Commonwealth Consolidated Acts

BANKRUPTCY ACT 1966 - SECT 189AB

Creation of charge

  (1)   When the debtor's property becomes subject to control under this Division, the debtor's property is charged with:

  (a)   the debtor's unsecured debts at the time the debtor signed the authority under section   188; and

  (b)   any amount by which the debtor's secured debts exceeded the value of the property secured for payment of the debts at the time the debtor signed the authority under section   188.

Charge continues despite changing ownership of charged property

  (2)   Subject to subsections   (3) and (9), the charge is not affected by any change of ownership of the charged property.

Certain other charges have priority

  (3)   The charge created by subsection   (1) is subject to:

  (a)   any charge or encumbrance that was on the debtor's property immediately before the debtor signed the authority under section   188; and

  (b)   any charge or encumbrance acquired in good faith and for market value by a person who did not have notice of the charge created by subsection   (1).

Priority over some other charges

  (4)   The charge created by subsection   (1) has priority over a charge or encumbrance that is not described in subsection   (3).

Registration of charge

  (5)   The controlling trustee may register a charge created by subsection   (1) over particular property if a law of the Commonwealth, or of a State or Territory, provides for registration of a charge over that sort of property.

Effect of registration of charge

  (6)   If the trustee registers the charge over particular property, a person who acquires the property or an interest in the property after the charge is registered is taken to have notice of the charge for the purposes of subsections   (3) and (9).

Controlling trustee may sell charged property

  (7)   The controlling trustee may sell property that is subject to a charge under subsection   (1).

Application of proceeds of sale

  (8)   Any proceeds from the sale of charged property that are not needed to meet a charge or encumbrance that has higher priority than the charge created by subsection   (1) are the debtor's property.

End of charge on property that is sold

  (9)   A charge created by subsection   (1) ceases to have effect in relation to property if the property is acquired by a person:

  (a)   in good faith for consideration at least as valuable as the market value of the property without notice of the charge; or

  (b)   from the controlling trustee in a sale under subsection   (7).

Charge ends when property ceases to be subject to control

  (10)   Unless it has already ceased to have effect under subsection   (9), the charge ceases to have effect when control of the debtor's property ends under subsection   189(1A).

Meaning of debtor's property

  (11)   In this section:

"debtor's property" has the meaning given in subsection   190(5).