House of Representatives

Bankruptcy Legislation Amendment Bill 2009

Explanatory Memorandum

Circulated By Authority of the Attorney-General, the Honourable Robert Mcclelland MP

SCHEDULE 3 - REMOVAL OF BANKRUPTCY DISTRICTS

117. The amendments made by this Schedule will remove the concept of Bankruptcy Districts from the Act and make other amendments consequential upon this.

118. The Act currently allows the Inspector-General to declare a part of Australia to be a Bankruptcy District. There is currently a District for each State and Territory. The Act provides that an Official Receiver shall be appointed for each District. Over time the use of Bankruptcy Districts as an organising principle in bankruptcy administration has become increasingly cumbersome and out of step with delivering an efficient national personal insolvency service. In addition, most aspects of the bankruptcy system now operate administratively rather than through the Courts which means the concept of Districts is now of little consequence.

119. The most significant feature of the Act relating to Bankruptcy Districts is that certain actions must be performed by the Official Receiver for the District in which a matter originates. For example:

where the court makes a sequestration order, the petitioning creditor must give a copy of the order to the Official Receiver for the District in which the order was made - subsection 52(1A);
where a sequestration order is made, the bankrupt must file a statement of affairs with the Official Receiver for the District in which the order was made - subsection 54(1);
the trustee must give a copy of a bankrupt's proposal under section 73 to the Official Receiver for the District in which the bankrupt resides - subsection 73(2);
where a registered trustee dies, the person administering the deceased estate must notify, in writing, the Official Receiver for the District in which the trustee was ordinarily resident - subsection 182(4);
where a debt agreement administrator dies, the person administering the deceased estate must give written notice of that fact to the Official Receiver for the District in which the administrator was ordinarily resident - subsection 185ZA(1);
where a debt agreement administrator dies, the Inspector-General must appoint an Official Receiver for a District as the replacement administrator - subsection 185ZB(1); and
a registered trustee or solicitor who consents to act as a controlling trustee under Part X must give a copy of the debtor's authority and the statement of affairs to the Official Receiver for the District in which the debtor resides - subsection 188(5).

120. Perhaps more significantly, the Official Receiver for a District is able to exercise the power, and perform the functions of, the Official Trustee that relate to a matter that is determined under section 5AA to have originated in that District - subsection 18(8). This means that an Official Receiver is not able to act as the Official Trustee for matters originating in other Districts.

121. These restrictions are no longer necessary or appropriate and impose unnecessary limitations on the administration of bankruptcy and related matters.

122. Item 1 will amend subsection 5(1) to remove the definition of 'District'.

123. Item 2 will amend the definition of 'the Official Receiver' in subsection 5(1) so that it can refer to any Official Receiver (rather than the Official Receiver for a particular District).

124. Item 3 will repeal section 5AA which currently determines the place of origin of bankruptcy and insolvency matters. It does so by reference to Districts which will no longer be necessary.

125. Item 4 will repeal section 13 which currently allow the Inspector-General to declare any part of Australia a Bankruptcy District. This power will no longer be necessary.

126. Item 5 will amend section 15 which deals with the appointment and powers of Official Receivers. Currently, there must be an Official Receiver for each Bankruptcy District. As there will no longer be Bankruptcy Districts, the amendment will allow the Minister to appoint such number of Official Receivers as the Minister thinks necessary. This will allow for flexibility to appoint Official Receivers on a geographical or functional basis. Alternatively, there could be a single Official Receiver who delegates powers to officers exercising powers on his or her behalf.

127. Items 6, 7 and 8 will amend section 18 which deals with the powers and functions of the Official Trustee. Currently, subsection 18(8) provides that the Official Receiver for a District may exercise the powers and perform the functions of the Official Trustee that relate to a matter that is determined under section 5AA to have originated in that District. This restriction is no longer required. Item 6 will amend subsection 18(8) to provide simply that the Official Receiver may exercise the powers, and perform the functions, of the Official Trustee thus removing any geographically based limitations.

128. Subsection 18(8B) currently allows the Inspector-General to act as the Official Trustee other in relation to matter mentioned in subsection (8) (that is, other than where the Official Receiver is empowered to act). This is intended to ensure that the Inspector-General is not actually administering any bankrupt estates, debt agreements or personal insolvency agreements. Item 7 will maintain that position by providing that the Inspector-General can act as the Official Trustee other than in relation to individual insolvency administrations. Item 8 includes definitions for the purposes of subsection 18(8B).

129. Item 9 will repeal subsection 20B(5) which currently requires the Official Trustee to open a bank account in each District for the purposes of the Common Investment Fund. That will no longer be required.

130. Items 10 to 12 and 14 to 16 will amend various provisions which require a person to give a document to the Official Receiver for the District in which a person resides or where an order was made. These restrictions are no longer required and the amendments will allow the person to give the document to any Official Receiver.

131. Subsection 73(1B) currently defines 'working day' to include a day that is not a public holiday in the District in which the bankrupt resides. Item 13 will amend this definition to replace 'District' with 'place' consequential upon the abolition of Districts.

132. Item 17 is a transitional provision to ensure existing Official Receiver appointments continue once the amendments made by this Bill commence. The amendments will commence on the day after Royal Assent. The effect of the transitional provision is that any person is an Official Receiver immediately before commencement is taken to have been appointed under the Act as amended by this Schedule. The transitional provision will also ensure that any power exercised or function performed by an Official Receiver acting as Official Trustee before commencement will remain valid.


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