Commonwealth Consolidated Acts Commonwealth Consolidated ActsNote: See section 4A.
(1) The object of this Schedule is to ensure that any person registered as a trustee:
(a) has an appropriate level of expertise; and
(b) behaves ethically; and
(c) maintains sufficient insurance to cover his or her liabilities in practising as a registered trustee.
(2) The object of this Schedule is also:
(a) to regulate the administration of regulated debtors' estates consistently, unless there is a clear reason to treat a matter that arises in relation to a particular kind of estate differently; and
(b) to regulate the administration of regulated debtors' estates to give greater control to creditors.
1 - 5 Simplified outline of this Schedule
Registering trustees
Under this Act, only the Official Trustee or a registered trustee can act as the trustee of a regulated debtor's estate.
Part 2 of this Schedule sets out the process for registering trustees, and also deals with disciplining registered trustees.
Consistently regulating the administration of regulated debtors' estates
Part 3 of this Schedule sets out provisions to regulate the administration of regulated debtors' estates consistently.
A regulated debtor is a bankrupt, a person whose property is subject to control under Division 2 of Part X, a debtor under a personal insolvency agreement or a deceased person whose estate is being administered under Part XI.
Other provisions
There are other matters relevant to the administration of regulated debtors' estates in this Act.
This Schedule also gives authority for a legislative instrument, the Insolvency Practice Rules, to deal with some matters.
Many of the terms in this Schedule are defined. The Dictionary in section 5 - 5 contains a list of every term that is defined in this Schedule. Other terms are defined in section 5 of this Act.
5 - 1 Simplified outline of this Division
Terms used in this Schedule are defined in the Dictionary. In some cases, the definition is a signpost to another provision of the Schedule in which the meaning of the term is explained.
Some of the key terms, the meaning of which is explained in this Division, are regulated debtor, regulated debtor's estate and trustee of a regulated debtor's estate.
Subdivision B -- The Dictionary
In this Schedule:
"adequate and appropriate fidelity insurance" has a meaning affected by subsection 25 - 1(2).
"adequate and appropriate professional indemnity insurance" has a meaning affected by subsection 25 - 1(2).
"administration account" : see section 65 - 5.
"annual administration return" means the return required to be lodged under subsection 70 - 5(2).
"annual trustee return" means the return required to be lodged under subsection 30 - 1(1).
"committee of inspection" for a regulated debtor's estate means a committee appointed under sections 80 - 10 to 80 - 25 in relation to the administration of the estate.
"creditor" , when used in relation to a regulated debtor's estate, means a creditor of the estate.
"current conditions" : see section 5 - 10.
"end of an administration" of a regulated debtor's estate means:
(a) in the case of a bankruptcy--the day on which the bankrupt is discharged or the bankruptcy is annulled, whichever happens first; and
(b) in the case of an administration under Part X--the day 3 years after the day on which a personal insolvency agreement made by the debtor for the administration of the debtor's estate took effect; and
(c) in the case of an administration under Part XI--the day 3 years after the day on which the administration is taken to have commenced under section 247A.
"financial interest" : a person has a financial interest in the administration of a regulated debtor's estate in the circumstances set out in section 5 - 30.
"GST" has the same meaning as in the A New Tax System (Goods and Services Tax) Act 1999 .
"Insolvency Practice Rules" means the rules made by the Minister under section 105 - 1.
"Insolvency Practice Schedule (Corporations)" means Schedule 2 to the Corporations Act 2001 , and includes rules made under section 105 - 1 of that Schedule.
"March quarter" means the period of 3 months beginning on 1 January.
"maximum default amount" for a trustee of a regulated debtor's estate: see section 60 - 15.
"notified estate charge" : see subsection 20 - 75(7).
"prescribed" means prescribed by the Insolvency Practice Rules.
"registered trustee" means an individual who is registered as a trustee under Part 2 of this Schedule.
"Register of Trustees" means the register established and maintained by the Inspector - General under section 15 - 1.
"regulated debtor" : see section 5 - 15.
"regulated debtor's estate" : see section 5 - 16.
"remuneration determination" , for a trustee of a regulated debtor's estate, means a determination made:
(a) under section 60 - 10 or 60 - 11 in relation to the trustee; and
(b) in accordance with section 60 - 12.
"this Schedule" includes the Insolvency Practice Rules.
"trustee of a regulated debtor's estate" : see section 5 - 20 and 5 - 25.
Subdivision C -- Other definitions
5 - 10 Meaning of current conditions
(1) Each of the following is a current condition imposed on a registered trustee:
(a) a condition that a committee decides that the registered trustee is to be subject to under subsection 20 - 20(5) or (6), subject to any variation that a committee has decided should be made to the condition under section 20 - 55;
(b) a condition imposed on all registered trustees, or on registered trustees of the trustee's class, under section 20 - 35;
(c) a condition imposed under subsection 40 - 15(2) (direction not to accept further appointments);
(d) a condition that a committee decides that the registered trustee is to be subject to under paragraph 40 - 55(1)(f) or (g) (conditions as a result of disciplinary action), subject to any variation that a committee has decided should be made to the condition under section 20 - 55;
(e) a condition imposed on the registered trustee by the Court under section 45 - 1.
(2) However, the current conditions imposed on a registered trustee do not include:
(a) a condition that a committee has decided to remove under section 20 - 55; or
(b) a condition that is removed under subsection 40 - 15(4) (condition removed because a direction not to accept further appointments has been withdrawn); or
(c) a condition that the Court has ordered be removed under section 45 - 1.
5 - 15 Meaning of regulated debtor
A person is a regulated debtor if the person is:
(a) a bankrupt; or
(b) a person whose property is subject to control under Division 2 of Part X; or
(c) a debtor under a personal insolvency agreement; or
(d) a deceased person whose estate is being administered under Part XI.
5 - 16 Meaning of regulated debtor's estate
An estate is a regulated debtor's estate if it is:
(a) in relation to a bankrupt--the estate of the bankrupt, other than any estate of the bankrupt administered under Part XI because the bankrupt is a deceased person; and
(b) in relation to a person whose property is subject to control under Division 2 of Part X--the estate of the person; and
(c) in relation to a debtor under a personal insolvency agreement--the estate of the debtor; and
(d) in relation to a deceased person whose estate is being administered under Part XI--the estate of the person being administered under that Part.
5 - 20 Meaning of trustee of a regulated debtor's estate
A person is the trustee of a regulated debtor's estate if the person is:
(a) in relation to a bankrupt--the trustee of the bankrupt's estate; and
(b) in relation to a person whose property is subject to control under Division 2 of Part X--the controlling trustee; and
(c) in relation to a debtor under a personal insolvency agreement--the trustee of the agreement; and
(d) in relation to a deceased person whose estate is being administered under Part XI--the trustee administering the estate under that Part.
5 - 25 References to the trustee of a regulated debtor's estate
A reference in this Schedule to the trustee of a regulated debtor's estate is to be read:
(a) in relation to a regulated debtor's estate in respect of which there are 2 or more joint trustees--as a reference to all of the trustees; and
(b) in relation to a regulated debtor's estate in respect of which there are 2 or more joint and several trustees--as a reference to all of the trustees or any one or more of the trustees.
5 - 30 Persons with a financial interest in the administration of a regulated debtor's estate
A person has a financial interest in the administration of a regulated debtor's estate:
(a) if the person is one of the following:
(i) the regulated debtor;
(ii) a creditor;
(iii) the trustee; or
(b) in any other circumstances prescribed.
Division 6 -- Application of this Schedule to Official Trustee
6 - 1 Schedule generally does not apply to the Official Trustee
A provision of this Schedule does not apply to the Official Trustee unless the provision is expressed to apply to the Official Trustee.
Part 2 -- Registering and disciplining practitioners
10 - 1 Simplified outline of this Part
Registering trustees
An individual may apply to the Inspector - General to be registered as a trustee. The Inspector - General will refer the application to a committee who will consider the applicant's qualifications, conduct and fitness and whether the applicant will take out appropriate insurance. Registration may be subject to conditions, is for 3 years and may be renewed.
A registered trustee must:
(a) lodge an annual return with the Inspector - General that includes proof that the trustee has appropriate insurance; and
(b) give the Inspector - General notice if the trustee's circumstances change or if certain other events happen.
Disciplining registered trustees
If a registered trustee fails to comply with certain requirements, such as the requirement to lodge a document or give information, the Inspector - General may give directions that may result in the trustee being unable to accept further appointments. The Inspector - General may also seek a Court order.
The Inspector - General may suspend or cancel a trustee's registration in certain circumstances. The Inspector - General may also give the trustee a show - cause notice. If such a notice is given and no sufficient explanation is given, the Inspector - General may take further disciplinary action on the decision of a committee.
Industry bodies may notify the Inspector - General where they suspect there are grounds for disciplinary action.
Court powers
The Court has broad powers to make orders in relation to registered trustees (including imposing conditions on registration).
10 - 5 Working cooperatively with ASIC
In performing his or her functions and exercising his or her powers under this Act in relation to persons who are, have been or may become both registered trustees under this Act and registered liquidators under the Corporations Act 2001 , the Inspector - General must work cooperatively with ASIC.
Division 15 -- Register of trustees
(1) The Inspector - General must establish and maintain a Register of Trustees.
(2) The Register of Trustees may be kept in any form that the Inspector - General considers appropriate.
(3) The Insolvency Practice Rules may provide for and in relation to the Register of Trustees.
(4) Without limiting subsection (3), the Insolvency Practice Rules may provide for and in relation to:
(a) the details to be entered on the Register of Trustees; and
(b) the parts of the Register that are to be made available to the public.
(5) Without limiting paragraph (4)(a), those details may include:
(a) details of any disciplinary action decided by a committee under section 40 - 55; and
(b) details of persons who have had their registration as a trustee under this Act suspended or cancelled.
Division 20 -- Registering trustees
20 - 1 Simplified outline of this Division
An individual may apply to the Inspector - General to be registered as a trustee. The application will be referred to a committee, which will assess the application against specified criteria (the applicant's qualifications, conduct and fitness and whether the applicant will take out appropriate insurance). The committee will report its decision to the Inspector - General and, if the committee decides that the applicant should be registered, the Inspector - General will register the applicant as a trustee.
A registration may be subject to conditions. Conditions may be imposed on a particular registered trustee by the committee, or on all registered trustees or a class of registered trustees by the Insolvency Practice Rules. A registered trustee may apply to the Inspector - General to have a condition imposed by a committee removed or varied. That application will be referred to a committee.
Registration is for 3 years, but may be renewed. An application for renewal may be made to the Inspector - General within specified time periods.
A decision of a committee about an application for registration or about a condition of registration is reviewable by the Administrative Review Tribunal (see Division 96 of this Schedule).
20 - 5 Application for registration
(1) An individual may apply to the Inspector - General to be registered as a trustee.
(2) The application must be lodged with the Inspector - General in the approved form.
(3) The application must be accompanied by the application fee determined by the Minister by legislative instrument.
(4) The application is properly made if subsections (2) and (3) are complied with.
20 - 10 Inspector - General may convene a committee to consider
(1) The Inspector - General may convene a committee for the purposes of considering an application, or applications, for registration as a trustee.
(2) The committee must consist of:
(a) the Inspector - General; and
(b) a registered trustee chosen by a prescribed body; and
(c) a person appointed by the Minister.
Note 1: Section 50 - 5 sets out the knowledge and experience that a prescribed body must be satisfied a person has before making an appointment under paragraph (2)(b).
Note 2: Section 50 - 10 sets out the matters of which the Minister must be satisfied before making an appointment under paragraph (2)(c).
20 - 15 Inspector - General must refer applications to a committee
(1) The Inspector - General must refer an application for registration as a trustee that is properly made to a committee convened under section 20 - 10 for consideration.
(2) The Inspector - General must do so within 2 months after receiving the application.
20 - 20 Committee to consider applications
Committee must consider referred applications
(1) If an application for registration as a trustee is referred to a committee, the committee must consider the application.
(2) For the purposes of considering the application, the committee:
(a) must interview the applicant; and
(b) may require the applicant to sit for an exam.
Decision of committee
(3) Within 45 business days after interviewing the applicant, the committee must decide whether the applicant should be registered as a trustee or not.
(4) The committee must decide that the applicant should be registered as a trustee if it is satisfied that the applicant:
(a) has the qualifications, experience, knowledge and abilities prescribed; and
(b) will take out:
(i) adequate and appropriate professional indemnity insurance; and
(ii) adequate and appropriate fidelity insurance;
against the liabilities that the applicant may incur working as a registered trustee; and
(c) has not been convicted, within 10 years before making the application, of an offence involving fraud or dishonesty; and
(d) is not, and has not been within 10 years before making the application, an insolvent under administration; and
(e) has not had his or her registration as a trustee under this Act cancelled within 10 years before making the application, other than in response to a written request by the applicant to have the registration cancelled; and
(f) has not had his or her registration as a liquidator under the Corporations Act 2001 cancelled within 10 years before making the application, other than in response to a written request by the applicant to have the registration cancelled; and
(g) is not disqualified from managing corporations under Part 2D.6 of the Corporations Act 2001 , or under a law of an external Territory or a law of a foreign country; and
(h) is otherwise a fit and proper person; and
(i) is resident in Australia or in another prescribed country.
(5) The committee may decide that the applicant should be registered even if the committee is not satisfied of a matter mentioned in paragraph (4)(a), (e), (f) or (i), provided the applicant would be suitable to be registered as a trustee.
Registration may be subject to conditions
(6) The committee may decide that the applicant's registration is to be subject to any conditions specified by the committee.
Spent convictions
(7) Nothing in this section affects the operation of Part VIIC of the Crimes Act 1914 .
Note: Part VIIC of the Crimes Act 1914 includes provisions that, in certain circumstances, relieve persons from the requirement to disclose spent convictions and require persons aware of such convictions to disregard them.
The committee must give the applicant and the Inspector - General a report setting out:
(a) the committee's decision on the application; and
(b) the committee's reasons for that decision; and
(c) if the committee decides under subsection 20 - 20(5) or (6) that the applicant should be registered subject to a condition:
(i) the condition; and
(ii) the committee's reasons for imposing the condition.
