House of Representatives

Explanatory Memorandum

(Circulated by authority of the Attorney-General, the Hon Mark Dreyfus KC MP)

GENERAL OUTLINE

1. The Bankruptcy Amendment (Discharge from Bankruptcy) Bill 2023 (the Bill) amends the Bankruptcy Act 1966 (the Act) to regularise and validate the administrative processes of the Australian Financial Security Authority (AFSA), its predecessors and things done, purported to be done, or not done, in reliance on the administrative practice relating to the determination of when a statement of affairs is taken to have been filed for the purposes of a debtor's petition or as required in relation to a sequestration order.

2. The Bill seeks to establish a consistent process for the Official Receiver when assessing a statement of affairs for adequacy while providing legal certainty to debtors, trustees and other parties who may have been affected by previous practice. While the Bill operates retrospectively to validate and regularise decisions, it does not operate retrospectively in relation to past criminal convictions.

3. The Bill makes clear the powers of the Official Receiver to accept, or refuse to accept, a statement of affairs within 14 days of receipt. It also amends section 149 of the Act to clarify that automatic discharge dates from bankruptcy will be linked to when an adequate statement of affairs has been accepted by the Official Receiver. The Bill also amends the Act to ensure that a bankrupt's automatic discharge date under section 149 is consistent with the dates recorded by the Official Receiver in the National Personal Insolvency Index (NPII) prior to commencement in respect to their bankruptcy. It will also ensure that section 149 operates as originally intended, to encourage involuntary bankrupts to provide an adequate statement of their affairs as soon as possible after a sequestration order has been made.

4. An amendment to the Bankruptcy Regulations 2021 (the Regulations) aligns the dates that the Official Receiver is required to enter in the NPII with the amendments to the Act. The Bill aligns the Act with the established practices of the Official Receiver and will validate decisions made in reliance on the dates recorded by the Official Receiver. This will enable AFSA to continue assessing statements of affairs for adequacy, and assisting individuals where required, before 'starting the clock' on a person's period of bankruptcy.

5. Amendments to the Act will also validate decisions made before commencement of the Bill in reliance on dates recorded in the NPII in relation to the filing of a debtor or bankrupt's statement of affairs. The Bill includes a provision that the Commonwealth is liable to pay a reasonable amount of compensation to a person if the operation of the amendments would result in an acquisition of property other than on just terms within the meaning of paragraph 51(xxxi) of the Constitution.

6. In making the above prospective and retrospective amendments, the Bill does not extend or shorten the length of a person's bankruptcy, it confirms their position as advised on entry into bankruptcy and to which they were acting in reliance on.

7. The amendments in the Bill are necessary to provide legal certainty for all parties that engage with the bankruptcy system and who have acted in reliance on the dates contained within the NPII.

Background

8. For a person to apply to enter into bankruptcy voluntarily, they must file a statement of affairs with their debtor's petition. This document outlines a person's financial circumstances and is used to determine eligibility for bankruptcy. Persons who become involuntarily bankrupt through court order must also file a statement of affairs. The information provided within these statements enables the trustee to effectively administer the bankrupt person's estate during the period of their bankruptcy.

9. Under section 149 of the Act, a person becomes discharged from bankruptcy three years and one day after their statement of affairs is filed. The filing of a statement of affairs essentially commences a person's period of bankruptcy. This provision was inserted in the Act in 1991 and was intended to encourage those who become bankrupt involuntarily to file their statement of affairs.

10. It has been the long-standing practice of AFSA, and its predecessors, to record a bankruptcy applicant's statement of affairs as having been filed on the date it is accepted, rather than the date it was initially filed or 'presented'. This practice is designed to support debtors by minimising the risk of an application for bankruptcy being rejected. The process allows bankruptcy applications to be assessed for completeness and, if required, applicants to be supported to identify and obtain missing information. The same approach has been taken where someone becomes bankrupt involuntarily. This assistance is provided in order to provide a statement of affairs that is adequate for the purposes of administering the person's estate under bankruptcy. In these cases, a delay may occur between filing and acceptance to ensure a statement of affairs is adequate for the purposes of administering the estate.

11. As a consequence of this practice, the date that is recorded on the NPII and treated as the 'filing date' of a statement of affairs for the purpose of section 149 is, in some cases, later than the date that the statement of affairs was first provided to the Official Receiver. This means that the date taken to be the 'filing date' by AFSA and that starts the clock on a person's bankruptcy period, does not align with the ordinary meaning of when something has been 'filed'.

FINANCIAL IMPACT

1. This Bill has no financial impact.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Bankruptcy Amendment (Discharge from Bankruptcy) Bill 2023

1. This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Bill

2. The Bankruptcy Amendment (Discharge from Bankruptcy) Bill 2023 (the Bill) amends the Bankruptcy Act 1966 (the Act) to regularise and validate the administrative processes of the Australian Financial Security Authority (AFSA) and its predecessors in relation to determining when a statement of affairs is taken to have been filed for the purposes of a debtor's petition, or as required in relation to a sequestration order.

Statement of affairs and automatic discharge from bankruptcy

3. For a person to apply to enter into bankruptcy voluntarily, they must file a statement of affairs with their debtor's petition. This document outlines a person's financial circumstances and is used to determine eligibility for bankruptcy. Persons who become involuntarily bankrupt through court order must also file a statement of affairs. The information provided within these statements enables the trustee to effectively administer the bankrupt person's estate during the period of their bankruptcy.

4. Under section 149 of the Act, a person becomes discharged from bankruptcy three years and one day after their statement of affairs is filed. The filing of a statement of affairs essentially 'starts the clock' on a person's period of bankruptcy. This provision was inserted in the Act in 1991 and was intended to encourage those who become bankrupt involuntarily to file their statement of affairs.

Established practices of the Official Receiver

5. It has been the long-standing practice of AFSA, and its predecessors, to record a bankruptcy applicant's statement of affairs as having been filed on the date it is accepted, rather than the date it was initially filed or 'presented'. This practice is designed to support debtors by minimising the risk of an application for bankruptcy being rejected, as well as ensuring bankruptcies proceed with adequate information (eg if required, to support applicants to identify and obtain missing information). The same approach has been taken where someone becomes bankrupt involuntarily. This assistance is provided in order to provide a statement of affairs that is adequate for the purposes of administering the person's estate under bankruptcy. In these cases, a delay may occur between filing and acceptance to ensure a statement of affairs is adequate for the purposes of administering the estate.

6. As a consequence of this practice, the date that is recorded on NPII and treated as the 'filing date' of a statement of affairs for the purpose of section 149 is, in some cases, later than the date that the statement of affairs was first provided to the Official Receiver. This means that the date taken to be the 'filing date' by AFSA and that starts the clock on a person's bankruptcy period, may not align with the ordinary meaning of when something has been 'filed'.

Amendments made by the Bill

7. The Bill aligns the Act with the established practices of the Official Receiver and will validate decisions made in reliance on the dates recorded by the Official Receiver. This will enable AFSA to continue assessing statements of affairs for adequacy, and assisting individuals where required, before 'starting the clock' on a person's period of bankruptcy. It will also ensure that section 149 operates as originally intended, to encourage involuntary bankrupts to provide an adequate statement of their affairs as soon as possible after a sequestration order has been made.

8. Under amended section 149, persons who become bankrupt after commencement will be automatically discharged from bankruptcy three years and one day after either the Official Receiver accepts and endorses their debtor's petition and statement of affairs, or in the case of involuntarily bankruptcies, the date that an adequate statement of affairs has been filed.

