Bills Digest 46 1996-97 Bankruptcy Amendment Bill 1996


Numerical Index | Alphabetical Index

WARNING:
This Digest is prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments.

This Digest was available from 22 October 1996.

CONTENTS

Passage History

Bankruptcy Amendment Bill 1996

Date Introduced: 9 October 1996
House: Representatives
Portfolio: Attorney-General
Commencement: On Royal Assent, but some schedules may coincide with the commencement of related legislation (Bankruptcy (Estate Charges)
Act 1996
and Bankruptcy Legislation Amendment Act 1996).

Purpose

To make consequential amendments to the Bankruptcy Act 1966 resulting from the proposed enactment of the related Bankruptcy (Estate Charges) Bill 1996, and the Bankruptcy (Registration Charges) Bill 1996.

Background

This Bill is one of a package of 3 Bills which follow a separate major Bill passed by the Parliament on 10 October 1996 dealing with reform in the administration of bankruptcy in Australia.

On 26 June 1996, the Bankruptcy Legislation Amendment Bill 1996, was introduced into the House of Representatives. The Bill passed both Houses on 10 October 1996. The Bankruptcy Legislation Amendment Bill 1996 is a significant piece of legislation which includes major changes to the administration of bankruptcy, in that a number of functions now performed by the Federal Court will become the responsibility of the Insolvency and Trustee Service Australia (ITSA). ITSA is a Division of the Attorney-General's Department and the aim of the major changes is to create a One Stop Shop thus streamlining procedures and offering convenience for those who have need of the bankruptcy process.

This current package of Bills comprises:

  • Bankruptcy Amendment Bill 1996 (this Bill)
  • Bankruptcy (Estate Charges) Bill 1996
  • Bankruptcy (Registration Charges) Bill 1996

The related Bills (Charges Bills) in this package impose registration charges for the registration of trustees in bankruptcy (invariably an accountant), and a flat 8% charge on amounts realised by the trustee (or Official Trustee) in a bankrupt estate. The 8% charge is paid to Consolidated Revenue as a cost recovery for the running of ITSA. In addition, any interest accrued on moneys held in the bankrupt estate will be paid to Consolidated Revenue.

These charges are, in the main, already imposed under existing Bankruptcy Rules. The major reforms to the administration of bankruptcy which are contained in the separate Bankruptcy Legislation Amendment Bill 1996 (passed by Parliament on 10 October 1996) will afford the opportunity to allow the charges to be imposed by the Charges Bills in lieu of the Bankruptcy Rules.

This Bill mainly provides consequential amendments to recognise the provisions in Charges Bills.

Main Provisions

[This Bill implements the proposed amendments by way of Schedules to the Bill. Consequently, the Main Provisions will be referred to as Items in the Schedule rather than as Clauses in a Bill]

Schedule 1 - Amendment of the Bankruptcy Act 1966

Item 3 refers to section 154A(3)(b) which is now set out at Item 283 of Schedule 1 in the separate Bankruptcy Legislation Amendment Bill 1996 (as read a third time). Item 3 commences the consequential reference to the imposition of registration charges on trustees in bankruptcy by way of the proposed Bankruptcy (Registration Charges) Act 1996, in lieu of the existing Bankruptcy Rules.

Likewise, Items 5 to 10 deal with amendments to proposed revised sections 155 to 155E now found at Item 283 in Schedule 1 to the Bankruptcy Legislation Amendment Bill 1996 (as read a third time). The amendments proposed by Items 5 to 10 in this Bill are simple consequential amendments concerning applications to register as a trustee in bankruptcy and the obligation to pay a registration fee.

Item 13 changes the existing obligation upon a trustee in bankruptcy to open individual bank accounts for each bankruptcy estate administered by the trustee. A trustee must now pay all moneys received into a common interest bearing bank account of a type which complies with that specified in any Regulations made under the Bankruptcy Act 1966. Interest accrued by that bank account (less bank charges) will be the entitlement of the trustee who must, in turn, pay the interest to Consolidated Revenue pursuant to the proposed Bankruptcy (Estate Charges) Act 1996.

Item 17 revises section 175 of the Bankruptcy Act 1966 to dispense with the obligation on trustees to furnish statements after the finalisation of a bankruptcy estate to the Official Receiver (at present this function is performed by the Registrar in the Federal Court - Bankruptcy Division). Trustees will still be required to maintain financial records and, as before, these records are subject to audit by the Inspector-General in Bankruptcy. The section is being revised, as above, but will also now include a penalty of $500 for failure, by a trustee, to produce books required for audit (the reference to the penalty is in Item 18).

Item 20 inserts a new Part XV - Provisions relating to the Bankruptcy Charges Act. This is a shortened title which covers both the proposed Bankruptcy (Estate Charges) Act 1996 and the proposed Bankruptcy (Registration Charges) Act 1996. These are simple procedural provisions concerning the administration and payment of the charges.

Schedule 2 - Amendment of the Bankruptcy Legislation Amendment Act 1996

Item 1 proposes the repeal of Items 309 and 310 in Schedule 1 to the Bankruptcy Legislation Amendment Bill 1996 (passed by Parliament on 10 October 1996). This Bills Digest suggests that the repeal is necessary to recognise that there is no longer the mandatory obligation for trustees to file a formal statement on the finalisation of a bankruptcy (see comments under Item 17, immediately above).

[Digest Comment: The Explanatory Memorandum to the Bankruptcy Amendment Bill 1996 simply states, at paragraph 45, that Item 1 proposes
the repeal of Items 309 and 310 of the Bankruptcy Legislation Amendment
Act 1996.]

Schedule 3 - Transitional provisions relating to amendment of the Bankruptcy Act 1966

Items 1 and 2 are just transitional provisions to accommodate the changes made in the administration of bankruptcy by the related legislation.

Contact Officer and Copyright Details

Brendan Bailey Ph. 06 277 2434
18 October 1996
Bills Digest Service
Parliamentary Research Service

This Digest does not have any official legal status. Other sources should be consulted to determine whether the Bill has been enacted and, if so, whether the subsequent Act reflects further amendments.

PRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

ISSN 1323-9031
© Commonwealth of Australia 1996

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1996.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 22 October 1996

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