Registration as trustee
(1) The Inspector - General must register the applicant as a trustee if:
(a) the committee has decided that the applicant should be registered; and
(b) the applicant has produced evidence in writing to the Inspector - General that the applicant has taken out:
(i) adequate and appropriate professional indemnity insurance; and
(ii) adequate and appropriate fidelity insurance;
against the liabilities that the applicant may incur working as a registered trustee; and
(c) the applicant has paid the registration fee determined by the Minister by legislative instrument.
(2) The Inspector - General registers an applicant by entering on the Register of Trustees the details relating to the applicant prescribed for the purposes of subsection 15 - 1(3).
Registration subject to current conditions
(3) The registration is subject to the current conditions imposed on the registered trustee.
Certificate of registration
(4) After registering a person as a trustee, the Inspector - General must give the person a certificate of registration.
(5) The certificate may be given electronically.
Period of registration
(6) The registration has effect for 3 years.
20 - 35 Conditions imposed on all registered trustees or a class of registered trustees
(1) The Insolvency Practice Rules may impose conditions on all registered trustees, or registered trustees of a specified class.
(2) Without limiting subsection (1), a condition may be imposed limiting the kinds of activity in which a trustee may engage, either for the duration of the registration or for a shorter period.
(3) Without limiting subsection (1), conditions may be imposed relating to the administration of debt agreements by trustees.
Subdivision C -- Varying etc. conditions of registration
20 - 40 Application to vary etc. conditions of registration
(1) If a committee has decided under this Schedule that a person's registration as a trustee is to be subject to a condition, the person may apply to the Inspector - General for the condition to be varied or removed.
(2) However, an application cannot be made:
(a) if the person's registration as a trustee is suspended; or
(b) if the condition is of a prescribed kind; or
(c) in prescribed circumstances.
(3) The application must be lodged with the Inspector - General in the approved form.
(4) The application is properly made if:
(a) an application can be made; and
(b) subsection (3) is complied with.
(5) A single application by a registered trustee may deal with more than one condition.
20 - 45 Inspector - General may convene a committee to consider applications
(1) The Inspector - General may convene a committee for the purposes of considering an application, or applications, made under section 20 - 40.
(2) The committee must consist of:
(a) the Inspector - General; and
(b) a registered trustee chosen by a prescribed body; and
(c) a person appointed by the Minister.
Note 1: Section 50 - 5 sets out the knowledge and experience that a prescribed body must be satisfied a person has before making an appointment under paragraph (2)(b).
Note 2: Section 50 - 10 sets out the matters of which the Minister must be satisfied before making an appointment under paragraph (2)(c).
20 - 50 Inspector - General must refer applications to a committee
(1) The Inspector - General must refer an application that is properly made under section 20 - 40 to a committee convened under section 20 - 45 for consideration.
(2) The Inspector - General must do so within 2 months after receiving the application.
20 - 55 Committee to consider applications
(1) If an application to vary or remove a condition of registration is referred to a committee, the committee must consider the application.
(2) Unless the applicant otherwise agrees, the committee must, for the purposes of considering the application, interview the applicant.
(3) The committee must, within 20 business days after interviewing the applicant or obtaining the agreement of the applicant as referred to in subsection (2):
(a) decide whether the condition to which the application relates should be varied or removed; and
(b) if a condition is to be varied, specify the way in which it is to be varied.
The committee must give the applicant and the Inspector - General a report setting out:
(a) the committee's decision on the application; and
(b) the committee's reasons for that decision; and
(c) if the committee decides that a condition should be varied--the variation that is to be made.
20 - 65 Committee's decision given effect
If the committee decides that a condition imposed on a registered trustee is to be varied or removed, the condition is varied or removed in accordance with that decision.
20 - 70 Application for renewal
(1) An individual may apply to the Inspector - General to have the individual's registration as a trustee renewed.
(2) The application must be lodged with the Inspector - General, in the approved form, before the applicant's registration as a trustee ceases to have effect.
Note: The Court may extend the time within which an application must be lodged: see paragraph 33(1)(c).
(3) If an individual applies to have his or her registration as a trustee renewed, the individual must, at least 1 month before the registration ceases to have effect, pay the renewal fee determined by the Minister by legislative instrument. If the renewal fee is not paid at least 1 month before the registration ceases to have effect, an additional amount equal to 20% of the renewal fee is payable by the applicant by way of penalty.
(4) The application is properly made if subsection (2) is complied with.
Renewal of registration
(1) On application under section 20 - 70, the Inspector - General must renew the registration of the applicant as a trustee if:
(a) the application is properly made; and
(b) the applicant has produced evidence in writing to the Inspector - General that the applicant maintains:
(i) adequate and appropriate professional indemnity insurance; and
(ii) adequate and appropriate fidelity insurance;
against the liabilities that the applicant may incur working as a registered trustee; and
(c) the applicant has complied with any condition dealing with continuing professional education to which the applicant is subject during the applicant's current registration; and
(d) the applicant has paid the renewal fee determined by the Minister under subsection 20 - 70(3), and any late payment penalty under that subsection; and
(e) the applicant does not owe more than the prescribed amount of notified estate charges.
(2) The Inspector - General renews the registration of the applicant by entering, or maintaining, on the Register of Trustees the details relating to the applicant prescribed for the purposes of subsection 15 - 1(3).
Registration subject to current conditions
(3) The renewed registration is subject to the current conditions imposed on the registered trustee.
Certificate of registration
(4) After renewing the registration of a person as a trustee, the Inspector - General must give the person a certificate of registration.
(5) The certificate may be given electronically.
Period of registration
(6) The renewed registration has effect for 3 years, beginning on the day after the person's immediately preceding registration as a trustee ceased to have effect.
When a notified estate charge is owed
(7) A person owes a notified estate charge if:
(a) the person owes either of the following:
(i) a charge under the Bankruptcy (Estate Charges) Act 1997 (the estate charge );
(ii) a penalty under section 281 (late payment penalty) of this Act in respect of that charge; and
(b) the Inspector - General notified the person of the unpaid estate charge at least one month and 10 business days before the person's registration as a trustee ceases to have effect.
Subdivision E -- Offences relating to registration
20 - 80 False representation that a person is a registered trustee
A person commits an offence if:
(a) the person makes a representation; and
(b) the representation is that the person is a registered trustee; and
(c) the representation is false.
25 - 1 Registered trustees to maintain insurance
Registered trustee must maintain insurance
(1) A registered trustee must maintain:
(a) adequate and appropriate professional indemnity insurance; and
(b) adequate and appropriate fidelity insurance;
against the liabilities that the trustee may incur working as a registered trustee.
(2) The Inspector - General may, by legislative instrument, determine what constitutes adequate and appropriate professional indemnity insurance, and adequate and appropriate fidelity insurance, in relation to either or both of the following:
(a) specified circumstances;
(b) one or more specified classes of registered trustees.
Offence
(3) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person intentionally or recklessly fails to comply with the requirement.
(4) A person commits an offence of strict liability if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person fails to comply with the requirement.
Division 30 -- Annual trustee returns
Registered trustee must lodge annual return
(1) A person who is a registered trustee during all or part of a trustee return year for the person must, within 1 month after the end of that year, lodge with the Inspector - General a return that conforms with subsection (3).
(2) Each of the following is a trustee return year for a person who is or was registered as a trustee under section 20 - 30:
(a) the period of 12 months beginning on the day on which that registration first began;
(b) each subsequent period of 12 months.
(3) A return under subsection (1) must:
(a) be in the approved form; and
(b) include evidence that the person has, during the whole of any period of the year during which the person was registered as a trustee, maintained:
(i) adequate and appropriate professional indemnity insurance; and
(ii) adequate and appropriate fidelity insurance;
against the liabilities that the person may incur working as a registered trustee.
(4) The Inspector - General may, on the application of the registered trustee made before the end of the period for lodging a return under subsection (1), extend, or further extend, that period.
Offence
(5) A person commits an offence of strict liability if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person fails to comply with the requirement.
Note: See also section 277B (about infringement notices).
Division 35 -- Notice requirements
35 - 1 Notice of significant events
Registered trustee must lodge notice
(1) A registered trustee must lodge with the Inspector - General a notice, in the approved form, if any of the following events occur:
(a) the trustee becomes an insolvent under administration;
(b) a bankruptcy notice is issued under this Act in relation to the trustee as debtor, or a corresponding notice is issued in relation to the trustee as debtor under a law of an external Territory or a law of a foreign country;
(c) the trustee is convicted of an offence involving fraud or dishonesty;
(d) the trustee is disqualified from managing corporations under Part 2D.6 of the Corporations Act 2001 , or under a law of an external Territory or a law of a foreign country;
(e) the trustee ceases to have:
(i) adequate and appropriate professional indemnity insurance; or
(ii) adequate and appropriate fidelity insurance;
against the liabilities that the trustee may incur working as a registered trustee;
(f) the trustee is issued with a notice under section 40 - 40 of Schedule 2 to the Corporations Act 2001 (a show - cause notice) in relation to the trustee's registration as a liquidator under that Act;
(g) the trustee's registration as a liquidator under the Corporations Act 2001 is suspended or cancelled;
(h) any other event prescribed.
The notice must be lodged within 5 business days after the registered trustee could reasonably be expected to be aware that the event has occurred.
Offence
(2) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person intentionally or recklessly fails to comply with the requirement.
Registered trustee must lodge notice
(1) A registered trustee must lodge with the Inspector - General a notice, in the approved form, if any of the following events occur:
(a) information included in an annual trustee return, or in an annual administration return, prepared by or on behalf of the trustee is or becomes inaccurate in a material particular;
(b) any other event prescribed.
The notice must be lodged within 10 business days after the registered trustee could reasonably be expected to be aware that the event has occurred.
Offence
(2) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person intentionally or recklessly fails to comply with the requirement.
Note: See also section 277B (about infringement notices).
Division 40 -- Disciplinary and other action
40 - 1 Simplified outline of this Division
Remedying failure to lodge documents or give information or documents
The Inspector - General may direct a registered trustee to comply with a requirement to lodge a document, or give any information or document, to the Inspector - General. If the trustee fails to comply with the direction, the Inspector - General can direct that the trustee accept no further appointments or seek an order from the Court directing the trustee to comply.
Correcting and completing information given to the Inspector - General
If the Inspector - General reasonably suspects that information that a registered trustee is required to give the Inspector - General under this Act is incomplete or inaccurate, the Inspector - General can direct the trustee to confirm, complete or correct the information. The Inspector - General can also direct the trustee to tell someone about the defect in the information. If the trustee fails to comply with a direction, the Inspector - General can direct that the trustee accept no further appointments or seek an order from the Court directing the trustee to comply.
Other grounds for a direction not to accept further appointments
There are other grounds on which the Inspector - General can issue a direction not to accept further appointments, for example, if the registered trustee fails to comply with a direction to convene a meeting.
Suspending or cancelling registration
An individual's registration as a trustee can be suspended or cancelled.
The registration is automatically cancelled if the registered trustee becomes an insolvent under administration or dies.
In some circumstances, the Inspector - General can suspend or cancel the registration of a person as a trustee. The Inspector - General can also give a registered trustee notice to show - cause why the trustee should continue to be registered. If the Inspector - General is not satisfied with the answer, the Inspector - General can refer the matter to a committee which will make a decision on what action should be taken.
An industry body can give the Inspector - General notice of possible grounds for disciplinary action.
If a registration is suspended, the trustee can apply to the Inspector - General to have the suspension lifted or shortened.
A decision about the suspension or cancellation of the registration of a trustee is reviewable by the Administrative Review Tribunal (see Division 96 of this Schedule).
Subdivision B -- Direction to comply
40 - 5 Registered trustee to remedy failure to lodge documents or give information or documents
Application of this section
(1) This section applies if a registered trustee fails to comply with a requirement to lodge any document, or give any information or document, that the trustee is required under this Act to lodge with or give to the Inspector - General.
Inspector - General may give direction to comply
(2) The Inspector - General may, in writing, direct the trustee to comply with the requirement within 10 business days after the notice is given.
(3) The Inspector - General may, on the application of a registered trustee made before the end of the period referred to in subsection (2), extend, or further extend, that period.
Consequences for failing to comply
(4) If the trustee does not comply within the period, the Inspector - General may do either or both of the following:
(a) give a direction under subsection 40 - 15(1) (direction not to accept further appointments);
(b) apply to the Court for an order, under section 30 (general powers of Courts in bankruptcy), section 45 - 1 of this Schedule or any other provision that is relevant, directing the trustee to comply with the requirement within such time as is specified in the order.
Direction is not a legislative instrument
(5) A direction under subsection (2) is not a legislative instrument.
Relationship with other laws
(6) Nothing in this section limits the operation of any other provision of this Act, or any other law, in relation to a person who fails to comply with a requirement to lodge a document with, or give information or a document to, the Inspector - General.
40 - 10 Registered trustee to correct inaccuracies etc.
Application of this section
(1) This section applies if the Inspector - General reasonably suspects that information that a registered trustee is required under this Act to give the Inspector - General (whether in a document lodged or given to the Inspector - General or otherwise) is incomplete or incorrect in any particular.
Inspector - General may give direction to correct information etc.
(2) The Inspector - General may, in writing, direct the trustee to do one or more of the following within a period of 10 business days after the direction is given:
(a) confirm to the Inspector - General that the information is complete and correct;
(b) complete or correct the information (as the case requires);
(c) notify any persons specified by the Inspector - General in the direction of the addition or correction.
(3) The Inspector - General may, on the application of a registered trustee made before the end of the period referred to in subsection (2), extend, or further extend, that period.
Consequences for failing to comply
(4) If the trustee does not comply within the period, the Inspector - General may do either or both of the following:
(a) give a direction under subsection 40 - 15(1) (direction not to accept further appointments);
(b) apply to the Court for an order, under section 30 (general powers of Courts in bankruptcy), section 45 - 1 of this Schedule or any other provision that is relevant, directing the trustee to comply with the requirement within such time as is specified in the order.
Direction is not a legislative instrument
(5) A direction under subsection (2) is not a legislative instrument.
Relationship with other laws
(6) Nothing in this section limits the operation of any other provision of this Act, or any other law, in relation to a person giving incomplete or incorrect information.