9. The Bill also amends the Act to ensure that a bankrupt's automatic discharge date under section 149 is consistent with the dates recorded by the Official Receiver in the NPII prior to commencement in respect to their bankruptcy. An amendment to the Bankruptcy Regulations 2021 (the Regulations) aligns the dates that the Official Receiver is required to enter in the NPII with the amendments to the Act.

10. Amendments to the Act will also validate decisions made before commencement of the Bill in reliance on dates recorded in the NPII in relation to the filing of a debtor or bankrupt's statement of affairs. The Bill includes a provision that the Commonwealth is liable to pay a reasonable amount of compensation to a person if the operation of the amendments would result in an acquisition of property other than on just terms within the meaning of paragraph 51(xxxi) of the Constitution.

11. The validation of things done before commencement will not apply to criminal proceedings. This is to ensure that, if a person believes they were wrongfully convicted of a crime due to a mistaken understanding that they were bankrupt at a particular time, the Bill will not restrict their ability to challenge their conviction.

12. These amendments will allow bankrupted persons, the trustees of their estates, and other entities who rely on the dates within the NPII, to be assured that the discharge dates of bankruptcies, current and past, are not changed and that they will not be penalised for having relied on the dates recorded in the NPII.

13. New provisions will be inserted into the Act to require the Official Receiver to either accept, or refuse to accept, a statement of affairs within 14 days of receiving it. The Bill provides that the Official Receiver must accept a statement of affairs, unless the Official Receiver thinks it is inadequate. If the Official Receiver refuses to accept the statement of affairs, it must specify the respects in which it is inadequate and invite the person to file an updated statement of affairs. These new provisions are designed to ensure that decisions are made within a reasonable time and that individuals are supported to provide all required information in their statement of affairs.

Human rights implications

14. This Bill engages the following rights:

a.

Right to privacy in Article 17 of the International Covenant on Civil and Political Rights (ICCPR).

b.

Right to work in Articles 6(1) of the International Covenant on Economic, Social and Cultural Rights (ICESCR).

c.

Right to freedom of movement in Article 12 of the ICCPR.

d.

Right to equality and non-discrimination in Articles 2 and 26 of the ICCPR.

Right to privacy

15. Article 17(1) of the ICCPR states:

'No one shall be subjected to arbitrary or unlawful interreference with his privacy, family, home or correspondence, nor to unlawful attacks on his honour and reputation.'

16. The right to privacy under Article 17 can be subject to permissible limitations in order to achieve a legitimate objective. Permissible limitations on privacy must be authorised by law and must not be arbitrary, meaning the limitation on privacy must be in accordance with the provisions, aims and objectives of the ICCPR and reasonable in the particular circumstances.

17. The Bill engages the right to privacy, in that the Bill provides a mechanism for the Official Receiver to seek further information, which could be personal information, from a debtor or bankrupt for the purposes of receiving and accepting an adequate statement of affairs. Further, the Bill includes provisions requiring the giving of personal information by the bankrupt person to a third party (being the trustee for the bankrupt person's estate) through a requirement to provide the accepted statement of affairs to their trustee within a particular time period.

18. An individual is required to provide details of their estate through a statement of affairs which must be provided to the Official Receiver either on becoming bankrupt through court order or to accompany their debtor's petition to become bankrupt. The purpose of a statement of affairs is to provide sufficient detail to enable the trustee of the bankrupt estate to administer it effectively over the period of the bankruptcy. In this way, statements of affairs are, by nature, documents containing personal information. Information contained in these documents includes personal family details, whether the debtor is involved in legal action, and their assets, liabilities, and any other business details. Some of these details are also made public through the NPII, which is a publicly available electronic record of personal insolvencies.

19. The provisions within this Bill that require disclosure of personal information are reasonable limitations on the right to privacy. It is necessary to achieve the legitimate objective of the statement of affairs, which is to enable a trustee to appropriately administer the bankrupt estate. In doing so, the measures will allow the Official Receiver to accept a statement of affairs that is adequate for its purposes. The provisions are also proportionate, requiring the disclosure only where necessary in order to achieve the policy intent specified above.

Right to work

20. Article 6(1) of the ICESCR states:

'The States Parties to the present Covenant recognise the right to work, which includes the right of everyone to the opportunity to gain his living by work which he freely chooses or accepts, and will take appropriate steps to safeguard this right.'

21. The right to work may be permissibly limited by law for the purpose of promoting the general welfare in a democratic society. The Bill engages this right because it affects automatic discharge from bankruptcy under section 149 of the Act. Under amended section 149, the automatic discharge date of a person who has been bankrupt during the validation period is altered so that the Official Receiver's recorded date determines the period that the automatic discharge date will commence. This date may, for some individuals, be later than it would otherwise have been under the current framing of section 149.

22. Becoming bankrupt does not prevent a person from working, however bankrupted persons may be subject to obligations and restrictions related to their work. A bankrupt person must not act as a director of a company without the permission of a court, and failure of a bankrupt person to disclose certain details when operating a business is an offence under subsection 269(1) of the Act. Additionally, many industries have specific licensing regulations and association requirements, which may restrict a person's ability to hold a licence or impose additional obligations based on their bankruptcy. Such limitations predominantly cease upon discharge from bankruptcy, though in some cases restrictions may continue for a further period of time after a person's bankruptcy has ended.

23. To the extent that the Act engages the right to work, it is for the purpose of promoting the general welfare in our democratic society through providing an appropriate framework to enable individuals in severe financial stress to discharge unmanageable debts while providing for the distribution of a debtor's available assets to affected creditors. The impact of the Bill on the period of time that a person's right to work may be affected by bankruptcy is necessary and proportionate to achieving the policy intent of the Bill described above.

Right to freedom of movement

24. Article 12(2) of the ICCPR states:

'Everyone shall be free to leave any country, including his own.'

25. The right to freedom of movement under Article 12 can be permissibly limited by law if necessary to protect the rights and freedoms of others, provided the restrictions are proportionate and the least intrusive means of achieving the desired result.

26. The Bill engages the right to freedom of movement as section 272 of the Act provides that a person who is bankrupt must not leave Australia during the period of their bankruptcy without the written consent of the trustee of their estate. Under amended section 149, the automatic discharge date of a person who has been bankrupt during the validation period is altered so that the Official Receiver's recorded date determines the period that the automatic discharge date will commence. This date may, for some individuals, be later than it would otherwise have been under the current framing of section 149, meaning that their right to freely leave Australia may be restricted for a longer period of time.

27. The restriction on the right of a person to freely leave Australia during a period of bankruptcy is necessary to protect the rights of others, including their creditors. The impact of the Bill on the period of time that this restriction will apply to a person who becomes bankrupt is necessary, proportionate and the least intrusive means to achieve the policy intent of providing certainty to all those impacted by the Official Receiver's practice of recording the date of filing as a date linked to its acceptance of an adequate statement of affairs.

Right to equality and non-discrimination

28. Article 2(1) of the ICCPR states:

'Each State Party to the present Covenant undertakes to respect and to ensure to all individuals within its territory and subject to its jurisdiction the rights recognized in the present Covenant, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status.'

29. Article 2(2) of the ICESCR states:

'The States Parties to the present Covenant undertake to guarantee that the rights enunciated in the present Covenant will be exercised without discrimination of any kind as to race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status.'

