Bankruptcy Legislation Amendment Act 2004 (80 of 2004)

Schedule 1   Amendments relating to statements of affairs and Part X agreements

Part 1   Amendment of the Bankruptcy Act 1966

Division 2   Amendments relating to Part X agreements

142   Section 222

Repeal the section, substitute:

222 Court may set aside personal insolvency agreement

Setting aside on grounds of unreasonableness etc.

(1) If a personal insolvency agreement is in force, the Court may, on application by:

(a) the Inspector-General; or

(b) the trustee; or

(c) a creditor;

make an order setting the agreement aside if the Court is satisfied that:

(d) the terms of the agreement are unreasonable or are not calculated to benefit the creditors generally; or

(e) for any other reason, the agreement ought to be set aside.

Setting aside on grounds of non-compliance with this Part etc.

(2) If a personal insolvency agreement is in force, the Court may, on application by:

(a) the Inspector-General; or

(b) the trustee; or

(c) a creditor; or

(d) the debtor;

make an order setting the agreement aside if the Court is satisfied that:

(e) the agreement was not entered into in accordance with this Part; or

(f) the agreement does not comply with the requirements of this Part.

(3) The Court must not make an order setting aside a personal insolvency agreement on the ground that it does not comply with the requirements of this Part if the agreement complies substantially with those requirements.

(4) The Court must not make an order under subsection (2) unless the application for the order is made before all the obligations that the personal insolvency agreement created have been discharged.

Setting aside on grounds of false or misleading information etc.

(5) If a personal insolvency agreement is in force, the Court may, on application by:

(a) the Inspector-General; or

(b) the trustee; or

(c) a creditor;

make an order setting the agreement aside if the Court is satisfied that:

(d) the debtor has given false or misleading information in answer to a question put to the debtor with respect to any of the debtor's conduct or examinable affairs at the meeting of creditors at which the resolution requiring the debtor to execute the agreement was passed; or

(e) the debtor has:

(i) omitted a material particular from the statement of the debtor's affairs given under subsection 188(2C) or (2D); or

(ii) included an incorrect and material particular in that statement; or

(f) the debtor was subject to a requirement under subsection 194A(3) to table a statement, and the debtor has:

(i) omitted a material particular from that statement; or

(ii) included an incorrect and material particular in that statement; or

(g) the controlling trustee has:

(i) omitted a material particular from the declaration given by the controlling trustee under subsection 189A(3); or

(ii) included an incorrect and material particular in that declaration; or

(h) the controlling trustee was subject to a requirement under subsection 194A(5) to table a statement, and the controlling trustee has:

(i) omitted a material particular from that statement; or

(ii) included an incorrect and material particular in that statement; or

(i) a person who became the trustee of the agreement has:

(i) omitted a material particular from the declaration given by the person under subsection 215A(3) or (4); or

(ii) included an incorrect and material particular in that declaration.

(6) The Court must not make an order under subsection (5) unless it is satisfied that it would be in the interests of the creditors to do so.

(7) The Court must not make an order under subsection (5) unless the application for the order is made before all the obligations that the personal insolvency agreement created have been discharged.

Ancillary orders

(8) If the Court makes an order under subsection (1), (2) or (5), the Court may make such other orders as the Court thinks fit.

(9) An order under subsection (8) may be an order directing a person to pay another person compensation of such amount as is specified in the order. This subsection does not limit subsection (8).

Application for sequestration order

(10) The trustee or a creditor may include in an application under subsection (1), (2) or (5) an application for a sequestration order against the estate of the debtor. If the Court, on the first-mentioned application, makes an order under this section setting the personal insolvency agreement aside, it may, if it thinks fit, immediately make the sequestration order sought.

(11) The making of an application by the trustee or a creditor for a sequestration order under this section is taken, for the purposes of this Act, 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.

Court may dispense with service on debtor of notice of application

(12) The Court may, if it thinks fit, dispense with service on the debtor of notice of an application by the Inspector-General, the trustee or a creditor under this section, either unconditionally or subject to conditions.

222A Termination of personal insolvency agreement by trustee

(1) The trustee of a personal insolvency agreement may, in writing, propose the termination of the agreement if the trustee is satisfied that the debtor is in default.

(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.

(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.

(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.

(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 personal insolvency agreement; 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 agreement.

(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.

222B Termination of personal insolvency agreement by creditors

(1) The creditors may, by resolution at a meeting called for the purpose, terminate a personal insolvency agreement if:

(a) the debtor is in default; and

(b) before the passage of the resolution, the trustee of the agreement tabled at the meeting a written declaration to the effect that the trustee is satisfied that the debtor is in default.

(2) The creditors may, by special resolution at a meeting called for the purpose, terminate the personal insolvency agreement 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.

(3) However:

(a) paragraph (2)(a) does not apply if, when the personal insolvency agreement 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 personal insolvency agreement was made, the pecuniary penalty order was already in force against the debtor.

(4) 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 personal insolvency agreement; 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 agreement.

222C Court may terminate personal insolvency agreement

(1) If a personal insolvency agreement is in force, the Court may, on application by:

(a) the trustee; or

(b) a creditor; or

(c) the debtor; or

(d) if the debtor has died - the person administering the estate of the debtor;

make an order terminating the agreement if the Court is satisfied:

(e) that:

(i) the debtor; or

(ii) 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 agreement; or

(f) that the agreement cannot be proceeded with without injustice or undue delay to:

(i) the creditors; or

(ii) the debtor; or

(iii) if the debtor has died - the estate of the debtor; or

(g) that, for any other reason, the agreement ought to be terminated.

(2) The Court must not make an order terminating a personal insolvency agreement on the ground specified in paragraph (1)(e) or (g) unless it is satisfied that it would be in the interests of the creditors to do so.

Ancillary orders

(3) If the Court makes an order terminating a personal insolvency agreement, the Court may make such other orders as the Court thinks fit.

(4) An order under subsection (3) may be an order directing a person to pay another person compensation of such amount as is specified in the order. This subsection does not limit subsection (3).

Application for sequestration order

(5) 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. If the Court, on the first-mentioned application, makes an order under this section terminating the personal insolvency agreement, it may, if it thinks fit, immediately make the sequestration order sought.

(6) The making of an application by the trustee or a creditor for a sequestration order under this section is taken, for the purposes of this Act, 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.

Court may dispense with service on debtor of notice of application

(7) 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.

222D Termination of personal insolvency agreement by occurrence of terminating event

A personal insolvency agreement is terminated by the occurrence of any circumstance or event on the occurrence of which the agreement provides that it is to terminate.