40 - 15 Direction not to accept further appointments
Inspector - General may give direction not to accept further appointments
(1) The Inspector - General may, in writing, direct a registered trustee not to accept any further appointments as a trustee, or not to accept any further appointments as a trustee during a period specified in the direction, if:
(a) the trustee has failed to comply with a direction given to the trustee under section 40 - 5 (direction to remedy failure to lodge documents, or give information or documents); or
(b) the trustee has failed to comply with a direction given to the trustee under section 40 - 10 (direction to correct inaccuracies); or
(c) a committee has decided under paragraph 40 - 55(1)(d) that the Inspector - General should give the direction referred to in that paragraph; or
(d) the trustee has failed to comply with a direction given to the trustee under section 70 - 70 (direction to give relevant material); or
(e) the trustee has failed to comply with a direction given to the trustee under subsection 75 - 20(1) or (2) (direction to convene a meeting of creditors or comply with requirements in relation to such a meeting).
Condition of registration to comply with direction
(2) If the Inspector - General gives a direction to a registered trustee under subsection (1), it is a condition of the trustee's registration that the trustee must comply with the direction.
Withdrawal of direction
(3) The Inspector - General may withdraw a direction given under subsection (1).
(4) The condition is removed from the trustee's registration if the Inspector - General withdraws the direction.
Direction is not a legislative instrument
(5) A direction under subsection (1) is not a legislative instrument.
Relationship with other laws
(6) Nothing in this section limits the operation of any other provision of this Act, or any other law, in relation to:
(a) a person who fails to comply with a requirement to lodge a document with, or give information or a document to, the Inspector - General; or
(b) a person giving incomplete or incorrect information; or
(c) any matter in relation to which a committee makes a decision under subsection 40 - 55(1).
(7) Nothing in this section limits the power of the Inspector - General under this Act, or any other law, to apply to the Court for an order in relation to a failure to comply with a direction mentioned in subsection (1).
Subdivision C -- Automatic cancellation
40 - 20 Automatic cancellation
(1) The registration of a person as a trustee is cancelled if:
(a) the person becomes an insolvent under administration; or
(b) the person dies.
(2) The cancellation takes effect on the day the event mentioned in subsection (1) happens.
Subdivision D -- Inspector - General may suspend or cancel registration
40 - 25 Inspector - General may suspend registration
(1) The Inspector - General may suspend the registration of a person as a trustee if:
(a) the person is disqualified from managing corporations under Part 2D.6 of the Corporations Act 2001 , or under a law of an external Territory or a law of a foreign country; or
(b) the person ceases to have:
(i) adequate and appropriate professional indemnity insurance; or
(ii) adequate and appropriate fidelity insurance;
against the liabilities that the person may incur working as a registered trustee; or
(c) the person's registration as a liquidator under the Corporations Act 2001 has been cancelled or suspended, other than in compliance with a written request by the person to cancel or suspend the registration; or
(d) the person owes more than the prescribed amount of notified estate charges; or
(e) if the Court has made an order under section 90 - 15 that the person repay remuneration--the person has failed to repay the remuneration; or
(f) the person has been convicted of an offence involving fraud or dishonesty; or
(g) the person lodges a request with the Inspector - General in the approved form to have the registration suspended.
(2) Nothing in this section affects the operation of Part VIIC of the Crimes Act 1914 .
Note: Part VIIC of the Crimes Act 1914 includes provisions that, in certain circumstances, relieve persons from the requirement to disclose spent convictions and require persons aware of such convictions to disregard them.
40 - 30 Inspector - General may cancel registration
(1) The Inspector - General may cancel the registration of a person as a trustee if:
(a) the person is disqualified from managing corporations under Part 2D.6 of the Corporations Act 2001 , or under a law of an external Territory or a law of a foreign country; or
(b) the person ceases to have:
(i) adequate and appropriate professional indemnity insurance; or
(ii) adequate and appropriate fidelity insurance;
against the liabilities that the person may incur working as a registered trustee; or
(c) the person's registration as a liquidator under the Corporations Act 2001 has been cancelled, other than in compliance with a written request by the person to cancel the registration; or
(d) the person owes more than the prescribed amount of notified estate charges; or
(e) if the Court has made an order under section 90 - 15 that the person repay remuneration--the person has failed to repay the remuneration; or
(f) the person has been convicted of an offence involving fraud or dishonesty; or
(g) the person lodges a request with the Inspector - General in the approved form to have the registration cancelled.
(2) Nothing in this section affects the operation of Part VIIC of the Crimes Act 1914 .
Note: Part VIIC of the Crimes Act 1914 includes provisions that, in certain circumstances, relieve persons from the requirement to disclose spent convictions and require persons aware of such convictions to disregard them.
40 - 35 Notice of suspension or cancellation
Application of this section
(1) This section applies if the Inspector - General decides under section 40 - 25 or 40 - 30 to suspend or cancel the registration of a person as a trustee.
Inspector - General must give notice of decision
(2) The Inspector - General must, within 10 business days after making the decision, give the person a written notice setting out the decision, and the reasons for the decision.
When decision comes into effect
(3) The decision comes into effect on the day after the notice is given to the person.
Failure to give notice does not affect validity of decision
(4) A failure by the Inspector - General to give the notice under subsection (2) within 10 business days does not affect the validity of the decision.
Subdivision E -- Disciplinary action by committee
40 - 40 Inspector - General may give a show - cause notice
(1) The Inspector - General may give a registered trustee notice in writing asking the trustee to give the Inspector - General a written explanation why the trustee should continue to be registered, if the Inspector - General believes that:
(a) the trustee no longer has the qualifications, experience, knowledge and abilities prescribed under paragraph 20 - 20(4)(a); or
(b) the trustee has committed an act of bankruptcy within the meaning of this Act or a corresponding law of an external Territory or a foreign country; or
(c) the trustee is disqualified from managing corporations under Part 2D.6 of the Corporations Act 2001 , or under a law of an external Territory or a law of a foreign country; or
(d) the trustee has ceased to have:
(i) adequate and appropriate professional indemnity insurance; or
(ii) adequate and appropriate fidelity insurance;
against the liabilities that the person may incur working as a registered trustee; or
(e) the trustee has breached a current condition imposed on the trustee; or
(f) the trustee has contravened a provision of this Act; or
(g) the trustee's registration as a liquidator under the Corporations Act 2001 has been cancelled or suspended, other than in compliance with a written request by the trustee to cancel or suspend the registration; or
(h) the trustee owes more than the prescribed amount of notified estate charges; or
(i) if the Court has made an order under section 90 - 15 that the trustee repay remuneration--the trustee has failed to repay the remuneration; or
(j) the trustee has been convicted of an offence involving fraud or dishonesty; or
(k) the trustee is permanently or temporarily unable to perform the functions and duties of a trustee because of physical or mental incapacity; or
(l) the trustee has failed to carry out adequately and properly (whether in Australia or in an external Territory or in a foreign country):
(i) the duties of a trustee; or
(ii) any other duties or functions that a registered trustee is required to carry out under a law of the Commonwealth or of a State or Territory, or under the general law; or
(m) if the trustee is or was the administrator of a debt agreement--the trustee has failed to carry out adequately and properly (whether in Australia or in an external Territory or in a foreign country) the duties of an administrator in relation to a debt agreement; or
(n) the trustee is not a fit and proper person; or
(o) the trustee is not resident in Australia or in another prescribed country; or
(p) the trustee has failed to comply with a standard prescribed for the purposes of subsection (4).
(2) A notice under subsection (1) is not a legislative instrument.
(3) Nothing in this section affects the operation of Part VIIC of the Crimes Act 1914 .
Note: Part VIIC of the Crimes Act 1914 includes provisions that, in certain circumstances, relieve persons from the requirement to disclose spent convictions and require persons aware of such convictions to disregard them.
(4) The Insolvency Practice Rules may prescribe standards applicable to the exercise of powers, or the carrying out of duties, of registered trustees.
40 - 45 Inspector - General may convene a committee
(1) The Inspector - General may convene a committee to make a decision of a kind mentioned in section 40 - 55 in relation to a registered trustee, or registered trustees.
(2) The committee must consist of:
(a) the Inspector - General; and
(b) a registered trustee chosen by a prescribed body; and
(c) a person appointed by the Minister.
Note 1: Section 50 - 5 sets out the knowledge and experience that a prescribed body must be satisfied a person has before making an appointment under paragraph (2)(b).
Note 2: Section 50 - 10 sets out the matters of which the Minister must be satisfied before making an appointment under paragraph (2)(c).
40 - 50 Inspector - General may refer matters to the committee
The Inspector - General may refer a registered trustee to a committee convened under section 40 - 45 if the Inspector - General:
(a) gives the trustee a notice under section 40 - 40 (a show - cause notice); and
(b) either:
(i) does not receive an explanation within 20 business days after the notice is given; or
(ii) is not satisfied by the explanation.
40 - 55 Decision of the committee
(1) If a registered trustee is referred to a committee under section 40 - 50, the committee must decide one or more of the following:
(a) that the trustee should continue to be registered;
(b) that the trustee's registration should be suspended for a period, or until the occurrence of an event, specified in the decision;
(c) that the trustee's registration should be cancelled;
(d) that the Inspector - General should direct the trustee not to accept any further appointments as trustee, or not to accept any further appointments as trustee during the period specified in the decision;
(e) that the trustee should be publicly admonished or reprimanded;
(f) that a condition specified in the decision should be imposed on the trustee;
(g) that a condition should be imposed on all other registered trustees that they must not allow the trustee to carry out any of the functions or duties, or exercise any of the powers, of a trustee on their behalf (whether as employee, agent, consultant or otherwise) for a period specified in the decision of no more than 10 years;
(h) that the Inspector - General should publish specified information in relation to the committee's decision and the reasons for that decision.
(2) Without limiting paragraph (1)(f), conditions imposed under that paragraph may include one or more of the following:
(a) a condition that the trustee engage in, or refrain from engaging in, specified conduct;
(b) a condition that the trustee engage in, or refrain from engaging in, specified conduct except in specified circumstances;
(c) a condition that the trustee publish specified information;
(d) a condition that the trustee notify a specified person or class of persons of specified information;
(e) a condition that the trustee publish a specified statement;
(f) a condition that the trustee make a specified statement to a specified person or class of persons.
(3) In making its decision, the committee may have regard to:
(a) any information provided to the committee by the Inspector - General; and
(b) any explanation given by the trustee; and
(c) any other information given by the trustee to the committee; and
(d) if the trustee is or was also a registered liquidator under the Corporations Act 2001 --any information in relation to the trustee given to the committee by ASIC or a committee convened under the Insolvency Practice Schedule (Corporations); and
(e) any other matter that the committee considers relevant.
The committee must give the registered trustee and the Inspector - General a report setting out:
(a) the committee's decision in relation to the trustee; and
(b) the committee's reasons for that decision; and
(c) if the committee decides under paragraph 40 - 55(1)(f) that the trustee should be registered subject to a condition:
(i) the condition; and
(ii) the committee's reasons for imposing the condition; and
(d) if the committee decides under paragraph 40 - 55(1)(g) that a condition should be imposed on all other registered trustees in relation to the trustee:
(i) the condition; and
(ii) the committee's reasons for imposing the condition.
40 - 65 Inspector - General must give effect to the committee's decision
The Inspector - General must give effect to the committee's decision.
Subdivision F -- Lifting or shortening suspension
40 - 70 Application to lift or shorten suspension
Application of this section
(1) This section applies if a person's registration as a trustee has been suspended.
Suspended trustee may apply to the Inspector - General
(2) The person may apply to the Inspector - General:
(a) for the suspension to be lifted; or
(b) for the period of the suspension to be shortened.
(3) The application must be lodged with the Inspector - General in the approved form.
(4) The application is properly made if subsection (3) is complied with.
40 - 75 Inspector - General may convene a committee to consider applications
(1) The Inspector - General may convene a committee for the purposes of considering an application, or applications, made under section 40 - 70.
(2) The committee must consist of:
(a) the Inspector - General; and
(b) a registered trustee chosen by a prescribed body; and
(c) a person appointed by the Minister.
Note 1: Section 50 - 5 sets out the knowledge and experience that a prescribed body must be satisfied a person has before making an appointment under paragraph (2)(b).
Note 2: Section 50 - 10 sets out the matters of which the Minister must be satisfied before making an appointment under paragraph (2)(c).
40 - 80 Inspector - General must refer applications to a committee
(1) The Inspector - General must refer an application that is properly made under section 40 - 70 to a committee convened under section 40 - 75 for consideration.
(2) The Inspector - General must do so within 2 months after receiving the application.
40 - 85 Committee to consider applications
(1) If an application is referred to a committee, the committee must consider the application.
(2) Unless the applicant otherwise agrees, the committee must interview the applicant for the purposes of considering the application.
(3) Within 10 business days after interviewing the applicant or obtaining the agreement of the applicant as referred to in subsection (2), the committee must:
(a) decide whether the suspension should be lifted, or the period of the suspension shortened; and
(b) if the period of the suspension is to be shortened--specify when the suspension is to end.
The committee must give the applicant and the Inspector - General a report setting out:
(a) the committee's decision on the application; and
(b) the committee's reasons for that decision; and
(c) if the committee decides that the period of the suspension should be shortened--when the suspension is to end.
40 - 95 Committee's decision given effect
If the committee decides that a suspension is to be lifted or shortened, the suspension is lifted or shortened in accordance with the decision.
Subdivision G -- Action initiated by industry body
40 - 100 Notice by industry bodies of possible grounds for disciplinary action
Industry body may lodge notice
(1) An industry body may lodge with the Inspector - General a notice in the approved form (an industry notice ):
(a) stating that the body reasonably suspects that there are grounds for the Inspector - General:
(i) to suspend the registration of a registered trustee under section 40 - 25; or
(ii) to cancel the registration of a registered trustee under section 40 - 30; or
(iii) to give a registered trustee a notice under section 40 - 40 (a show - cause notice); or
(iv) to impose a condition on a registered trustee under another provision of this Schedule; and
(b) identifying the registered trustee; and
(c) including the information and copies of any documents upon which the suspicion is founded.
Inspector - General must consider information and documents
(2) The Inspector - General must consider the information and the copies of any documents included with the industry notice.
Inspector - General must give notice if no action to be taken
(3) If, after such consideration, the Inspector - General decides to take no action in relation to the matters raised by the industry notice, the Inspector - General must give the industry body written notice of that fact.
45 business days to consider and decide
(4) The consideration of the information and the copies of any documents included with the industry notice must be completed and, if the Inspector - General decides to take no action, a notice under subsection (3) given, within 45 business days after the industry notice is lodged.