30. The Bill engages the right to equality and non-discrimination because the Act may indirectly discriminate on the basis of property, since bankruptcy affects individuals who are unable to pay their debts.

31. Not all treatment that differs among individuals or groups on a ground mentioned in Article 2(1) of the ICCPR and Article 2(2) of the ICESCR constitutes discrimination. Differential treatment is permitted if it is reasonable, objective and aimed at achieving a purpose that is legitimate under the ICCPR or ICESCR.

32. The rights recognised in the ICCPR and ICESCR that the Bill engages, to which the right to equality and non-discrimination apply, are the right to privacy in Article 17 of the ICCPR, the right to work in Article 6(1) of the ICESCR and the right to freedom of movement in Article 12 of the ICCPR. As outlined above, to the extent that the Bill limits these rights on the basis of bankruptcy, the limitations are reasonable, objective and for a legitimate purpose.

Conclusion

33. This Bill is compatible with human rights as, to the extent it may limit some human rights, those limitations are reasonable, necessary and proportionate.

Notes on Clauses

Preliminary

Clause 1 - Short title

1. This clause provides for the short title of the Act to be the Bankruptcy Amendment (Discharge from Bankruptcy) Act 2023.

Clause 2 - Commencement

2. This clause provides for the commencement of each provision in the Bill, as set out in the table. Item 1 in the table provides that Bill as a whole will commence on the day after the Bill receives Royal Assent.

Clause 3 - Schedules

3. This clause provides that legislation that is specified in a Schedule to the Bill is amended or repealed as set out in the applicable items in the Schedule concerned. Further, any other item in a Schedule to the Bill operates according to its terms.

4. The note at the bottom of this clause provides that provisions of the Regulations that are amended or inserted by this Bill, and any other provisions of that instrument, may be amended or repealed by regulations made under section 315 of the Act (see subsection 13(5) of the Legislation Act 2003).

Schedule 1 - Discharge from bankruptcy

Part 1 - Amendments

Bankruptcy Act 1966

Item 1 - Subsection 6A(1)

This item inserts a reference to section 57B into subsection 6A(1). The reference is required and is a consequential amendment resulting from the amendments in Item 12 of this Bill to include a process of accepting a statement of affairs.

Item 2 - Section 33A (heading)

This item repeals the heading to section 33A of the Act 'Alteration of filing date for statement of affairs' and substitutes a new heading 'Alteration of dates relating to statements of affairs and debtor's petitions'. Item 2 is a consequential amendment to align with the amendments made by Item 3 of this Bill.

Item 3 - Subsections 33A(1) and (2)

This item repeals subsections 33A(1)and (2) of the Act and substitutes new subsections 33A(1) and (2).

Currently, section 33A allows the Court to make an order that a bankrupt person's statement of affairs is to be treated as having been filed at an earlier date than it was actually filed, where the Court is satisfied that the person believed on reasonable grounds that it had been filed earlier. An amendment to section 33A is required to ensure the provision works effectively with the new acceptance process for statements of affairs under new Division 3A set out in Item 12 of this Bill, and sections 149 and 149A as amended by this Bill.

New subsection 33A(1) allows the Court to backdate the date on which a statement of affairs is filed. This will allow the Court to make orders in relation to statements of affairs filed for the purposes listed within the subsection. A change to the date of filing and acceptance of a statement of affairs filed in relation to a sequestration order, or for a non-petitioning member of a partnership, will affect a bankrupt person's automatic discharge date for the purposes of section 149 and 149A as amended by this Bill. The date of filing is also significant for the purposes of offence provisions relating to the filing of a statement of affairs.

Section 149, as amended by this Bill, provides that a person will be automatically discharged from bankruptcy because of a debtor's petition three years from the acceptance of the debtor's petition. New subsection 33A(2) allows the Court to make orders in relation to the presentation and acceptance of a debtor's petition. For a Court to make such an order, a Court must be satisfied that the person believed, on reasonable grounds, that a debtor's petition relating to that person's bankruptcy had been presented before it was actually presented and that same debtor's petition had been accepted by the Official Receiver. The difference in terminology accounts for the presentation of a debtor's petition, rather than the filing of a statement of affairs, as a statement of affairs must accompany a debtor's petition.

Item 4 - Subsection 33A(3)

Item 4 is a consequential change to refer to new subsections 33A(1) and 33A(2). Subsection 33A(3) provides that a Court cannot make an order under section 33A that would result in the person being discharged from bankruptcy earlier than 30 days after the order is made. This item clarifies that the order made relates to those made under subsections (1) and (2) of section 33A.

Item 5 - After subsection 54(2)

Item 5 inserts a new subsection (2A) and is a consequential amendment to section 54. The need for a consequential amendment arises due to the new process for the assessment of a statement of affairs in Division 3A of this Bill, which allows for an updated statement of affairs to be provided to the Official Receiver. This item places on the bankrupt the same obligation to provide the trustee with a copy of an updated statement of affairs that exists under subsections 54(1) and (2) in relation to a statement of affairs. Where an updated statement of affairs is accepted by the Official Receiver pursuant to subsection 57B(1) of this Bill, the bankrupt person must provide a copy of that statement of affairs to the trustee in bankruptcy within 14 days of receiving the notice of acceptance.

The penalty of 50 units mirrors existing penalties in equivalent sections of the Act. In accordance with the amendment made by item 6 below, subsection 54(2A) is a strict liability offence.

Item 6 - Subsection 54(3)

Item 6 amends subsection 54(3) to include new subsection 54(2A) in the list of offences to which strict liability applies. This amendment is consequential to the amendment at Item 5.

Item 7 - Paragraph 55(3)(c)

This item amends paragraph 55(3)(c) to provide that the Official Receiver may reject a debtor's petition where the Official Receiver has given the debtor notice that the debtor's statement of affairs has been refused on the grounds of inadequacy (see Item 12 below for an explanation of adequacy), and the debtor has not filed an updated statement of affairs for the purposes of subsection 57(3) within the period specified in the notice.

Item 8 - Before paragraph 55(3AA)(a)

Item 8 inserts a new paragraph before paragraph 55(3AA)(a). New paragraph 55(3AA)(aa) provides that the Official Receiver may reject a debtor's petition where the Official Receiver has accepted a statement of affairs filed by a debtor under subsection 57B(1) for the purposes of paragraph 55(2)(b). In order for the Official Receiver to understand whether a debtor's petition may be rejected on these grounds, the statement of affairs must be assessed for adequacy and accepted by the Official Receiver, as provided for by Division 3A of this Bill. Where the Official Receiver accepts a statement of affairs, but believes that the circumstances in paragraph 55(3AA)(b) exist, they may reject the debtor's petition. As provided by subsection 55(3AB), the Official Receiver is not required to consider in each case whether there is a discretion to reject under subsection 55(3AA).

For clarity, a person does not become bankrupt until a debtor's petition is accepted.

Item 9 - Paragraph 56B(4)(c)

Item 9 repeals paragraph 56B(4)(c) and substitutes a new paragraph which clarifies the circumstances in which the Official Receiver may reject a debtor's petition for a partnership on the basis of an inadequate statement of affairs. New paragraph 56B(4)(c) provides that the Official Receiver may reject a debtor's petition if the Official Receiver has given the debtor notice under subsection 57B(3) of a refusal to accept a statement of affairs filed for each member of the partnership (paragraph 56B(3)(a)) or a statement of the partnership affairs (paragraph56B(3)(b)) and an updated statement of affairs has not been filed within the period specified in the notice.

