose, terminate the composition.
241(2)
The creditors may, by special resolution at a meeting called for the purpose, terminate the composition if:
(a) property of the debtor is covered by a restraining order or a forfeiture order; or
(b) a pecuniary penalty order made against the debtor is in force.HistoryS 241(2) inserted by No 86 of 2002, s 3 and sch 4 item 28, effective 1 January 2003.
241(3)
However:
(a) paragraph (2)(a) does not apply if, when the composition was made, the restraining order or forfeiture order already covered the property in question; and
(b) paragraph (2)(b) does not apply if, when the composition was made, the pecuniary penalty order was already in force against the debtor.HistoryS 241(3) inserted by No 86 of 2002, s 3 and sch 4 item 28, effective 1 January 2003.
SECTION 242 COURT MAY TERMINATE COMPOSITION
242(1)
The Court may, upon application by the trustee, a creditor or the debtor, or, if the debtor has died, the person administering the estate of the debtor, if it is satisfied:
(a) that the debtor, or, if the debtor has died, the debtor or the person administering the estate of the debtor, has failed to carry out or comply with a term of the composition;
(b) that the composition cannot be proceeded with without injustice or undue delay to the creditors, the debtor or, if the debtor has died, the estate of the debtor; or
(c) that for any other reason the composition ought to be terminated;make an order terminating the composition.
HistoryS 242(1) substituted by No 12 of 1980, s 133.
242(2)
The Court shall not make an order terminating a composition on the ground specified in paragraph (1)(a) or (c) unless it is satisfied that it would be in the interests of the creditors to do so.
242(3)
The trustee or a creditor may include in an application under subsection (1) an application for a sequestration order against the estate of the debtor and if the Court makes an order on the first-mentioned application terminating the composition, it may, if it thinks fit, forthwith make the sequestration order sought.
242(4)
The Court may, if it thinks fit, dispense with service on the debtor of notice of an application by the trustee or a creditor under this section, either unconditionally or subject to conditions.
242(5)
The making of an application by the trustee or a creditor for a sequestration order under this section shall, for the purposes of this Act, be deemed to be equivalent to the presentation of a creditor ' s petition against the debtor, but the provisions of subsection 43(1), sections 44 and 47, subsections 52(1) and (2) and Part XIA do not apply in relation to such an application.HistoryS 242(5) amended by No 122 of 1970, s 15.
SECTION 243 APPLICATION OF GENERAL PROVISIONS OF ACT TO COMPOSITIONS
243(1)
Sections 81 to 107 (inclusive) and 140 to 147 (inclusive) apply, with the prescribed modifications (if any), in relation to a composition under this Part as if:
(a) a sequestration order had been made against the debtor on the day on which the special resolution accepting the composition was passed; and
(b) the trustee of the composition were the trustee in his or her bankruptcy.HistoryS 243(1) amended by No 119 of 1987, s 85(1)(a); No 9 of 1992, s 39; No 44 of 1996, Sch 1, Pt 1(381).
243(2)
In the application of the provisions of this Act specified in subsection (1) in relation to a composition, a reference to a provable debt shall be read as a reference to a provable debt within the meaning of this Part.HistoryS 243(2) amended by No 119 of 1987, s 85(1)(b).
243(3)
Part VIII applies, with any modifications prescribed by the regulations, in relation to a trustee of a composition under this Part as if the debtor by whom the composition was made were a bankrupt and the trustee of the composition were the trustee in his or her bankruptcy.HistoryS 243(3) amended by No 12 of 1980, s 134; No 193 of 1985, s 3, Sch 1; No 119 of 1987, s 85(1)(c); No 44 of 1996, Sch 1, Pt 1(380).
243(4)
If, after taking into account the prescribed modifications and the provisions of subsection (2), a provision specified in subsection (1) or (3) is incapable of application in relation to a composition, or the trustee of a composition, as the case requires, or is inconsistent with this Part, that provision does not so have application.HistoryS 243(4) amended by No 119 of 1987, s 85(1)(d).
243(5)
Nothing in this Division empowers the Court to stay any proceedings under a proceeds of crime law.HistoryS 243(5) inserted by No 86 of 2002, s 3 and Sch 4 item 29, effective 1 January 2003.
S 243(5) omitted by No 119 of 1987, s 85(1)(e).
SECTION 243AA RIGHT OF DEBTOR TO REMAINING PROPERTY
243AA(1)
The debtor is entitled to any property remaining after payment in full of:
(a) the costs, charges and expenses of the administration of the composition; and
(b) all provable debts; and
(c) interest on interest-bearing provable debts.
243AA(2)
The Court may make an order directing the trustee not to pay or transfer the property, or a specified part of the property, referred to in subsection (1), to the debtor if:
(a) the Director of Public Prosecutions, or a person who is entitled to apply for an interstate confiscation order under a corresponding law, applies to the Court for an order under this subsection; and
(b) the Court is satisfied that:
(i) proceedings are pending under a proceeds of crime law; and
(ii) property of the debtor may:
(A) become subject to a forfeiture order or interstate forfeiture order made in the proceedings; or
(B) be required to satisfy a pecuniary penalty order or interstate pecuniary penalty order made in the proceedings.HistoryS 243AA(2) amended by No 86 of 2002, s 3 and Sch 4 item 44, by substituting in (b)(i) " a proceeds of crime law " for " the Proceeds of Crime Act 1987 or a corresponding law " , effective 1 January 2003.
243AA(3)
The Court, on application made to it, may vary or revoke an order made under subsection (1).HistoryS 243AA inserted by No 9 of 1992, s 40.
SECTION 243A CERTIFICATE BY TRUSTEE THAT TERMS OF COMPOSITION HAVE BEEN CARRIED OUT
243A(1)
Where the trustee of a composition is satisfied that the terms of the composition have been carried out, the trustee shall, upon request in writing by the debtor, furnish to the debtor a certificate signed by him or her to that effect.
243A(2)
A certificate signed by a trustee under this section is prima facie evidence of the facts stated in it.
[ S 243A inserted by No 12 of 1980, s 135.]
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