Inspector - General not precluded from taking action
(5) The Inspector - General is not precluded from:
(a) suspending the registration of a registered trustee under section 40 - 25; or
(b) cancelling the registration of a registered trustee under section 40 - 30; or
(c) giving a registered trustee a notice under section 40 - 40 (a show - cause notice); or
(d) imposing a condition on a registered trustee under another provision of this Schedule;
wholly or partly on the basis of information or a copy of a document included with the industry notice, merely because the Inspector - General has given a notice under subsection (3) in relation to the matters raised by the industry notice.
Notice to industry body if Inspector - General takes action
(6) If the Inspector - General does take action of the kind mentioned in subsection (5) wholly or partly on the basis of information or a copy of a document included with the industry notice, the Inspector - General must give the industry body notice of that fact.
Notices are not legislative instruments
(7) A notice under subsection (3) or (6) is not a legislative instrument.
40 - 105 No liability for notice given in good faith etc.
(1) An industry body is not liable civilly, criminally or under any administrative process for giving a notice under subsection 40 - 100(1) if:
(a) the body acted in good faith in giving the notice; and
(b) the suspicion that is the subject of the notice is a reasonable suspicion.
(2) A person who, in good faith, makes a decision as a result of which the industry body gives a notice under subsection 40 - 100(1) is not liable civilly, criminally or under any administrative process for making the decision.
(3) A person who, in good faith, gives information or a document to an industry body that is included, or a copy of which is included, in a notice under subsection 40 - 100(1) is not liable civilly, criminally or under any administrative process for giving the information or document.
40 - 110 Meaning of industry bodies
The Insolvency Practice Rules may prescribe industry bodies for the purposes of this Subdivision.
Division 45 -- Court oversight of registered trustees
45 - 1 Court may make orders in relation to registered trustees
(1) The Court may make such orders as it thinks fit in relation to a registered trustee.
(2) The Court may exercise the power under subsection (1):
(a) on its own initiative, during proceedings before the Court; or
(b) on application under subsection (3).
(3) Each of the following persons may apply for an order under subsection (1):
(a) the registered trustee;
(b) the Inspector - General.
(4) Without limiting the matters which the Court may take into account when making orders, the Court may take into account:
(a) whether the registered trustee has faithfully performed, or is faithfully performing, the registered trustee's duties; and
(b) whether an action or failure to act by the registered trustee is in compliance with this Act and the Insolvency Practice Rules; and
(c) whether an action or failure to act by the registered trustee is in compliance with an order of the Court; and
(d) whether any person has suffered, or is likely to suffer, loss or damage because of an action or failure to act by the registered trustee; and
(e) the seriousness of the consequences of any action or failure to act by the registered trustee, including the effect of that action or failure to act on public confidence in registered trustees as a group.
(5) This section does not limit the Court's powers under any other provision of this Act, or under any other law.
45 - 5 Court may make orders about costs
(1) Without limiting section 45 - 1, the Court may make orders in relation to a registered trustee that deal with the costs of a matter considered by the Court.
(2) Those orders may include an order that:
(a) the registered trustee is personally liable for some or all of those costs; and
(b) the registered trustee is not entitled to be reimbursed by a regulated debtor's estate or creditors in relation to some or all of those costs.
(3) This section does not limit the Court's powers under any other provision of this Act, or under any other law.
Division 50 -- Committees under this Part
50 - 1 Simplified outline of this Division
This Division sets out common rules for committees established under this Part.
If a prescribed body appoints a person to a committee, that person must have the prescribed knowledge or experience or, if no knowledge or experience is prescribed, the knowledge and experience necessary to carry out the functions to be performed. If the Minister appoints a person to a committee, that person must have knowledge or experience in a field such as business, law (including the law of bankruptcy) or public policy relating to bankruptcy.
A single committee may consider more than one matter. The consideration of a matter is not affected by a change in the membership of the committee. A matter may be adjourned or transferred to another committee. The Insolvency Practice Rules may prescribe procedures and make other rules for committees.
The use and disclosure of information given to a committee is restricted to listed purposes.
50 - 5 Prescribed body appointing a person to a committee
Application of this section
(1) This section applies if a prescribed body is to appoint a person to a committee under this Part.
Prescribed body must only appoint a person with appropriate knowledge and experience
(2) The prescribed body is to appoint a person as a member of the committee only if the prescribed body is satisfied that the person has:
(a) if any knowledge or experience is prescribed in relation to appointments of the kind to be made--that knowledge or experience; or
(b) if no knowledge or experience is prescribed in relation to appointments of the kind to be made--the knowledge and experience necessary to carry out the person's functions as a member of the committee if appointed.
50 - 10 Minister appointing a person to a committee
Application of this section
(1) This section applies if the Minister is to appoint a person to a committee under this Part.
Matters of which the Minister must be satisfied before appointing
(2) The Minister is to appoint a person as a member of the committee only if the Minister is satisfied that the person is qualified for appointment by virtue of his or her knowledge of, or experience in, one or more of the following fields:
(a) business;
(b) law, including the law relating to bankruptcy;
(c) economics;
(d) accounting;
(e) public policy relating to bankruptcy.
50 - 15 Single committee may consider more than one matter
A single committee may be convened under this Part to consider one or more of the following:
(a) a matter or matters relating to one applicant for registration as a trustee;
(b) a matter or matters relating to more than one applicant for registration as a trustee;
(c) a matter or matters relating to one registered trustee;
(d) a matter or matters relating to more than one registered trustee.
50 - 20 Ongoing consideration of matters by committee
If a committee is convened under this Part to consider a matter:
(a) the committee's powers, functions and duties in relation to the matter are not affected by a change in the membership of the committee; and
(b) the committee may adjourn its consideration of the matter, and may do so more than once; and
(c) the matter may be transferred to another committee with powers, functions and duties under this Part in relation to matters of that kind.
50 - 25 Procedure and other rules relating to committees
The Insolvency Practice Rules may provide for and in relation to:
(a) the manner in which the committees convened under this Part are to perform their functions, including:
(i) meetings of committees; and
(ii) the number of committee members required to constitute a quorum; and
(iii) disclosure of interests in a matter before a committee; and
(iv) the manner in which questions are to be decided by the committee; and
(b) the reconstitution of a committee; and
(c) the termination of the consideration of a matter by a committee, and the transfer of matters to another committee.
50 - 30 Remuneration of committee members
(1) A member of a committee convened under this Part is entitled to receive the remuneration that is determined by the Remuneration Tribunal. If no determination of that remuneration by the Tribunal is in operation, the member is entitled to receive such remuneration as the Minister determines in writing.
(2) A member is entitled to receive such allowances as the Minister determines in writing.
(3) This section has effect subject to the Remuneration Tribunal Act 1973 .
50 - 35 Committee must only use information etc. for purposes for which disclosed
Offence
(1) A person commits an offence if:
(a) the person is or was a member of a committee convened under this Part; and
(b) information or a document is or was disclosed to the person for the purposes of exercising powers or performing functions as a member of the committee; and
(c) the person uses or discloses the information or document.
Exception--information or document disclosed to ASIC or another committee etc.
(2) Subsection (1) does not apply if the information or document:
(a) is used or disclosed by the person for the purposes of exercising powers or performing functions as a member of the committee mentioned in subsection (1); or
(b) is disclosed:
(i) to ASIC to assist ASIC to exercise its powers or perform its functions under Chapter 5 of the Corporations Act 2001 or the Insolvency Practice Schedule (Corporations); or
(ii) to a committee convened under Part 2 of the Insolvency Practice Schedule (Corporations) to assist the committee to exercise its powers or perform its functions under that Part; or
(iii) to another committee convened under this Part to assist the committee to exercise its powers or perform its functions under this Part; or
(iv) to enable or assist a body prescribed for the purposes of this paragraph to perform its disciplinary function in relation to its members; or
(v) in order to enable or assist an authority or person in a State or Territory, or a foreign country, to perform or exercise a function or power that corresponds, or is analogous, to any of the committee's or the Inspector - General's functions and powers; or
(vi) to a court or tribunal in relation to proceedings before the court or tribunal.
Note 1: A defendant bears an evidential burden in relation to the matter in subsection (2) (see subsection 13.3(3) of the Criminal Code ).
Note 2: Chapter 5 of the Corporations Act 2001 deals with external administration of companies.
Part 3 -- General rules relating to estate administrations
55 - 1 Simplified outline of this Part
This Part sets out requirements for conducting the administration of a regulated debtor's estate.
The main provisions deal with:
(a) the remuneration of the trustee; and
(b) the duties of the trustee in handling the money and other property of the estate; and
(c) conflicts of interest; and
(d) the duties of the trustee to keep appropriate records, to report to the Inspector - General and to give information, documents and reports to creditors and others; and
(e) creditor meetings; and
(f) the creation and conduct of a committee to monitor the administration (called a committee of inspection); and
(g) the rights of creditors to review the administration; and
(h) the rights of creditors to remove the trustee and appoint another; and
(i) the review of the administration by the Court.
There are additional rules that apply to the administration of a regulated debtor's estate (for example, about appointment of the trustee) in this Act.
Division 60 -- Remuneration and other benefits received by the trustee
60 - 1 Simplified outline of this Division
Remuneration
The trustee of a regulated debtor's estate is entitled to receive remuneration for necessary work properly performed by the trustee in relation to the administration.
The amount of remuneration will usually be set under a remuneration determination. Remuneration determinations are made in most cases by the creditors or the committee of inspection (if there is one).
However, if there is no remuneration determination, the trustee will be entitled to receive a reasonable amount for the work. The maximum amount that the trustee may receive in this way is $5,000 (exclusive of GST and indexed).
The Court may review the remuneration of the trustee of a regulated debtor's estate and may also make orders under Division 90 about remuneration (including ordering repayment of remuneration).
Other benefits
The trustee of a regulated debtor's estate must not:
(a) employ a related entity, unless certain requirements are met; or
(b) purchase any assets of the estate; or
(c) get any other benefits or profits from the administration of the estate.
Subdivision B -- Remuneration of trustees
Remuneration in accordance with remuneration determinations
(1) The trustee of a regulated debtor's estate is entitled to receive remuneration for necessary work properly performed by the trustee in relation to the administration of the regulated debtor's estate, in accordance with the remuneration determinations (if any) for the trustee (see sections 60 - 10 and 60 - 11).
Remuneration for trustees if no remuneration determination made
(2) If no remuneration determination is made in relation to necessary work properly performed by a trustee in relation to the administration of the regulated debtor's estate, the trustee is entitled to receive reasonable remuneration for the work. However, that remuneration must not exceed the maximum default amount.
Remuneration to be paid from the funds in the estate
(3) The remuneration is to be paid from the funds in the regulated debtor's estate.
60 - 10 Remuneration determinations--creditors or committee of inspection
A determination, specifying remuneration that a trustee of a regulated debtor's estate is entitled to receive for necessary work properly performed by the trustee in relation to the administration of the estate, may be made:
(a) by resolution of the creditors; or
(b) if there is a committee of inspection and a determination is not made under paragraph (a)--by the committee of inspection.
60 - 11 Remuneration determinations--Inspector - General
(1) The Inspector - General may, in prescribed circumstances, make a determination specifying remuneration that a trustee of a regulated debtor's estate is entitled to receive for necessary work properly performed by the trustee in relation to the administration of the estate.
(2) The Inspector - General must have regard to any matter prescribed in making a determination under subsection (1).
(3) Insolvency Practice Rules made for the purposes of subsection (2) may provide for and in relation to:
(a) a matter referred to in section 60 - 12; or
(b) any other matter.
60 - 12 Remuneration determinations--general rules
Manner in which remuneration may be specified
(1) A determination under section 60 - 10 or 60 - 11 may specify remuneration that the trustee is entitled to receive in either or both of the following ways:
(a) by specifying an amount of remuneration;
(b) by specifying a method for working out an amount of remuneration.
Remuneration on a time - cost basis
(2) If a determination under section 60 - 10 or 60 - 11 specifies that the trustee is entitled to receive remuneration worked out wholly or partly on a time - cost basis, the determination must include a cap on the amount of remuneration worked out on a time - cost basis that the trustee is entitled to receive.
Remuneration on a percentage basis
(3) If a determination under section 60 - 10 or 60 - 11 specifies that the trustee is entitled to receive remuneration worked out wholly or partly on the basis of a specified percentage of money received by the trustee in respect of the regulated debtor's estate:
(a) the determination must specify the money to which the specified percentage applies; and
(b) the specified percentage must not be greater than the percentage prescribed for the purposes of this paragraph.
More than one remuneration determination may be made
(4) To avoid doubt, more than one determination under section 60 - 10 or 60 - 11 may be made in relation to a particular trustee and a particular regulated debtor's estate.
60 - 15 Maximum default amount
Maximum default amount
(1) The maximum default amount for a trustee is an amount (exclusive of GST) worked out as follows:
(a) if the trustee is appointed as the trustee of the regulated debtor's estate during the financial year beginning on 1 July 2016--$5,000;
(b) if the trustee is appointed as the trustee of the regulated debtor's estate during a financial year beginning on or after 1 July 2017--the greater of:
(i) the amount worked out by multiplying the indexation factor for the financial year (worked out under subsections (3) and (4)) by the maximum default amount for a trustee appointed as the trustee of a regulated debtor's estate during the previous financial year; and
(ii) the amount (if any) prescribed for the purposes of this subparagraph.
Rounding
(2) Amounts worked out under subsection (1) must be rounded to the nearest whole dollar (rounding 50 cents upwards).
Indexation factor
(3) Subject to subsection (4), the indexation factor for a financial year is the number worked out by dividing the index number for the March quarter immediately preceding that financial year by the index number for the March quarter immediately preceding that first - mentioned March quarter.
(4) If an indexation factor worked out under subsection (3) would be less than 1, the indexation factor is to be increased to 1.
Changes to CPI index reference period and publication of substituted index numbers
(5) In working out the indexation factor:
(a) use only the index numbers published in terms of the most recently published index reference period for the Consumer Price Index; and
(b) disregard index numbers published in substitution for previously published index numbers (except where the substituted numbers are published to take account of changes in the index reference period).
Definition--index number
(6) In this section:
"index number" , in relation to a quarter, means the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Statistician in respect of that quarter.
Subdivision E -- Duties of trustees relating to remuneration and benefits etc.