Item 10 - Subsection 56F(1B)

Item 10 amends subsection 56F(1B) to omit 'subsection (1) does not apply' and substitutes 'it is an exception to an offence against subsection (1)'. This means that a non-petitioning partner may not be liable for an offence under subsection 56F(1) and (1A) where they have a reasonable excuse for not filing a statement of affairs. This is a minor and technical amendment, and does not operate to change the meaning of the subsection.

Item 11 - Paragraph 57(3)(c)

Item 11 repeals paragraph 57(3)(c) and substitutes a new paragraph which clarifies the circumstances in which the Official Receiver may reject a debtor's petition on the basis of an inadequate statement of affairs. New paragraph 57(3)(c) provides that the Official Receiver may reject a debtor's petition where the Official Receiver has given the debtor notice under subsection 57B(3) of a refusal to accept a statement of affairs filed for a petitioning debtor (paragraph 57(2)(a)) or a statement of their joint affairs (paragraph 57(2)(b)) and an updated statement of affairs has not been filed in accordance with the new assessment process outlined in Division 4 of this Bill (specifically subsection 57B(5), see below).

Item 11 operates to align paragraph 57(3)(c) with the amendments made by Items 12 and 15 of this Bill.

Item 12 - After Division 3 of Part IV

Item 12 inserts a new Division after Division 3 of Part IV, 'Division 3A - Acceptance of a statement of affairs by Official Receiver'.

This Division inserts a mechanism for the Official Receiver to be able to accept or refuse to accept a statement of affairs filed, under sections 54, 55, 56B, 56F or 57, on the grounds of adequacy. The new section is modelled on the Official Receiver's current administrative practice in relation to statements of affairs.

Assessment of adequacy

Unlike the provision of a debtor's petition, the Official Receiver does not currently have the ability to accept or refuse to accept a statement of affairs on the grounds of adequacy. This differs from the criteria for the statement of affairs prescribed by subsection 6A(2) and section 6D of the Act (which provides the characteristics of what is required for a form to be considered a statement of affairs) and provides the Official Receiver an ability to consider adequacy of information provided within the statement of affairs.

The subjective test of adequacy has been left deliberately broad in recognition of the varied information which can differ between statements of affairs. As a statement of affairs is specific to a bankrupt person's circumstances, it is not possible to describe each permutation of inadequacy as it relates to a statement of affairs. Accordingly, the statement of affairs will be assessed on a case by case basis. Whether a statement of affairs is adequate will hinge upon the particulars set out in the statement of affairs, specifically whether the statement of affairs contains particulars relevant to the effective administration of the bankrupt's estate.

Timeframe for assessment of adequacy of statement of affairs

Subsection 57B(1) of this Bill sets out the timeframe by which the Official Receiver must either accept or refuse to accept the statement of affairs or an updated statement of affairs within 14 days from the day on which it is filed. Currently, a person must file a statement of affairs in circumstances specified by various sections in the Bankruptcy Act, however, this requirement only applies to circumstances listed in paragraphs 57B(1)(a)-(e), being:

(a)

subsection 54(1) or (2) - where a sequestration order is made against one or multiple joint debtors (whether partners or not); or

(b)

paragraph 55(2)(b) - where a debtor presents a petition to the Official Receiver against himself or herself; or

(c)

paragraph 56B(3)(a) or (b) - where a debtor's petition is brought against a partnership; or

(d)

paragraph 56F(1)(a) or (b) - where a member of a partnership did not join in presenting a debtor's petition against the partnership but became a bankrupt as a result of the petition; or

(e)

paragraph 57(2)(a) or (b) - where joint debtors are not in a partnership the debtors, or any 2 or more of the debtors, may present to the Official Receiver a petition jointly against themselves.

A note at the bottom of subsection 57B(1) refers to subsections (6) and (7) which provide certain exceptions to the application of this rule.

Acceptance of, or refusal to accept, a statement of affairs

Subsection 57B(2) of this Bill requires the Official Receiver to accept a statement of affairs unless the Official Receiver thinks the statement of affairs is inadequate. The test for determining adequacy is specified above. Where a statement of affairs is inadequate, it can frustrate the ability of a trustee to realise assets and, in some cases, will increase the cost of administering the estate, and potentially the length of a person's bankruptcy. Currently, under section 149 of the Act a person could be automatically discharged from bankruptcy even in circumstances where an inadequate statement of affairs is filed. The mechanism to accept, or refuse to accept, a statement of affairs ties in with the amendments to section 149 and 149A made by this Bill.

Allowing the Official Receiver to refuse to accept an inadequate statement of affairs ensures the effective and efficient administration of a bankrupt person's estate in accordance with the Act. An adequate statement of affairs will be advantageous to creditors, trustees and the bankrupt person. The trustee administering the estate will have the relevant particulars of the bankrupt person's financial position to effectively and efficiently administer the estate. The creditors will benefit from the realisation of all available assets. The bankrupt person's estate will not incur additional fees during the administration of their estate caused by a trustee's investigation into their financial position.

Providing the Official Receiver with the ability to accept or refuse to accept a statement of affairs accords with the Official Receiver's current administrative practice.

Decision to accept or refuse to accept statement of affairs

A statement of affairs filed in each of the abovementioned circumstances represents a specific stage in the process leading to bankruptcy. In relation to a sequestration order, a statement of affairs filed in relation to a sequestration order is the final step in a creditor driven process. As such, there must be a balance between the rights of creditors to be paid and the rights of a bankrupt person. A debtor's petition presented against a partnership, on the other hand, can be presented by some and not all of the members of the partnership. In either circumstance, where an inadequate statement of affairs is provided, the creditor or petitioning partner driven process results in delays for the administration of a person's bankrupt estate. The Official Receiver's decision to accept or refuse to accept a statement of affairs is not reviewable because this can cause further delay to the process. A delay could result in further detriment to creditors and petitioning partners of partnership who have engaged in the process that resulted in a person's bankruptcy. By contrast, a petition brought against a debtor by themselves is the first step in a debtor driven process and an adequate statement of affairs is advantageous for a debtor. The decisions of the Official Receiver not being reviewable in this context operates to emphasise the seriousness of entering bankruptcy.

While the decisions of the Official Receiver are not merits reviewable a general ability under subsection 15(5) exists to review an act done by the Official Receiver. A note is included under subsection 57B(2) to this effect.

In accordance with the Division (specifically, paragraph 57B(4)(a)), where a decision is made to refuse to accept a statement of affairs, a person will receive a notice advising the respects in which the Official Receiver thinks it is inadequate. A person will then be able to file an updated statement of affairs. This mechanism ensures that a bankrupt person is aware of the reasons for the Official Receiver's decision and is able to understand how the statement of affairs is to be updated.

Basis on which decisions by the Official Receiver are not reviewable

While the decision made by the Official Receiver is not reviewable, the amendments within this Bill introduces the following safeguards for debtors:

•

a flexible assessment process which allows for assessment on a case by case basis,

•

timeframes during which adequacy of a statement of affairs must be assessed by the Official Receiver,

•

an opportunity to address any inadequacies identified by the Official Receiver, and

•

the Official Receiver must give reasons for any refusal to accept a statement of affairs.

The amendments in this Bill take into consideration the function of a statement of affairs - being a form that advises the Official Receiver (and later the trustee in bankruptcy) of a debtor's financial position, including their assets and liabilities. In light of this, the Official Receiver's power to assess adequacy is not arbitrary. A debtor's eligibility to become bankrupt is determined by the information in the statement of affairs, and in circumstances where a person is already bankrupt (i.e. as the result of a Sequestration Order) the realisation of assets by the trustee in bankruptcy and creditors is dependent on the information provided in the statement of affairs. As such, a statement of affairs is integral to the efficient and effective administration of a bankrupt estate.

Targeted consultation with the Official Receiver indicates that, in practice, debtors and bankrupt persons often need assistance in order to provide a statement of affairs that is adequate to enable the proper administration of a bankrupt estate.

The mechanism proposed to be introduced by Part 1 of this Bill has been designed to fit within the existing framework of the Official Receiver's current administrative practices and is reflective of the process taken prior to, and continued since, the enactment of the 1991 Act. The objective of the mechanism aligns with the policy of the Bankruptcy Act - to allow for the discharge of unmanageable debts while providing for the realisation of a debtor's available assets for distribution to affected creditors.

The Official Receiver is appropriately qualified and suitably skilled to make such decisions. While the subjective assessment has the capacity to affect rights, liberties, or obligations, of the debtor and bankrupt person, the decision of the Official Receiver is designed to limit any undue consequences or negative impact. This mechanism, while not reviewable, will operate to aid debtors and balance any processes which could be used to hinder or frustrate the objectives of the system.

Additionally, as stated above, a Court may review an act done by the Official Receiver under subsection 15(4) and section 303. This power is noted at the bottom of subsection 57B(2).

Notification of decision and invitation to provide updated statement of affairs

Subsection 57B(3) and paragraph 57B(4)(c) requires the Official Receiver to provide the bankrupt person with notice of the decision under 57B(1) of this Bill. Where the Official Receiver refuses to accept a statement of affairs, the Official Receiver must provide the reasons for this refusal, and give at least 14 days for the provision of an updated statement of affairs.

A note at the bottom of subsection 57B(4) provides for circumstances where a notice is varied . This note directs users of the legislation to subsection 33(3) of the Acts Interpretation Act 1901 for variation of a notice (for example, to extend the period within which the updated statement may be filed).

Subsection 57B(3) sets out the person(s) who the Official Receiver is required to inform once a decision has been made under subsection 57B(1). Identifying the relevant parties to whom the Official Receiver must provide notice ensures clarity and consistent administrative practices. The requirements are as follows:

(a)

for a statement of affairs filed for the purposes of subsection 54(1) or paragraph 55(2)(b), 56B(3)(a), 56F(1)(a) or 57(2)(a)-the person whose affairs the statement relates to; or

(b)

for a statement of affairs filed for the purposes of subsection 54(2)-each of the joint debtors; or

(c)

for a statement of affairs filed for the purposes of paragraph 56B(3)(b)-each of the petitioning members of the partnership; or

(d)

for a statement of affairs filed for the purposes of paragraph 56F(1)(b)-the member, or each of the members, of the partnership who gave the statement of affairs; or

(e)

for a statement of affairs filed for the purposes of paragraph 57(2)(b)-each of the petitioning debtors.

Paragraph 54(4)(a) provides the specifics the Official Receiver must address in the notice when refusing to accept the statement of affairs. The notice must specify the respects in which the Official Receiver thinks the statement of affairs is inadequate. As specified above, the subjective test of adequacy has been left deliberately broad in recognition of the varied information which can differ between statements of affairs. As a statement of affairs is specific to a person's circumstances it is not possible to describe each permutation of inadequacy as it relates to a statement of affairs. Accordingly, the statement of affairs will be assessed on a case by case basis. Whether a statement of affairs is adequate will hinge upon the particulars set out in the statement of affairs, specifically whether the statement of affairs contains particulars sufficient to allow the effective administration of the bankrupt's estate.

This subsection provides the bankrupt person with the opportunity to provide an updated statement of affairs addressing any issues identified by the Official Receiver. Paragraph 57B(4)(c) also allows the Official Receiver to stipulate the timeframe by which the bankrupt is to file the updated statement of affairs provided it is at least 14 days from the notice being given.

The provision of the Official Receiver's thoughts on inadequacy ensures that the bankrupt person is able to understand the inadequacies, and provide an updated statement of affairs. Dependent on the Official Receiver's assessment, and the adequacy of a particular statement of affairs, the Official Receiver can provide more than 14 days for the bankrupt person to address the inadequacies in their original statement of affairs and file an updated statement of affairs.

Subsection 57B(5) allows for the bankrupt to file an updated statement of affairs within the timeframe specified by the Official Receiver under subsection 57B(4).

Subsection 57B(5) of this Bill allows the updated statement of affairs provided by the bankrupt under subsection 57B(5) to replace, for all purposes, any prior statement of affairs filed by the bankrupt that the Official Receiver refused to accept. Where a bankrupt person provides an updated statement of affairs, it is because the Official Receiver has refused to accept the previous statement of affairs. Upon filing an updated statement of affairs, the bankrupt person will have ostensibly filed two or more statements of affairs. For the avoidance of doubt, subsection 57B(5) operates to ensure the updated statement of affairs has replaced the original refused statement of affairs. As a result of this, the date of automatic discharge under section 149 of this Bill (Item 15 below) will refer to the updated statement of affairs.

Subsections 57B(6) and (7) clarify that the application of Item 12, does not extend to where the Official Receiver must refer a petition to the Court for a direction to accept or reject the petition, or where the Official Receiver rejects a debtor's petition. In the event a Court makes a direction, that direction is to be followed by the Official Receiver. In these circumstances, the Official Receiver is not required to assess a statement of affairs for adequacy before referring the matter to Court.

Subsection 57B(8) provides a reporting mechanism for the assessment process. Subsection (8) requires that a report given by the Inspector-General to the responsible Minister under paragraph 12(1)(d) (Report), must contain the number of statements of affairs filed with the Official Receiver that was not processed in accordance with new subsection 57B(1). The subsection specifically requires the Report include the number of statements of affairs (including updated statements of affairs) filed with the Official Receiver which are not accepted or refused for acceptance within the 14 day period provided under subsection (1). Where a debtor's petition is rejected within the period specified in subsection (1), the Official Receiver no longer needs to comply with the period specified in that subsection. A rejection of a debtor's petition does not result in a failure to comply with that subsection, and will not need to be reported for the purposes of this section.

Subsection 57B(9) provides a meaning for the term 'filed' in this section, specifically that filed includes 'presented, lodged or given'. This subsection operates to ensure clarity and consistent administrative practices.

Duties of a bankrupt person

Item 13 - Paragraph 77(1)(bb)

Item 13 repeals paragraphs 77(1)(bb) and substitutes new paragraph 77(1)(bb). This is a consequential amendment to allow the duty owed by a bankrupt person to advise the trustee of any material change in their statement of affairs to align with the new process outlined in Division 3A of this Bill. A bankrupt person must now inform a trustee if a material change occurs between the time:

(a)

the bankrupt's statement of affairs was accepted under subsection 57B(1); and

(b)

the bankrupt became a bankrupt.

Item 14 - Paragraph 77(1)(bc)

Item 14 amends paragraph 77(1)(bc) to omit 'occurred later' and substitute 'occurs at or after the later of the times mentioned in subparagraphs (bb)(i) or (ii)'. The amendment is consequential to the amendments made by Item 13 of this Bill.