60 - 20 Trustee must not derive profit or advantage from the administration of the estate
Deriving profit or advantage from the estate
(1) A trustee of a regulated debtor's estate must not directly or indirectly derive any profit or advantage from the administration of the estate.
Circumstances in which profit or advantage is taken to be derived
(2) To avoid doubt, a trustee of a regulated debtor's estate is taken to derive a profit or advantage from the administration of the estate if:
(a) the trustee directly or indirectly derives a profit or advantage from a transaction (including a sale or purchase) entered into for or on account of the estate; or
(b) the trustee directly or indirectly derives a profit or advantage from a creditor of the estate; or
(c) a related entity of the trustee directly or indirectly derives a profit or advantage from the administration of the estate.
Exceptions
(3) Subsection (1) does not apply to the extent that:
(a) another provision of this Act, or of another law, requires or permits the trustee to derive the profit or advantage; or
(b) the Court gives leave to the trustee to derive the profit or advantage.
Note: Subsection (1) would not, for example, prevent the trustee from recovering remuneration for necessary work properly performed by the trustee in relation to the administration of the estate, as the trustee is permitted to do so under other provisions of this Act.
(4) Despite paragraph (2)(c), subsection (1) does not apply to the extent that:
(a) the trustee employs or engages a person to provide services in connection with the administration of the estate; and
(b) a related entity of the trustee directly or indirectly derives a profit or advantage as a result of that employment or engagement; and
(c) one of the following is satisfied:
(i) the trustee does not know, and could not reasonably be expected to know, that the related entity would derive that profit or advantage;
(ii) the creditors, by resolution, agree to the related entity deriving the profit or advantage;
(iii) it is not reasonably practicable in all the circumstances to obtain the agreement, by resolution, of the creditors to the related entity deriving the profit or advantage and the cost of employing or engaging the person to provide the services is reasonable in all the circumstances.
(4A) Despite paragraph (2)(c), subsection (1) does not apply to the extent that a related entity of the trustee directly or indirectly derives a profit or advantage:
(a) from remuneration paid to the trustee in accordance with section 60 - 5 of this Schedule; or
(b) from a profit or advantage covered by subsection (4).
(5) Subsection (1) does not apply to the extent that the profit or advantage is a payment that:
(a) is made to the trustee by or on behalf of the Commonwealth or an agency or authority of the Commonwealth; and
(b) is of a kind prescribed.
Offence
(6) A person commits an offence of strict liability if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person fails to comply with the requirement.
Note: A defendant bears an evidential burden in relation to the matters in subsections (3), (4) and (5) (see subsection 13.3(3) of the Criminal Code ).
Effect of contravention of this section
(7) A transaction or any other arrangement entered into in contravention of this section may be set aside by the Court.
60 - 21 Inducements to be appointed as trustee
A person (the first person ) commits an offence if:
(a) the first person gives, or agrees or offers to give, to another person any valuable consideration; and
(b) the first person does so with the intention of:
(i) securing the first person's appointment or nomination as a trustee of a regulated debtor's estate; or
(ii) securing or preventing the appointment or nomination of a third person as a trustee of a regulated debtor's estate.
Penalty: Imprisonment for 6 months.
60 - 26 Payments in respect of performance by third parties
No payments for performance of trustee's ordinary duties by another person
(1) If a trustee of a regulated debtor's estate receives remuneration for his or her services, a payment in respect of the performance by another person of the ordinary duties that are required by this Act to be performed by the trustee is not allowed in the trustee's accounts.
Exception
(2) Subsection (1) does not apply to a payment if the payment was authorised by resolution of:
(a) the creditors; or
(b) the committee of inspection (if any).
Offence
(3) A person commits an offence of strict liability if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person fails to comply with the requirement.
Note: A defendant bears an evidential burden in relation to the matter in subsection (2) (see subsection 13.3(3) of the Criminal Code ).
65 - 1 Simplified outline of this Division
The trustee of a regulated debtor's estate has duties to:
(a) promptly pay all money of the estate into an account (called an administration account); and
(b) promptly deposit instruments such as securities with a bank; and
(c) not pay any money into the account unless it is money of a regulated debtor's estate for which the account is held; and
(d) only pay money out of the account if it is for a legitimate purpose.
The trustee may keep a single account for more than one estate.
People with a financial interest in the administration of a regulated debtor's estate (such as creditors) may ask the Court to give directions to the trustee about the way money and other property of the estate is to be handled.
If the trustee of a regulated debtor's estate does not comply with this Division, the trustee may have to pay penalties, be paid less remuneration or be removed as trustee.
65 - 5 Trustee must pay all money into the administration account
Trustee must pay money into the administration account
(1) The trustee of a regulated debtor's estate must pay all money received by the trustee on behalf of, or in relation to, the estate into an administration account for the estate within 5 business days after receipt.
Exception
(2) If the Court gives a direction that is inconsistent with subsection (1), that subsection does not apply to the extent of the inconsistency.
Offence
(3) A person commits an offence of strict liability if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person fails to comply with the requirement.
Note: A defendant bears an evidential burden in relation to the matter in subsection (2) (see subsection 13.3(3) of the Criminal Code ).
65 - 10 Administration accounts
A bank account is an administration account in relation to a regulated debtor's estate if:
(a) the account is maintained in relation to the regulated debtor's estate; and
(b) if any requirements are prescribed in relation to administration accounts of regulated debtors' estates, it complies with those requirements.
65 - 15 Trustee must not pay other money into the administration account
Trustee must not pay other money into the administration account
(1) The trustee of a regulated debtor's estate must not pay any money into the administration account for the estate if it is not received by the trustee on behalf of, or in relation to:
(a) the estate; or
(b) where the trustee maintains the account in relation to more than one estate of a regulated debtor or regulated debtors--one of those estates.
Exception
(2) If the Court gives a direction that is inconsistent with subsection (1), that subsection does not apply to the extent of the inconsistency.
Offence
(3) A person commits an offence of strict liability if:
(a) the person is subject to the requirement under subsection (1); and
(b) the person fails to comply with the requirement.
Note: A defendant bears an evidential burden in relation to the matter in subsection (2) (see subsection 13.3(3) of the Criminal Code ).
65 - 20 Consequences for failure to pay money into administration account
Application of this section
(1) This section applies if:
(a) the trustee of a regulated debtor's estate:
(i) is subject to a requirement under subsection 65 - 5(1) (paying money into administration account); and
(ii) fails to comply with the requirement in relation to an amount of money; and
(b) the amount exceeds:
(i) $50; or
(ii) if another amount is prescribed--that other amount.
Exception
(2) Subsection (1) does not apply if, on the application of the trustee of the regulated debtor's estate, the Court is satisfied that the trustee had sufficient reason for failing to comply with the requirement in relation to the amount.
Trustee must pay penalty on excess
(3) The trustee must, as a penalty, pay interest to the Commonwealth on the excess, worked out:
(a) at the rate of 20% per year; or
(b) if another rate is prescribed--at that other rate;
for the period during which the trustee fails to comply with the requirement.
(4) The trustee is personally liable for, and is not entitled to be reimbursed by the estate in relation to, the payment of that interest.
65 - 25 Paying money out of administration account
Money only to be paid out of administration account in accordance with this Act etc.
(1) The trustee of a regulated debtor's estate must not pay any money out of the administration account for the estate otherwise than:
(a) for purposes related to the administration of the estate; or
(b) in accordance with this Act; or
(c) in accordance with a direction of the Court.
Offence
(2) A person commits an offence of strict liability if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person fails to comply with the requirement.
65 - 31 Interest on administration account
(1) The trustee of a regulated debtor's estate is entitled, in his or her personal capacity, to each payment of interest on the administration account for the estate, less an amount equal to the bank fees or charges (if any) paid or payable on the account during the period to which the interest relates.
(2) If, under subsection (1), the trustee is only entitled to part of a payment of interest, the rest of that payment:
(a) if the administration account contains money from only one estate of a regulated debtor--forms part of that estate; or
(b) if the administration account contains money from more than one estate of a regulated debtor or regulated debtors--forms part of those estates in proportion to the respective amounts of money held in the administration account on account of each of those estates.
(3) Interest on money in the administration account for a regulated debtor's estate is not subject to taxation under a law of the Commonwealth, a State or a Territory except as provided in Part 2 of the Bankruptcy (Estate Charges) Act 1997 .
65 - 32 Reconciliation of administration account
Application of this section
(1) This section applies if the trustee maintains a single bank account for more than one estate of a regulated debtor or regulated debtors.
Trustee must maintain separate records
(2) The trustee must:
(a) maintain a separate record for each of those estates of:
(i) money received by the trustee from the regulated debtor in relation to the estate; and
(ii) payments made by the trustee in relation to the estate; and
(iii) the balance of money held by the trustee in relation to the estate; and
(b) at least once every 25 business days, reconcile the balance relating to each estate held in the account with the corresponding record maintained under paragraph (a).
Securities must be deposited with administration account bank
(1) The trustee of a regulated debtor's estate must deposit in a bank:
(a) the bills of exchange; and
(b) the promissory notes; and
(c) any other negotiable instrument or security;
payable to the regulated debtor or the trustee as soon as practicable after they are received by the trustee.
Exception
(2) If the Court gives a direction that is inconsistent with subsection (1), that subsection does not apply to the extent of the inconsistency.
Offence
(3) A person commits an offence of strict liability if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person fails to comply with the requirement.
Note 1: A defendant bears an evidential burden in relation to the matter in subsection (2) (see subsection 13.3(3) of the Criminal Code ).
Note 2: See also section 277B (about infringement notices).
Delivery of securities
(4) The bills, notes or other instrument or security must be delivered out on the signed request of the trustee.
65 - 45 Handling of money and securities--Court directions
(1) The Court may, on application, give directions regarding the payment, deposit or custody of:
(a) money; and
(b) bills of exchange, promissory notes and other negotiable instruments and securities;
that are payable to, or held by, the trustee of a regulated debtor's estate.
(2) The Court may, on application, give directions authorising the trustee of a regulated debtor's estate to make payments into and out of a special bank account.
(3) Without limiting subsection (2), the Court may:
(a) authorise the payments for the time and on the terms it thinks fit; and
(b) if the Court thinks the account is no longer required--at any time order it to be closed.
(4) A copy of an order under paragraph (3)(b) must be served by the trustee on the bank with which the special bank account was opened.
(5) An application under this section may be made by a person with a financial interest in the administration of the regulated debtor's estate.
65 - 46 Review of payments to third parties
(1) The Insolvency Practice Rules may provide for and in relation to the review by the Inspector - General of a bill of costs for services provided by a person in relation to the administration of a regulated debtor's estate.
(2) Without limiting subsection (1), the Insolvency Practice Rules may provide for and in relation to:
(a) the application for the review (including who may apply); and
(b) the powers available to the Inspector - General in relation to the review; and
(c) the provision of information or documents to the Inspector - General for the purposes of the review; and
(d) the decisions that may be made by the Inspector - General in relation to the review; and
(e) the notification of decisions made by the Inspector - General; and
(f) the consideration of the decisions made by the Inspector - General in relation to the review by the Court.
65 - 50 Rules in relation to consequences for failure to comply with this Division
The Insolvency Practice Rules may provide for and in relation to:
(a) the payment by the trustee of a regulated debtor's estate of interest at such rate, on such amount and in respect of such period as is prescribed; and
(b) disallowance of all or of such part as is prescribed of the remuneration of the trustee of a regulated debtor's estate; and
(c) the removal from office of the trustee of a regulated debtor's estate by the Court; and
(d) the payment by the trustee of a regulated debtor's estate of any expenses occasioned by reason of his or her default;
in cases where the trustee of a regulated debtor's estate contravenes or fails to comply with this Division (including Insolvency Practice Rules made under this Division).
70 - 1 Simplified outline of this Division
The trustee of a regulated debtor's estate must:
(a) give annual reports of the administration of the estate (called annual administrative returns) to the Inspector - General; and
(b) keep books of meetings and other affairs of the estate; and
(c) allow those books to be audited if required to do so; and
(d) allow access to those books by creditors; and
(e) give creditors and others requested information, documents and reports relating to the administration.
The committee of inspection (if there is one) may also request information, documents and reports from the trustee under Division 80.
If the trustee does not comply with a request, the Inspector - General may direct the trustee to do so. If the trustee does not comply with the direction, the Inspector - General may ask the Court to order compliance. Alternatively, the person who requested the information may ask the Court to order compliance with the request.
Subdivision B -- Annual administration return
70 - 5 Annual administration return
Application of this section
(1) This section applies if a person is the trustee of a regulated debtor's estate during all or part of a financial year.
Annual administration return to be lodged
(2) The person must lodge a return in relation to the person's administration of that estate during that year or part of that year (as the case requires).
(3) The return must:
(a) be in the approved form; and
(b) be lodged with the Inspector - General within 25 business days after the end of the financial year.
Late lodgement fee payable
(4) If the person does not lodge the return within the period mentioned in paragraph (3)(b), the person must pay a late lodgement fee, determined by the Minister by legislative instrument, by way of penalty.
Subdivision C -- Record - keeping
70 - 6 Subdivision applies to the Official Trustee
This Subdivision applies to the Official Trustee in the same way as it applies to the trustee of a regulated debtor's estate.
Trustee must keep proper books
(1) The trustee of a regulated debtor's estate must keep proper books in which the trustee must cause to be made:
(a) entries or minutes of proceedings at meetings relating to the administration of the estate; and
(b) such other entries as are necessary to give a complete and correct record of the trustee's administration of the estate.
(2) The trustee must:
(a) ensure that the books are available at the trustee's office for inspection; and
(b) permit a creditor, or another person acting on the creditor's behalf, to inspect the books at all reasonable times.
Exception
(3) Subsections (1) and (2) do not apply if the trustee has a reasonable excuse.
Offence
(4) A person commits an offence of strict liability if:
(a) the person is subject to a requirement under subsection (1) or (2); and
(b) the person fails to comply with the requirement.
Note 1: A defendant bears an evidential burden in relation to the matter in subsection (3) (see subsection 13.3(3) of the Criminal Code ).
Note 2: See also section 277B (about infringement notices).
70 - 11 Trustee's books when trading
Trustee must keep trading books etc.
(1) If the trustee of a regulated debtor's estate carries on a business previously carried on by the regulated debtor, the trustee must:
(a) keep such books as are usually kept in relation to the carrying on of a business of that kind; and
(b) permit a creditor, or another person acting on the creditor's behalf, to inspect the books at all reasonable times.
Offence
(2) A person commits an offence of strict liability if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person fails to comply with the requirement.
Note: See also section 277B (about infringement notices).
70 - 15 Audit of administration books--Inspector - General
Inspector - General may audit books, or cause them to be audited
(1) The Inspector - General may audit, or cause to be audited, the books referred to in section 70 - 5 (annual administration return), 70 - 10 (administration books) or 70 - 11 (books when trading).
Audit on the Inspector - General's initiative or on request
(2) The audit may be conducted:
(a) on the Inspector - General's own initiative; or
(b) at the request of the regulated debtor; or
(c) at the request of a creditor.
Auditor must prepare a report
(3) The person carrying out the audit must prepare a report on the audit.
Inspector - General must give a copy of the report
(4) The Inspector - General must give a copy of the report to:
(a) the trustee of the estate; and
(b) the person who requested the report (if any).
Costs of an audit
(5) The costs of an audit under this section must be determined by the Inspector - General and is to be borne by the estate.
Qualified privilege in relation to audit reports
(6) A person who conducts an audit under this section has qualified privilege (within the meaning of the Corporations Act 2001 ) in respect of any report prepared under subsection (3) that is given to a person under subsection (4) or otherwise published.
70 - 20 Audit of administration books--on order of the Court
(1) The Court may order that the Inspector - General audit, or cause to be audited, the books referred to in section 70 - 5 (annual administration return), 70 - 10 (administration books) or 70 - 11 (books when trading).
(2) The order may be made on application of any person with a financial interest in the administration of the regulated debtor's estate.
(3) The Court may make such orders in relation to the audit as it thinks fit, including:
(a) the preparation and provision of a report on the audit; and
(b) orders as to the costs of the audit.
70 - 25 Trustee to comply with auditor requirements
Application of this section
(1) This section applies if books are audited under section 70 - 15 or 70 - 20.
Trustee must give assistance etc.
(2) The trustee of the estate must give to the person carrying out the audit such books, information and assistance as the person reasonably requires.
Exception
(3) Subsection (2) does not apply if the trustee has a reasonable excuse.
Offence
(4) A person commits an offence of strict liability if:
(a) the person is subject to a requirement under subsection (2); and
(b) the person fails to comply with the requirement.
Note 1: A defendant bears an evidential burden in relation to the matter in subsection (3) (see subsection 13.3(3) of the Criminal Code ).
Note 2: See also section 277B (about infringement notices).
70 - 30 Transfer of books to new trustee
Application of this section
(1) This section applies if:
(a) a person (the former trustee ) ceases to be the trustee of a regulated debtor's estate; and
(b) a registered trustee (the new trustee ) is appointed as trustee of the estate instead.
Transfer of books to new trustee
(2) The former trustee must transfer to the new trustee, within the handover period, possession or control of any books relating to the administration of the estate that are in the former trustee's possession or control.
(3) The handover period is:
(a) the period of 10 business days beginning on the day after the new trustee is appointed; or
(b) if another period is agreed between the former trustee and the new trustee--that other period.
(4) The former trustee may take a copy of any part of the books before transferring possession or control of them to the new trustee.
New trustee must accept the books
(5) The new trustee must take possession or accept control of any books relating to the administration of the regulated debtor's estate.
New trustee must allow inspection etc.
(6) After possession or control of the books is transferred, the new trustee must allow the former trustee to inspect them at any reasonable time and take a copy of any part of the books.
Offence
(7) A person commits an offence if:
(a) the person is subject to a requirement under subsection (2), (5) or (6); and
(b) the person intentionally or recklessly fails to comply with the requirement.
Lien against books not prejudiced
(8) If the new trustee is entitled to take possession or control of the books under this section:
(a) a person is not entitled, as against the new trustee, to claim a lien on the books; and
(b) such a lien is not otherwise prejudiced.
70 - 35 Retention, return or destruction of books
Retention period for books
(1) The last trustee to administer a regulated debtor's estate must retain all books that:
(a) relate to the administration of the estate; and
(b) are in the last trustee's possession or control at the end of the administration;
for a period (the retention period ) of 7 years from the end of the administration.
Exception--reasonable excuse
(2) Subsection (1) does not apply if the trustee has a reasonable excuse.
Exception--books given by regulated debtor
(3) Despite subsection (1), any books that the regulated debtor has given to the trustee of the estate may be returned to the regulated debtor within the retention period:
(a) if there is a committee of inspection--as the committee directs; or
(b) otherwise--as the creditors by resolution direct.
Return or destruction of books at end of retention period
(4) The trustee may return the books to the regulated debtor, or destroy the books, at the end of the retention period.
Offence
(5) A person commits an offence if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person intentionally or recklessly fails to comply with the requirement.
Note: A defendant bears an evidential burden in relation to the matters in subsections (2) and (3) (see subsection 13.3(3) of the Criminal Code ).
Relationship with other laws
(6) Subsections (3) and (4) do not apply to the extent that the trustee is under an obligation to retain the books, or a part of the books, under another provision of this Act or under any other law.
70 - 36 Return or destruction of irrelevant books
(1) The trustee of a regulated debtor's estate may, at any time during the administration of the estate, return to the regulated debtor, or destroy, any books that:
(a) the regulated debtor has given to any trustee of the estate; and
(b) the trustee considers will not help the administration of the estate.
(2) Despite subsection (1), the trustee is not permitted to return the books to the regulated debtor, or to destroy them, if the trustee knows, or reasonably ought to know, that:
(a) another person had a lien over the books before the trustee took possession of them; or
(b) another person has a legal right to possession of the books; or
(c) the trustee is not permitted to return the books to the regulated debtor or destroy them (as the case requires), because of another provision of this Act, or a provision of any other law.
Subdivision D -- Giving information etc. to creditors and others
70 - 37 Subdivision applies to the Official Trustee
This Subdivision applies to the Official Trustee in the same way as it applies to the trustee of a regulated debtor's estate.
70 - 40 Right of creditors to request information etc. from trustee
(1) The creditors may by resolution request the trustee of a regulated debtor's estate to:
(a) give information; or
(b) provide a report; or
(c) produce a document;
to the creditors.
(2) The trustee must comply with the request unless:
(a) the information, report or document is not relevant to the administration of the regulated debtor's estate; or
(b) the trustee would breach his or her duties in relation to the administration of the regulated debtor's estate if the trustee complied with the request; or
(c) it is otherwise not reasonable for the trustee to comply with the request.
(3) The Insolvency Practice Rules may prescribe circumstances in which it is, or is not, reasonable for a trustee to comply with a request of a kind mentioned in subsection (1).
70 - 45 Right of individual creditor to request information etc. from trustee
(1) A creditor may request the trustee of a regulated debtor's estate to:
(a) give information; or
(b) provide a report; or
(c) produce a document;
to the creditor.
(2) The trustee must comply with the request unless:
(a) the information, report or document is not relevant to the administration of the regulated debtor's estate; or
(b) the trustee would breach his or her duties in relation to the administration of the regulated debtor's estate if the trustee complied with the request; or
(c) it is otherwise not reasonable for the trustee to comply with the request.
(3) The Insolvency Practice Rules may prescribe circumstances in which it is, or is not, reasonable for the trustee of a regulated debtor's estate to comply with a request of a kind mentioned in subsection (1).
70 - 50 Reporting to creditors
(1) The Insolvency Practice Rules may provide for and in relation to the obligations of trustees of regulated debtors' estates:
(a) to give information; and
(b) to provide reports; and
(c) to produce documents;
to creditors or the regulated debtor.
(2) Without limiting subsection (1), the Insolvency Practice Rules may provide for and in relation to:
(a) other circumstances in which the trustee of a regulated debtor's estate must give information, provide a report or produce a document to a creditor or the regulated debtor; and
(b) the manner and form in which information is to be given, a report provided or a document produced; and
(c) the timeframes in which information is to be given, a report provided or a document produced; and
(d) who is to bear the cost of giving information, providing a report or producing a document.
(3) The Insolvency Practice Rules may:
(a) make different provision in relation to different kinds of estate administration; and
(b) provide that specified requirements imposed under the Insolvency Practice Rules may be replaced or modified, by resolution, by:
(i) the creditors; or
(ii) if there is a committee of inspection--the committee.
Subdivision E -- Other requests for information etc.
70 - 51 Subdivision applies to the Official Trustee
This Subdivision applies to the Official Trustee in the same way as it applies to the trustee of a regulated debtor's estate.
70 - 55 Commonwealth may request information etc.
Application of this section
(1) This section applies if either:
(a) a former employee of a regulated debtor has made a claim for financial assistance from the Commonwealth in relation to unpaid employment entitlements; or
(b) the Commonwealth considers that such a claim is likely to be made.
Commonwealth may request information etc.
(2) The Commonwealth may request the trustee of the regulated debtor's estate to provide specified information, reports or documents in relation to the administration of the regulated debtor's estate.
(3) The trustee must comply with the request.
(4) The Insolvency Practice Rules may provide for and in relation to who is to bear the cost of providing the information, reports or documents.
70 - 56 Right of regulated debtor to request information etc. from trustee
(1) A regulated debtor may request the trustee of the regulated debtor's estate to:
(a) give information; or
(b) provide a report; or
(c) produce a document;
to the regulated debtor.
(2) The trustee must comply with the request unless:
(a) the information, report or document is not relevant to the administration of the regulated debtor's estate; or
(b) the trustee would breach his or her duties in relation to the administration of the regulated debtor's estate if the trustee complied with the request; or
(c) it is otherwise not reasonable for the trustee to comply with the request.
(3) The Insolvency Practice Rules may prescribe circumstances in which it is, or is not, reasonable for a trustee of a regulated debtor's estate to comply with a request of a kind mentioned in subsection (1).
Subdivision F -- Reporting to the Inspector - General
70 - 60 Insolvency Practice Rules may provide for reporting to Inspector - General
(1) The Insolvency Practice Rules may provide for and in relation to the obligations of trustees of regulated debtor's estates:
(a) to give information; and
(b) to provide reports; and
(c) to produce documents;
to the Inspector - General.
(2) Without limiting subsection (1), the Insolvency Practice Rules may provide for and in relation to:
(a) the manner and form in which information is to be given, a report provided or a document produced; and
(b) the timeframes in which information is to be given, a report provided or a document produced; and
(c) who is to bear the cost of giving information, providing a report or producing a document.
(3) The Insolvency Practice Rules may make different provision in relation to different kinds of estate administration.
Note: A failure to give information, provide a report or produce a document to the Inspector - General in accordance with the Insolvency Practice Rules may lead to disciplinary action under Subdivision B of Division 40 of Part 2 of this Schedule.
Subdivision G -- Trustee may be compelled to comply with requests for information etc.
70 - 65 Application of this Subdivision
(1) This Subdivision applies if the trustee of a regulated debtor's estate refuses a request made by a person under:
(a) Subdivision D; or
(b) a rule made under section 70 - 50; or
(c) Subdivision E; or
to give information, provide a report or produce a document.
(2) In this Subdivision:
(a) the information, report or document is referred to as the relevant material ; and
(b) the request is referred to as the request for relevant material ; and
(c) giving the information, providing the report or producing the document is referred to as giving the relevant material.
70 - 70 Inspector - General may direct trustee to comply with the request for relevant material
(1) The Inspector - General may, in writing, direct the trustee to give all or part of the relevant material to the person or persons who made the request for the relevant material within 5 business days after the direction is given.
(2) A direction under subsection (1) is not a legislative instrument.
70 - 75 Inspector - General must notify trustee before giving a direction under section 70 - 70
(1) Before giving the trustee a direction under section 70 - 70, the Inspector - General must give the trustee notice in writing:
(a) stating that the Inspector - General proposes to give the trustee a direction under that section; and
(b) identifying:
(i) the relevant material, or the part of the relevant material, that the Inspector - General proposes to direct be given; and
(ii) the person or persons to whom the Inspector - General proposes to direct that the relevant material, or that part of the relevant material, be given; and
(c) inviting the trustee to make a written submission to the Inspector - General within 10 business days after the notice is given, stating:
(i) whether the trustee has any objection to giving the relevant material, or that part of the relevant material, to a person or persons as proposed; and
(ii) if the trustee has such an objection--the reasons for that objection.
(2) If the trustee objects to giving the relevant material, or part of the relevant material, to a person, the Inspector - General must take into account the reasons for that objection when deciding whether to direct that the relevant material, or that part of the relevant material, be given to the person.
(3) A notice under subsection (1) is not a legislative instrument.
70 - 80 Inspector - General must not direct trustee to give the relevant material if trustee entitled not to comply with the request
The Inspector - General must not give a direction under section 70 - 70 to give the relevant material, or part of the relevant material, to a person if the Inspector - General is satisfied that the trustee was entitled, under a provision of this Act or any other law, not to comply with the request for the relevant material, or that part of the relevant material, to the person.
70 - 85 Inspector - General may impose conditions on use of the relevant material
Inspector - General may, by notice, impose conditions
(1) The Inspector - General may, by notice in writing to the person or persons to whom the relevant material is to be given, impose conditions on the use and disclosure of the relevant material, or part of the relevant material, by the person or persons.
Offence
(2) A person commits an offence if:
(a) the Inspector - General directs that the relevant material, or part of the relevant material, be given to the person; and
(b) the Inspector - General has given the person notice under subsection (1) imposing a condition in relation to the use or disclosure of that material by the person; and
(c) the person does not comply with the condition.
Penalty: 10 penalty units or imprisonment for 3 months, or both.
Notice is not a legislative instrument
(3) A notice under subsection (1) is not a legislative instrument.
70 - 90 Court may order relevant material to be given
(1) The person or persons who made the request for the relevant material may apply to the Court for an order that the trustee give the person all or part of the relevant material.
(2) If:
(a) the Inspector - General gives the trustee a direction under section 70 - 70 in relation to all or part of the relevant material; and
(b) the trustee does not comply with the direction;
the Inspector - General may apply to the Court for an order that the trustee comply with the direction.
(3) On application under subsection (1) or (2), the Court may:
(a) order the trustee to give the person, or any or all of the persons, who made the request for the relevant material all or part of that material; and
(b) make such other orders, including orders as to costs, as it thinks fit.
Division 75 -- Meetings of creditors
75 - 1 Simplified outline of this Division
The trustee of a regulated debtor's estate may convene creditor meetings at any time and must convene them in particular circumstances, for example when directed to do so by certain creditors or by the Inspector - General.