Item 15 - Section 149

Item 15 repeals section 149 and substitutes a new section 149. New section 149 provides for the automatic discharge date of a bankrupt person from bankruptcy. The effect of Item 15 is to provide that, subject to section 149A, the automatic discharge of a bankrupt from bankruptcy will occur three years from either:

(a)

for a bankruptcy because of a sequestration order, the date the statement of the bankrupt's affairs accepted under subsection 57B(1) was filed,

(b)

for a debtor's petition, the date on which the Official Receiver accepted the debtor's petition, or

(c)

for a bankruptcy because of a debtor's petition against a partnership, of a member who did not join the petition, the date the statement of the bankrupt's affairs accepted under subsection 57B(1) was filed.

This represents a shift from the current wording of section 149, meaning that a person will be discharged from their bankruptcy three years from the above timeframes, rather than three years from the date on which the statement of affairs is filed.

A note at the bottom of new subsection 149(2) provides clarity as to the application of Item 15. The note directs users to Part 2 of Schedule 1 to this Bill for provisions relating to the discharge of bankruptcy of persons that became bankrupt before the commencement of that Part.

Item 16 - Subsection 149A(1)

Item 16 amends subsection 149A(1) to omit the words after 'withdrawn or cancelled' and substitute 'the bankrupt is taken to be discharged under section 149 at the end of the prescribed number of years from the prescribed date'. This is a consequential change to ensure that this subsection operates in conjunction with the amendments to section 149 at Item 15. Where an objection to discharge is made, a bankrupt person is taken to be discharged by force of subsection 149(1) at the end of the period prescribed by subsection 149(2) of the Act.

Item 17 - Subparagraph 149A(2)(b)(ii)

Item 17 amends subparagraph 149A(2)(b)(ii) to omit 'the date on which the bankrupt filed his or her statement of affairs' and substitute 'the date applicable under whichever of paragraph 149(1)(a), (b) and (c) applies'. This is a consequential amendment owing to the amendments proposed by Item 15 of this Bill which repeals 149 of the Act and inserts a new section 149.

Item 18 - Subparagraph 149A(3)(b)(i)

Item 18 amends subparagraph 149A(3)(b)(i) to omit 'whichever of subsections 149(2), (3) and (4) applies in relation to the bankrupt' and substitute 'subsection 149(1)'. This is a consequential amendment owing to Item 15 of this Bill, which repeals 149 of the Act and inserts a new section 149.

Item 19 - After paragraph 267(1)(d)

Item 19 inserts a new paragraph after paragraph 267(1)(d). New paragraph 267(1)(daa) expands the application of subsection 267(1) to a declaration contained in a statement that is filed in accordance with a notice given under subsection 57B(3), being an updated statement of affairs. Item 19 is a consequential amendment to align with the amendments made by Item 12 of this Bill.

Bankruptcy Regulations 2021

Item 20 - Before paragraph 76(2)(a)

Item 20 of the Bill inserts new paragraph 76(2)(aa) into the Bankruptcy Regulations. The paragraph aligns the Official Receiver's practice under this Bill with what must be listed on the NPII in relation to a statement of affairs against whose estate a sequestration order is made. Currently, the Official Receiver lists the date of filing of the statement of affairs it accepts.

The paragraph clarifies that the Official Receiver is only required to enter the date of filing of a statement of affairs under item 2 of the table in subsection 76(2) where it accepts a statement of affairs filed.

The date of filing a statement of affairs in relation to a sequestration order is significant because the determination of a bankrupt's date of discharge is contingent on the date of filing of a statement of affairs under subsection 149(1)(a) of this Bill.

Item 21 - Subsection 76(2) (cell at table item 2, column 1)

Item 21 is a minor amendment to clarify the wording of the table item.

Item 22 - Subsection 76(2) (table item 3, column 2, paragraph (e))

Item 22 repeals and substitutes paragraph (3) of column 2 in table item 3. The item aligns the Official Receiver's process under this Bill with the date that must be listed on the NPII in relation to a statement of affairs accompanying a debtor's petition. Currently, the Official Receiver lists the date it accepts the statement of debtor's affairs, rather than the date of filing of a statement of affairs. The amendment clarifies that the Official Receiver must list the date it accepts a statement of affairs for the purposes of a debtor's petition.

The date of acceptance of a debtor's petition is significant because the determination of a bankrupt's date of discharge hinges on the date of acceptance of a debtor's petition under section 149(1) of this Bill.

Item 23 - Subsection 76(2) (table item 4, column 2, paragraph (c))

Item 23 is a minor change to clarify that the time of commencement of a bankruptcy should be entered regardless of whether subsection 56C(5) of the Act applies.

Item 24 - Subsection 76(2) (table item 4, column 2, subparagraphs (e)(i) and (ii))

Item 24 repeals and substitutes subparagraphs (e)(i) and (ii) from column 2 of table item 4. This item deals with debtor's petitions filed by members of a partnership against the partnership.

Subparagraph (e)(i) aligns the Official Receiver's practice under this Bill with which date must be listed on the NPII in relation to a statement of a partner's affairs. Currently, the Official Receiver lists the date it accepts the statement of affairs for each partner, rather than the date of filing of a statement of affairs. The amendment to this subparagraph allows the Official Receiver to list the date it accepts a statement of affairs for this purpose.

Subparagraph (e)(ii) does the same for statements of the partnership's affairs.

The date of acceptance is significant because the determination of a bankrupt's date of discharge hinges on the date of acceptance of a statement of affairs under subsection 149(1) of this Bill.

Item 25 - Subsection 76(2) (table item 5, column 2, paragraph (c))

Item 25 is a minor change to clarify that the time of commencement of a bankruptcy should be entered into the NPII regardless of whether subsection 57(3C) of the Act applies.

Item 26 - Subsection 76(2) (table item 5, column 2, subparagraphs (e)(i) and (ii))

Item 26 repeals and substitutes subparagraphs (e)(i) and (ii) from column 2 of table item 5. This item deals with debtor's petitions filed by joint debtors who are not partners.

Subparagraph (e)(i) aligns the Official Receiver's practice under this Bill with the date that must be listed on the NPII in relation to a statement of a partner's affairs. Currently, the Official Receiver lists the date it accepts the statement of affairs for each joint debtor, rather than the date the statement of affairs was given to it. The amendment to this subparagraph allows the Official Receiver to list the date it accepts a statement of affairs for this purpose.

Subparagraph (e)(ii) does the same for statements of the joint debtor's joint affairs.

The date of acceptance is significant because the determination of a bankrupt's date of discharge hinges on the date of acceptance of a statement of affairs under subsection 149(1) of this Bill.

Part 2 - Application transitional and validation provisions

Division 1 - Definitions

Item 27 - Definitions

Item 27 provides the definitions to be used in Part 2 of Schedule 1 of the Bill. The insertion of these new terms ensures consistency and certainty across the application, transitional and retrospective validation provisions contained in Part 2 of this Bill.

Definition of affected bankruptcy period

The definition of 'affected bankruptcy period' provides the timeframe for the application of this Part. The affected bankruptcy period begins on the day section 27 of the Bankruptcy Amendment Act 1991 commenced, and ends on the day before the commencement of this item.

Section 27 of the Bankruptcy Amendment Act 1991 amended section 149 to provide that a bankrupt person is automatically discharged from bankruptcy three years from the date that their statement of affairs was filed. The definition of affected bankruptcy period refers to the period between the commencement of section 27 and the day before commencement of the Bill.