Requirements for convening and holding meetings (including notice, agenda, quorum, voting on proposals and costs) are set out in the Insolvency Practice Rules.
There is a mechanism for resolving a matter without holding a meeting.
75 - 2 Division applies to the Official Trustee
This Division applies to the Official Trustee in the same way as it applies to the trustee of a regulated debtor's estate.
75 - 5 Other obligations to convene meetings not affected
Nothing in this Division limits the operation of any other provision of this Act, or any other law, imposing an obligation to convene a meeting in relation to a regulated debtor, or the administration of a regulated debtor's estate.
75 - 10 Trustee may convene meetings
The trustee of a regulated debtor's estate may convene a meeting of the creditors at any time.
75 - 15 Trustee must convene meeting in certain circumstances
(1) The trustee of a regulated debtor's estate must convene a meeting of the creditors if:
(a) where there is a committee of inspection--the committee of inspection directs the trustee to do so; or
(b) the creditors direct the trustee to do so by resolution; or
(c) at least 25% in value of the creditors direct the trustee to do so in writing; or
(d) both of the following are satisfied:
(i) less than 25%, but more than 10%, in value of the creditors direct the trustee to do so in writing;
(ii) security for the cost of holding the meeting is given to the trustee before the meeting is convened.
(2) However, the trustee of a regulated debtor's estate need not comply with the direction if the direction is not reasonable.
(3) The Insolvency Practice Rules may prescribe circumstances in which a direction is, or is not, reasonable.
(4) For the purposes of paragraphs (1)(c) and (d), the value of the creditors is to be worked out by reference to the value of the creditors' claims against the regulated debtor's estate that are known at the time the direction is given.
75 - 20 Trustee must convene meeting if required by the Inspector - General
(1) The Inspector - General may, in writing, direct the trustee of a regulated debtor's estate to convene a meeting of the creditors.
(2) The Inspector - General may include in the direction requirements to be complied with by the trustee in notifying the creditors of the meeting and in conducting the meeting.
(3) The trustee must comply with a direction given under subsection (1), and any requirements included in the direction under subsection (2).
(4) A direction given under subsection (1) is not a legislative instrument.
75 - 25 Trustee's representative at meetings
(1) The trustee of a regulated debtor's estate may, in writing, appoint a person to represent the trustee at a meeting.
(2) Subsection (1) does not apply to a meeting of a kind prescribed.
(3) If the trustee is not personally present at a meeting, then a reference in a provision of this Act to a trustee, in respect of matters occurring at or in connection with the meeting, is a reference to a person appointed to represent the trustee at the meeting.
75 - 30 Inspector - General may attend meetings
(1) The Inspector - General is entitled to attend any meeting of creditors held under this Act.
(2) Subject to any provision of this Act (including any provision in relation to voting), the Inspector - General is entitled to participate in any meeting of creditors held under this Act.
75 - 35 Commonwealth may attend certain meetings etc.
If:
(a) a former employee of a regulated debtor has made a claim for financial assistance from the Commonwealth in relation to unpaid employment entitlements; or
(b) the Commonwealth considers that such a claim is likely to be made;
the Commonwealth is entitled to nominate a representative to attend any meeting of creditors held in relation to the administration of the regulated debtor's estate.
75 - 40 Proposals to creditors without meeting
Proposal by notice to creditors
(1) The trustee of a regulated debtor's estate may at any time put a proposal to the creditors by giving notice, in writing, under this section.
Content and service of notice
(2) The notice must:
(a) contain a single proposal; and
(b) include a statement of the reasons for the proposal and the likely impact it will have on creditors (if it is passed); and
(c) be given to each creditor who would be entitled to receive notice of a meeting of creditors; and
(d) invite the creditor to either:
(i) vote Yes or No on the proposal; or
(ii) object to the proposal being resolved without a meeting of creditors; and
(e) specify a reasonable time by which replies must be received by the trustee (in order to be taken into account).
Evidentiary certificate relating to proposals
(3) A certificate signed by the trustee of the regulated debtor's estate stating any matter relating to a proposal under this section is prima facie evidence of the matter.
Insolvency Practice Rules relating to proposals
(4) The Insolvency Practice Rules may provide for and in relation to proposals without meeting under this section.
(5) Without limiting subsection (4), the Insolvency Practice Rules may provide for and in relation to:
(a) the circumstances in which a proposal is taken to be passed; and
(b) whether a proposal, if passed, is to be taken to have been passed as a resolution or a special resolution; and
(c) costs and security for those costs in relation to a proposal.
75 - 50 Rules relating to meetings
(1) The Insolvency Practice Rules may provide for and in relation to meetings of creditors.
(2) Without limiting subsection (1), the Insolvency Practice Rules may provide for and in relation to:
(a) the circumstances in which meetings must or may be convened; and
(b) notice for convening meetings; and
(c) agenda; and
(d) information to be given to creditors; and
(e) who is to preside at meetings; and
(f) the number of creditors required to constitute a quorum; and
(g) proxies and attorneys; and
(h) motions; and
(i) voting (including casting votes); and
(j) the circumstances in which a resolution or a special resolution must or may be put to creditors in a meeting; and
(k) the circumstances in which a resolution or a special resolution put to creditors in a meeting is passed; and
(l) facilities, including electronic communication facilities, to be available at meetings; and
(m) minutes; and
(n) costs in relation to meetings and security for those costs.
Division 80 -- Committees of inspection
80 - 1 Simplified outline of this Division
Creditors of a regulated debtor's estate may decide that there is to be a committee of inspection to monitor the administration of the estate and to give assistance to the trustee.
Appointing the committee
Each of the following have rights to appoint members to the committee (and to remove those members and fill the vacancy):
(a) the creditors by resolution;
(b) a single creditor who is owed, or a group of creditors who together are owed, a large amount;
(c) a single employee who is owed, or a group of employees who together are owed, a large amount.
Once a person exercises a right in one capacity to appoint a member, the person cannot exercise a right in another capacity to do so. A person can exercise the right in a particular capacity to appoint only one person (unless the person is filling a vacancy in that appointment).
Procedures and powers
This Division also deals with the procedures and powers of committees of inspection (including directing that information, documents and reports be provided by the trustee and obtaining specialist advice).
The trustee of a regulated debtor's estate must have regard to directions of the committee but is not obliged to comply.
Review
The Court may inquire into and make orders about the conduct of committees of inspection.
80 - 2 Division applies to the Official Trustee
This Division applies to the Official Trustee in the same way as it applies to the trustee of a regulated debtor's estate.
80 - 5 Application of sections 80 - 10 to 80 - 25
The rules in sections 80 - 10 to 80 - 25 apply if the trustee of a regulated debtor's estate convenes a meeting of creditors for the purpose of determining either or both of the following:
(a) whether there is to be a committee of inspection for the regulated debtor's estate;
(b) if there is, or is to be, a committee of inspection--who are to be appointed members of the committee.
80 - 10 Committee of inspection
The creditors of a regulated debtor's estate may, by resolution, determine that there is to be a committee of inspection in relation to the administration of the estate.
80 - 15 Appointment and removal of members of committee of inspection by creditors generally
(1) The creditors of a regulated debtor's estate may, by resolution, appoint members of a committee of inspection in relation to the administration of the estate.
(2) The creditors of a regulated debtor's estate may by resolution:
(a) remove a person appointed as a member of the committee under this section; and
(b) appoint another person to fill a vacancy in the office of a member of the committee appointed under this section.
(3) A person is not entitled to vote on a resolution to appoint or remove a member of a committee of inspection under this section if:
(a) the person, acting either alone or with others, appoints a person as a member of the committee under section 80 - 20; or
(b) the person, acting either alone or with others, appoints a person as a member of the committee under section 80 - 25.
80 - 20 Appointment of committee member by large creditor
(1) A creditor representing at least 10% in value of the creditors, or a group of creditors who together represent at least 10% in value of the creditors, of a regulated debtor's estate may appoint a person as a member of a committee of inspection in relation to the administration of the estate.
(2) If a creditor or a group of creditors appoints a person as a member of a committee of inspection under this section, the creditor or group of creditors may:
(a) remove the person as a member of the committee; and
(b) appoint another person to fill a vacancy in the office of that member of the committee.
(3) A creditor, acting either alone or with others, is not entitled to appoint a person as a member of a committee of inspection under subsection (1) if:
(a) the creditor votes on a resolution to appoint or remove a member of the committee under section 80 - 15; or
(b) the creditor, acting either alone or with others, appoints a member of the committee under subsection 80 - 25(1); or
(c) the creditor, acting either alone or with others, has already appointed a member of the committee under subsection (1) of this section.
80 - 25 Appointment of committee member by employees
(1) Either:
(a) an employee of the regulated debtor; or
(b) the employees of the regulated debtor;
representing at least 50% in value of amounts owed to or in respect of employees by the regulated debtor, in respect of services rendered to or for the regulated debtor, may appoint a person as a member of a committee of inspection to represent the employees.
(2) If an employee or a group of employees appoints a person under this section, the employee or group of employees may:
(a) remove the person as a member of the committee; and
(b) appoint another person to fill a vacancy in the office of that member of the committee.
(3) An employee, acting either alone or with others, is not entitled to appoint a person as a member of a committee of inspection under subsection (1) if:
(a) the employee votes on a resolution to appoint or remove a member of the committee under section 80 - 15; or
(b) the employee, acting either alone or with others, appoints a member of the committee under subsection 80 - 20(1); or
(c) the employee, acting either alone or with others, has already appointed a member of the committee under subsection (1) of this section.
80 - 30 Committees of inspection--procedures etc.
(1) Subject to subsection (2), a committee of inspection is to determine its own procedures.
(2) The Insolvency Practice Rules may provide for and in relation to committees of inspection.
(3) Without limiting subsection (2), the Insolvency Practice Rules may provide for and in relation to:
(a) eligibility to be appointed as a member of a committee of inspection; and
(b) the convening of, conduct of, and procedure and voting at, meetings; and
(c) resignation and removal of members; and
(d) vacancies in membership.
80 - 35 Functions of committee of inspection
(1) A committee of inspection has the following functions:
(a) to advise and assist the trustee of the regulated debtor's estate;
(b) to give directions to the trustee of the regulated debtor's estate;
(c) to monitor the conduct of the administration of the estate;
(d) such other functions as are conferred on the committee by this Act;
(e) to do anything incidental or conducive to the performance of any of the above functions.
(2) The trustee of a regulated debtor's estate must have regard to any directions given to the trustee by the committee of inspection, but the trustee is not required to comply with such directions.
(3) If the trustee of a regulated debtor's estate does not comply with a direction, the trustee must make a written record of that fact, along with the trustee's reasons for not complying with the direction.
80 - 40 Committee of inspection may request information etc.
(1) A committee of inspection may request the trustee of a regulated debtor's estate to:
(a) give information; or
(b) provide a report; or
(c) produce a document;
to the committee.
(2) The trustee must comply with the request unless:
(a) the information, report or document is not relevant to the administration of the regulated debtor's estate; or
(b) the trustee would breach his or her duties in relation to the administration of the regulated debtor's estate if the trustee complied with the request; or
(c) it is otherwise not reasonable for the trustee to comply with the request.
(3) The Insolvency Practice Rules may prescribe circumstances in which it is, or is not, reasonable for a trustee to comply with a request of a kind mentioned in subsection (1).
80 - 45 Reporting to committee of inspection
(1) The Insolvency Practice Rules may provide for and in relation to the obligations of trustees of regulated debtors' estates:
(a) to give information; and
(b) to provide reports; and
(c) to produce documents;
to committees of inspection.
(2) Without limiting subsection (1), the Insolvency Practice Rules may provide for and in relation to:
(a) other circumstances in which the trustee must give information, provide a report or produce a document to a committee of inspection; and
(b) the manner and form in which information is to be given, a report provided or a document produced; and
(c) the timeframes in which information is to be given, a report provided or a document produced; and
(d) who is to bear the cost of giving information, providing a report or producing a document.
(3) The Insolvency Practice Rules may:
(a) make different provision in relation to different classes of regulated debtor, or regulated debtor's estates; and
(b) provide that specified requirements imposed under the Insolvency Practice Rules may be replaced or modified, by resolution, by:
(i) the creditors; or
(ii) the committee of inspection.
80 - 50 Committee of inspection may obtain specialist advice or assistance
(1) A committee of inspection may resolve that a member of the committee obtain, on behalf of the committee, such advice or assistance as the committee considers desirable in relation to the conduct of the administration of the regulated debtor's estate.
(2) The committee of inspection must obtain the approval of the trustee of the regulated debtor's estate or the Court before expenses are incurred in obtaining the advice or assistance.
(3) To avoid doubt, an expense incurred under subsection (2) is to be taken to be an expense of the administration of the estate, unless the Court orders otherwise.
80 - 55 Obligations of members of committee of inspection
Deriving profit or advantage from the estate
(1) A member of a committee of inspection must not directly or indirectly derive any profit or advantage from the administration of the regulated debtor's estate.
Circumstances in which profit or advantage is taken to be derived
(2) To avoid doubt, a member of a committee of inspection is taken to derive a profit or advantage from the administration of the regulated debtor's estate if:
(a) the member directly or indirectly derives a profit or advantage from a transaction (including a sale or purchase) entered into for or on account of the estate; or
(b) the member directly or indirectly derives a profit or advantage from a creditor of the estate; or
(c) a related entity of the member directly or indirectly derives a profit or advantage from the administration of the estate.
Exceptions
(3) Subsection (1) does not apply if the creditors resolve otherwise.
(4) The member of the committee is not entitled to vote on the resolution referred to in subsection (3).
(5) Subsection (1) does not apply to the extent that:
(a) another provision of this Act, or of another law, requires or permits the member of the committee of inspection to derive the profit or advantage; or
(b) the Court gives leave to the member of the committee to derive the profit or advantage.
Note: Subsection (1) would not, for example, prevent a creditor from recovering debts proved in the bankruptcy, as this is permitted under Division 2 of Part VI.
(6) Despite paragraph (2)(c), subsection (1) does not apply to the extent that:
(a) the profit or advantage arises because the trustee employs or engages a person to provide services in connection with the administration of the regulated debtor's estate; and
(b) the person is a related entity of a member of the committee of inspection; and
(c) one of the following applies:
(i) the member does not know, and could not reasonably be expected to know, that the trustee has employed or engaged a related entity of the member;
(ii) the creditors, by resolution, agree to the related entity being employed or engaged.