Definition of amended Act

Amended Act is defined as the Bankruptcy Act 1966 as amended by Part 1 of Schedule 1 of the Bill. The definition allows for reference to the Act as amended by the changes to the acceptance procedure for statements of affairs and amended section 33A introduced in Part 1 of Schedule 1.

Definition of amended Regulations

Amended Regulations is defined as the Bankruptcy Regulations 2021 as amended by Part 1 of Schedule 1 of the Bill. The definition allows for reference to the Regulations as amended by the changes to the information required to be listed on the NPPI by the Official Receiver.

Definition of commencement

Commencement is defined as the commencement of item 27, which in accordance with the commencement provision set out in clause 2 of the Bill, is the day after the Bill receives Royal Assent.

The new terms 'affected bankruptcy period' and 'commencement' provide the timeframe in which bankruptcies were impacted by the previous regulatory practice of the Official Receiver that recorded the date that a statement of affairs was accepted rather than the date a statement of affairs was filed or presented.

Definition of discharge reference date

This definition provides how a date of filing or acceptance is to be defined for the purposes of this Part.

For a bankruptcy because of a sequestration order, the discharge reference date is the date that the version of a statement of the bankrupt's affairs that the Official Receiver accepted for filing was filed. This means that, where the Official Receiver has requested further information on a statement of affairs, or a further statement of affairs to be filed, the discharge reference date will be the date the final version accepted by the Official Receiver was filed. This definition will only apply where item 26(b) or (c) does not apply.

For a bankruptcy because of a debtor's petition (other than against a partnership in the circumstances specified by item 26(a)(iii)), the discharge reference date will be the date that the Official Receiver accepts the debtor's petition. While the Official Receiver assesses a statement of affairs for adequacy, it either accepts or rejects the accompanying debtor's petition. It is the acceptance and endorsement of the debtor's petition by the Official Receiver which commences the bankruptcy. This definition will only apply where item 26(b) or (c) does not apply.

For a bankruptcy, where a debtor's petition against a partnership has made a person bankrupt and the person is a member of the partnership who did not join in presenting the petition, the discharge reference date is the date the version of a statement of the bankrupt's affairs that the Official Receiver accepted for filing was filed. This means that, where the Official Receiver has requested further information on a statement of affairs, or a further statement of affairs to be filed, the discharge reference date will be the date the final version accepted by the Official Receiver was filed. This definition will only apply where item 26(b) or (c) does not apply.

Paragraph (b) of the definition recognises that court orders may exist which affect the discharge reference dates in paragraph (a). Under the Act, a court is able to make an order declaring the date on which a statement of affairs was filed with the Official Receiver for a bankrupt to be a particular date; or order that the statement be treated as having been filed at a time before it was actually filed; or otherwise affect the date on which the statement of affairs is filed for the purposes of section 149 and 149A of the Act as in force during the affected bankruptcy period. Where a court has made an order of this sort for the bankruptcy, the discharge reference date is the date that is applicable under that order.

Paragraph (c) of the definition recognises that there may be court orders which affect the discharge reference date that are in force either at, or after, commencement. This paragraph references item 32 of the Bill. Where a court has made an order of this sort, the discharge reference date is the date that is applicable under that order.

Definition of do a thing and purport to do a thing

The definition of do a thing is broad in scope and includes:

(a)

make, or refuse to make, a decision (however described and whether or not under a law); and

(b)

exercise a power, perform a function, comply with an obligation or discharge a duty; and

(c)

refuse to do a thing covered by paragraph (b); and

(d)

enter into, or refuse to enter into, an agreement or transaction (however described); and

(e)

do, or refuse to do, anything else.

Purport to do a thing has a corresponding meaning.

Definition of Official Receiver

The definition of 'Official Receiver' provides an expanded definition of the term for this Part. The definition covers all persons who may have been accepting statements of affairs during the affected bankruptcy period and ensures the definition captures the different types of office holders that will have accepted statements of affairs over that period.

The expanded definition captures any historical modifications to the delegable power under subsection 15(4) of the Act since 1991. This broader definition works to accommodate the historical iterations of the role of 'Official Receiver' to ensure consistent application of the provisions in this Bill.

Division 2 - Application of the amended Act and amended Regulations

Item 28 - Application of the amended Act

Item 28 provides the ways in which the amended Act, as defined by Item 27, will apply to different circumstances before and after commencement. These application provisions only apply to statements of affairs to which the amended Act applies.

Requirement to accept or refuse to accept statement of affairs

Subitem (1) and (2) provide that provisions of the amended Act covered by paragraphs 55(3)(c), 55(3AA)(a), 56N(4)(c), 57(3)(c), 57B(1) apply to statements of affairs filed for the purposes of paragraphs 57B(1)(a) to (e) :

1.

on or after commencement, or

2.

before commencement, if the Official Receiver had not, before commencement:

a.

accepted the statement of affairs for filing; or

b.

refused to accept for filing the most recent version of the statement of affairs given to the Official Receiver before commencement.

Subitem (3) applies subsection 57B(1) of the amended Act (item 12 of this Bill) in two ways:

1.

The 14 day assessment period will be taken to run from commencement for those statements of affairs that have been filed but not accepted or rejected by the Official Receiver before commencement. This means that the Official Receiver will have 14 days from commencement to accept or reject a statement of affairs that is being held for assessment with the Official Receiver on commencement of the Bill.

2.

For statements of affairs filed on or after commencement, or before commencement where the Official Receiver had not accepted or refused to accept the statement of affairs before commencement, , subsection 57B(1) will operate subject to subsections 57B(6) and (7) of the amended Act. These subsections provide that, where the Official Receiver must refer a debtor's petition to the Court for direction, and where a statement of affairs is subsequently not required to be filed by the Court, or where the Official Receiver rejects the debtor's petition, the Official Receiver is not required to accept or refuse to accept a statement of affairs.

Discharge from bankruptcy

Subitem (4) applies sections 149 and 149A of the amended Act in two ways, depending on whether a statement of affairs has been accepted by the Official Receiver at the date of commencement (see item 14 of this Bill for an explanation of section 149).

Where the Official Receiver had not accepted, or refused to accept, for filing the most recent version of a statement of affairs before commencement, section 149 will apply such that the three year discharge period will not commence for a bankrupt until their statement of affairs has been accepted as provided for by that section.

Court alteration of dates

Subitem (5) provides an application provision that applies section 33A of the amended Act to a bankrupt whose statement of affairs is filed either on or after commencement, or, where the Official Receiver has not accepted or refused to accept a statement at the time of commencement, section 33A will apply before commencement (see item 1 of this Bill for an explanation of section 33A).

Section 33A allows the Court to make an order that a statement of affairs is taken to be filed at an earlier date where the bankrupt believed, on reasonable grounds, it was filed at an earlier date. The Court is also able to make an order that a statement of affairs is to be treated, for the purposes of automatic discharge under sections 140 and 149A, as having been accepted at an earlier date.

A note at the end of subitem (5) directs the reader to item 32 of the Bill for the operation of section 33A where the Official Receiver has accepted the statement affairs for filing before commencement.

Advising trustee of material changes

Subitem (6) provides an application provision that applies paragraphs 77(1)(bb) and (bc) of the amended Act to a bankrupt whose statement of affairs is filed either on or after commencement, or, where the Official Receiver has not accepted or refused to accept a statement at the time of commencement, paragraphs 77(1)(bb) and (bc) will apply before commencement (see items 13 and 14 of this Bill for an explanation of paragraphs 77(1)(bb) and (bc)).