Offence
(7) A person commits an offence of strict liability if:
(a) the person is subject to a requirement under subsection (1); and
(b) the person fails to comply with the requirement.
Note: A defendant bears an evidential burden in relation to the matters in subsections (3), (5) and (6) (see subsection 13.3(3) of the Criminal Code ).
Effect of contravention of this section
(8) A transaction or any other arrangement entered into in contravention of this section may be set aside by the Court.
80 - 60 Obligations of creditor appointing a member of committee of inspection
Application of this section
(1) This section applies if a creditor representing at least 10% in value of the creditors of a regulated debtor's estate appoints a person under section 80 - 20 as a member of a committee of inspection in relation to the administration of the estate.
(2) The creditor must not directly or indirectly become the purchaser of any part of the regulated debtor's estate.
Exceptions
(3) Subsection (2) does not apply if the creditors resolve otherwise.
(4) The creditor is not entitled to vote on the resolution referred to in subsection (3).
(5) Subsection (2) does not apply to the extent that:
(a) another provision of this Act, or of another law, requires or permits the creditor to purchase the property; or
(b) the Court gives leave to the creditor to purchase the property.
Offence
(6) A person commits an offence of strict liability if:
(a) the person is subject to a requirement under subsection (2); and
(b) the person fails to comply with the requirement.
Note: A defendant bears an evidential burden in relation to the matters in subsections (3) and (5) (see subsection 13.3(3) of the Criminal Code ).
Effect of contravention of this section
(7) A transaction or any other arrangement entered into in contravention of this section may be set aside by the Court.
80 - 65 The Inspector - General may attend committee meetings
The Inspector - General is entitled to attend any meeting of a committee of inspection.
80 - 70 The Court may inquire into conduct of the committee
The Court may inquire into the conduct of a committee of inspection and make such orders as it thinks fit to ensure the proper conduct of the committee.
Division 85 -- Directions by creditors
85 - 1 Simplified outline of this Division
The trustee of a regulated debtor's estate must have regard to directions given to the trustee by the creditors of the estate but is not obliged to comply with those directions.
85 - 2 Division applies to the Official Trustee
This Division applies to the Official Trustee in the same way as it applies to the trustee of a regulated debtor's estate.
85 - 5 Trustee to have regard to directions given by creditors
(1) The creditors may, by resolution, give directions to the trustee of a regulated debtor's estate in relation to the administration of the estate.
(2) The trustee must have regard to any directions mentioned in subsection (1), but the trustee is not required to comply with such directions.
(3) If the trustee does not comply with a direction, the trustee must make a written record of that fact, along with the trustee's reasons for not complying with the direction.
(4) If there is a conflict between directions given by the creditors under subsection (1) and by the committee of inspection under section 80 - 35, directions given by the creditors override any directions given by the committee.
Division 90 -- Review of the administration of a regulated debtor's estate
90 - 1 Simplified outline of this Division
Review by the Court
The Court may inquire into the administration of a regulated debtor's estate either on its own initiative or on the application of the Inspector - General or a person with a financial interest in the administration of the regulated debtor's estate.
The Court has wide powers to make orders, including orders replacing the trustee or dealing with losses resulting from a breach of duty by the trustee.
Review by the Inspector - General
The Inspector - General may review a decision of the trustee of a regulated debtor's estate to withdraw funds from the estate for payment for the trustee's remuneration.
The Insolvency Practice Rules may set the powers and duties of the Inspector - General in conducting such a review and may deal with issues relating to the review process.
Removal of trustee by creditors
The creditors of a regulated debtor's estate may remove the trustee of the estate and appoint another. However, the trustee may apply to the Court to be reappointed.
Subdivision B -- Court powers to inquire and make orders
90 - 2 Subdivision applies to the Official Trustee
This Subdivision applies to the Official Trustee in the same way as it applies to the trustee of a regulated debtor's estate.
90 - 5 Court may inquire on own initiative
(1) The Court may, on its own initiative during proceedings before the Court, inquire into the administration of a regulated debtor's estate.
(2) The Court may, for the purposes of such an inquiry, require a person who is or has at any time been the trustee of the regulated debtor's estate to:
(a) give information; or
(b) provide a report; or
(c) produce a document;
to the Court in relation to the administration of the estate.
(3) This section does not limit the Court's powers under any other provision of this Act, or under any other law.
90 - 10 Court may inquire on application of creditors etc.
(1) The Court may, on the application of a person mentioned in subsection (2), inquire into the administration of a regulated debtor's estate.
(2) Each of the following persons may make an application for an inquiry:
(a) a person with a financial interest in the administration of the regulated debtor's estate;
(b) if the committee of inspection (if any) so resolves--a creditor, on behalf of the committee;
(c) the Inspector - General.
(3) The Court may, for the purposes of such an inquiry, require a person who is or has at any time been the trustee of the regulated debtor's estate to:
(a) give information; or
(b) provide a report; or
(c) produce a document;
to the Court in relation to the administration of the estate.
(4) If an application is made by a person referred to in paragraph (2)(b), the reasonable expenses associated with the application are to be taken to be expenses of the administration of the estate unless otherwise ordered by the Court.
(5) This section does not limit the Court's powers under any other provision of this Act, or under any other law.
90 - 15 Court may make orders in relation to estate administration
Court may make orders
(1) The Court may make such orders as it thinks fit in relation to the administration of a regulated debtor's estate.
Orders on own initiative or on application
(2) The Court may exercise the power under subsection (1):
(a) on its own initiative, during proceedings before the Court; or
(b) on application under section 90 - 20.
Examples of orders that may be made
(3) Without limiting subsection (1), those orders may include any one or more of the following:
(a) an order determining any question arising in the administration of the estate;
(b) an order that a person cease to be the trustee of the estate;
(c) an order that another person be appointed as the trustee of the estate;
(d) an order in relation to the costs of an action (including court action) taken by the trustee of the estate or another person in relation to the administration of the estate;
(e) an order in relation to any loss that the estate has sustained because of a breach of duty by the trustee;
(f) an order in relation to remuneration, including an order requiring a person to repay to the estate of a regulated debtor, or the creditors of a regulated debtor, remuneration paid to the person as trustee.
Matters that may be taken into account
(4) Without limiting the matters which the Court may take into account when making orders, the Court may take into account:
(a) whether the trustee has faithfully performed, or is faithfully performing, the trustee's duties; and
(b) whether an action or failure to act by the trustee is in compliance with this Act and the Insolvency Practice Rules; and
(c) whether an action or failure to act by the trustee is in compliance with an order of the Court; and
(d) whether the regulated debtor's estate or any person has suffered, or is likely to suffer, loss or damage because of an action or failure to act by the trustee; and
(e) the seriousness of the consequences of any action or failure to act by the trustee, including the effect of that action or failure to act on public confidence in registered trustees as a group.
Costs orders
(5) Without limiting subsection (1), an order mentioned in paragraph (3)(d) in relation to the costs of an action may include an order that:
(a) the trustee or another person is personally liable for some or all of those costs; and
(b) the trustee or another person is not entitled to be reimbursed by the regulated debtor's estate or creditors in relation to some or all of those costs.
Orders to make good loss sustained because of a breach of duty
(6) Without limiting subsection (1), an order mentioned in paragraph (3)(e) in relation to a loss may include an order that:
(a) the trustee is personally liable to make good some or all of the loss; and
(b) the trustee is not entitled to be reimbursed by the regulated debtor's estate or creditors in relation to the amount made good.
Section does not limit Court's powers
(7) This section does not limit the Court's powers under any other provision of this Act, or under any other law.
90 - 20 Application for Court order
(1) Each of the following persons may apply for an order under section 90 - 15:
(a) a person with a financial interest in the administration of the regulated debtor's estate;
(b) if the committee of inspection (if any) so resolves--a creditor, on behalf of the committee;
(c) the Inspector - General.
(2) If an application is made by a person referred to in paragraph (1)(b), the reasonable expenses associated with the application are to be taken to be expenses of the administration of the estate.
Subdivision C -- Review by Inspector - General
90 - 21 Review by Inspector - General
(1) The Inspector - General may carry out a review of the remuneration received by the trustee of a regulated debtor's estate for services performed by the trustee in relation to the administration of the estate.
(2) The Inspector - General may carry out a review under this Subdivision:
(a) on his or her own initiative; or
(b) on application by the regulated debtor or a creditor.
(3) The trustee, the regulated debtor or a creditor of the regulated debtor may apply to the Court for an order in relation to a decision of the Inspector - General in relation to the review.
(4) In making an order under subsection (3), the Court must have regard to whether the remuneration received by the trustee is reasonable, taking into account any or all of the following matters:
(a) the extent to which the work by the trustee was necessary and properly performed;
(b) the extent to which the work likely to be performed by the trustee is likely to be necessary and properly performed;
(c) the period during which the work was, or is likely to be, performed by the trustee;
(d) the quality of the work performed, or likely to be performed, by the trustee;
(e) the complexity (or otherwise) of the work performed, or likely to be performed, by the trustee;
(f) the extent (if any) to which the trustee was, or is likely to be, required to deal with extraordinary issues;
(g) the extent (if any) to which the trustee was, or is likely to be, required to accept a higher level of risk or responsibility than is usually the case;
(h) the value and nature of any property dealt with, or likely to be dealt with, by the trustee;
(i) the number, attributes and conduct, or the likely number, attributes and conduct, of the creditors;
(j) if the remuneration is worked out wholly or partly on a time - cost basis--the time properly taken, or likely to be properly taken, by the trustee in performing the work;
(k) any other relevant matters.
(1) The Insolvency Practice Rules may provide for and in relation to reviews under this Subdivision.
(2) Without limiting subsection (1), the Insolvency Practice Rules may provide for and in relation to any or all of the following matters:
(a) the giving of notice to the trustee before beginning a review, or making an application for a review, under this Subdivision;
(b) the powers and duties of the Inspector - General in carrying out a review;
(c) the decisions that may be made by the Inspector - General in relation to the review;
(d) the repayment of remuneration by the trustee as a consequence of a review under this Subdivision.
Subdivision D -- Removal by creditors
90 - 30 Subdivision applies to the Official Trustee
This Subdivision applies to the Official Trustee in the same way as it applies to the trustee of a regulated debtor's estate.
Creditors may remove trustee and appoint another
(1) The creditors may:
(a) by resolution at a meeting, remove the trustee of a regulated debtor's estate; and
(b) by resolution at the same or a subsequent meeting, appoint another person as trustee of the regulated debtor's estate.
Note: For the general rules relating to meetings, see Division 75.
(2) However, the creditors may not do so unless at least 5 business days' notice of the meeting is given to all persons who are entitled to receive notice of creditors' meetings.
Former trustee may apply to Court to be reappointed
(3) A person (the former trustee ) who has been removed as trustee of the regulated debtor's estate by resolution of the creditors may apply to the Court to be reappointed as trustee of the regulated debtor's estate.
(4) If the former trustee makes such an application, the former trustee must:
(a) record all costs incurred by the former trustee and the debtor's estate in relation to the application; and
(b) do so in a way that separates those costs from the costs incurred by the former trustee and the regulated debtor's estate in relation to other matters.
(5) The Court may order that the former trustee be reappointed as trustee of the regulated debtor's estate if the Court is satisfied that the removal of the former trustee was an improper use of the powers of one or more creditors.
(6) The Court may make such other orders in relation to the application as it thinks fit, including orders in relation to:
(a) the costs of the application; and
(b) the remuneration of the former trustee.
95 - 1 Simplified outline of this Part
This Part deals with a variety of matters:
(a) the trustee of a regulated debtor's estate may assign a right to sue; and
(b) the Minister has power to make rules to be called the Insolvency Practice Rules.
Division 96 -- Administrative review
96 - 1 Review by the Administrative Review Tribunal
Applications may be made to the Administrative Review Tribunal for review of any of the following decisions:
(a) a decision of a committee under section 20 - 20 in relation to an application for registration as a trustee;
(b) a decision of a committee under section 20 - 55 in relation to an application for the variation or removal of a condition of registration;
(c) a decision of the Inspector - General to give a direction to a registered trustee under section 40 - 15 not to accept further appointments;
(d) a decision of the Inspector - General to suspend the registration of a person as a trustee under section 40 - 25;
(e) a decision of the Inspector - General to cancel the registration of a person as a trustee under section 40 - 30;
(f) a decision of a committee under section 40 - 55 (disciplinary action by committee);
(g) a decision of a committee under section 40 - 85 in relation to an application to lift or shorten the suspension of a person's registration as a trustee.
100 - 1 Division applies to the Official Trustee
This Division applies to the Official Trustee in the same way as it applies to the trustee of a regulated debtor's estate.
100 - 5 Trustee may assign right to sue under this Act
(1) Subject to subsections (2) and (3), the trustee of a regulated debtor's estate may assign any right to sue that is conferred on the trustee by this Act.
(2) If the trustee's action has already begun, the trustee cannot assign the right to sue unless the trustee has the approval of the Court.
(3) Before assigning any right under subsection (1), the trustee must give written notice to the creditors of the proposed assignment.
(4) If a right is assigned under this section, a reference in this Act to the trustee in relation to the action is taken to be a reference to the person to whom the right has been assigned.
Division 105 -- The Insolvency Practice Rules
105 - 1 The Insolvency Practice Rules
(1) The Minister may, by legislative instrument, make rules providing for matters:
(a) required or permitted by this Act to be provided by the rules; or
(b) necessary or convenient to be provided in order to carry out or give effect to this Act.
(2) Rules made under subsection (1) may include offences.
(3) The penalties for offences described in subsection (2) must not be more than 50 penalty units for an individual or 250 penalty units for a body corporate.
(4) To avoid doubt, the rules may not do the following:
(a) create a civil penalty;
(b) provide powers of:
(i) arrest or detention; or
(ii) entry, search or seizure;
(c) impose a tax;
(d) set an amount to be appropriated from the Consolidated Revenue Fund under an appropriation in this Act;
(e) directly amend the text of this Act.
(5) Rules that are inconsistent with the regulations have no effect to the extent of the inconsistency, but rules are taken to be consistent with the regulations to the extent that the rules are capable of operating concurrently with the regulations.
(7) In this section:
"this Act" does not include the regulations or rules made under this section.