Paragraphs 77(1)(bb) and (bc) of the amending Act relate to a requirement on a bankrupt to advise a trustee of a material change that occurred between the time the bankrupt's statement of affairs was accepted and the time the bankrupt became a bankrupt.

Item 29 - Application of the amended Regulations

Item 29 provides an application provision in relation to the amended Regulations. The amended Regulations are located in Part 1 of this Bill and provide an ability for the Official Receiver to enter dates on the NPII related to statements of affairs for the purposes of subsection 54(1) or paragraphs 55(2)(b), 56B(3)(a) or (b) or 57(2)(a) or (b) of the amended Act.

The application provision at Item 27A applies the amended Regulations in two ways, depending on whether a statement of affairs has been accepted by the Official Receiver at the date of commencement. The amended Regulations will apply to a statement of affairs filed before commencement where the Official Receiver has not accepted the statement of affairs for filing, or refused to accept the most recent version of the statement of affairs given to it before commencement.

Division 3 - Alteration of discharge dates

Item 30 - Discharge date for bankrupts not discharged from bankruptcy before commencement

Subitem 30(1) specifies the application of the Item, specifically that it applies to a person who became bankrupt before the commencement of the amending Act, where that bankrupt person has not been discharged from bankruptcy by force of subsection 149(1) of the Act before commencement of the amending Act.

Subitem 30(2) clarifies that sections 149 and 149A of the Bankruptcy Act, as in force immediately before the commencement of the amending Act, continues to apply in relation to the bankrupt person on and after commencement of the amending Act.

Subitem 30(3) clarifies the application of sections 149 and 149A with reference to the date on which the bankrupt person has filed their statement of affairs. Specifically, that those sections apply as if the references to subsection 149(4) and section 149A of the Bankruptcy Act (as then in force) were references to the discharge reference date for the bankruptcy under the amending Act.

This subitem prospectively changes the automatic discharge date of a bankrupt person from their bankruptcy by applying a retrospective amendment to the date on which their statement of affairs is either filed or accepted in accordance with the definition of discharge reference date (see Item 27 of this Bill). The effect of this is that the date on which the bankrupt person is discharged from bankruptcy may be later than the date that would otherwise apply. It is understood, however, that most, if not, all bankrupt persons, will have been operating on the assumption that their automatic discharge date was the discharge reference date in any event.

This potential impact on a bankrupt's discharge date is stated as a note to Item 30.

Item 31 - Discharge date for bankrupts discharged from bankruptcy before commencement

Item 31 provides the application provisions for bankrupt people discharged from bankruptcy before commencement of the Bill. Application of the provisions will depend on several circumstances outlined in subitems 31(1)-(9).

Subitem 31(1) applies Item 31 to a person who was discharged from bankruptcy before commencement of the amending Act by force of subsection 149(1) of the Act, as in force during the affected bankruptcy period. In addition to being discharged before the commencement of the amending Act, for Item 31 to apply, the discharge reference date for the bankruptcy must be later than the date on which the bankrupt filed their statement of affairs for the purposes of sections 149 and 149A of the Act, as then in force.

The application provision operates to capture bankruptcies which could have otherwise been discharged on the statement of affairs filing date, rather than the dates listed under 149 of the amending Act.

Subitem 31(2) sets out the interaction between this subitem and the discharge reference date. Under this subitem, the date of discharge under sections 149 and 149A (being the date of filing of a statement of affairs, as in force at the time) is taken to be and to have always been references to the discharge reference date for the bankruptcy. This means that a person's prior discharge date, where incorrect, is now regularised under the amending Act.

Subitem 31(3) clarifies that the application of subitem 31(2), does not render anything done by or in relation to the person before commencement invalid or ineffective on the basis that the date of discharge was or would be the date that would have been applied under section 149 or 149A had subitem 31(2) not applied during the affected bankruptcy period. This application allows for the validation of any acts done on the basis of a discharge date calculated on the date of filing.

Subitem 31(4) provides that no action, suit or proceeding (whether civil or criminal) lies against a person in relation to any act or omission that the person did or omitted to perform before commencement on the basis that section 149 or 149A applied as in force during the affected bankruptcy period. This protects any person who has acted, or omitted to act, in reliance of the statement of affairs filing date for the purposes of 149 and 149A.

Subitem 31(5) provides that subitem 31(2) does not apply where there is no Court order in force before commencement declaring the date of the discharge to be a particular date or otherwise affecting the date of the discharge (i.e. where the Court has made an order under section 33A of the Bankruptcy Act) and the bankruptcy is not in a class determined by subitem 31(6) (see below).

Subitem 31(6) provides a power for the Minister to make a legislative instrument for the purposes of subitem 31(5)(b) determining that a class of bankruptcies is carved out for the purposes of this subitem 31(2). An ability for making legislative instrument allows for the carve out of a class of bankruptcies where the amending Act causes detriment to a certain class.

Subitem 31(7) specifies that subitem 31(8) applies to things done, or purportedly done, before commencement that would otherwise be invalid or ineffective only because the things were done, or purportedly done, on the basis that the date on which a person filed their statement of affairs was the discharge reference date. This applies to things done, or purportedly done to the person, or in relation to the bankruptcy. For example the thing done may be making or not making a decision, entering into a transaction, or other acts in connection with the bankruptcy which would otherwise have been ineffective or invalid had the true discharge date been known.

Subitem 31(8) clarifies that, without limiting subitem 31(2), the thing done or purportedly done is taken for all purposes to valid and effective and have always been so.

Subitem 31(9) clarifies the application of Item 31 in relation to civil or criminal proceedings.

Subitem 31(9)(a) provides that the item will apply to civil and criminal proceedings instituted on or after commencement. This means that where a civil or criminal proceeding is instituted on or after commencement, where a person has been discharged from bankruptcy before commencement, and the discharge reference date is later than the discharge date, the proceeding will be validated by this item. This allows for pre-commencement conduct in relation to a bankruptcy to be the subject of civil or criminal proceedings instituted on or after commencement.

Subitem 31(9)(b) clarifies that the item only applies to civil proceedings, but not criminal proceedings, instituted before commencement but concluded either before, or on or after commencement. This means that any civil proceedings that were started prior to commencement and concluded either before or after commencement, where the discharge reference date is later than the discharge date, will be validated by this item. However, where a criminal prosecution had been instituted, and concluded either before or after commencement of this item, the item will not apply. The disapplication of this item to criminal proceedings in these circumstances leaves open the possibility of appeal to those affected by the discharge reference date.

Division 4 - Other provisions

Item 32 - Court orders affecting the discharge reference date

Item 32 provides an application provision for court orders made for a person who had a statement of affairs accepted by the Official Receiver, but has not been discharged from bankruptcy before commencement of this part.

Subitem 32(1) applies this subitem to people who had a statement of affairs accepted by the Official Receiver for filing before commencement of the amending Act and had not been discharged from bankruptcy by force of subsection 149(1) of the Act before commencement of the amending Act.

Subitem 32(2) clarifies the operation of Court orders made under section 33A of the Act as in force immediately before the amending Act commenced. Where an order under section 33A of the Act had been made, it is taken to have also empowered the Court to make an order determining a person's discharge reference date as having been earlier than the date that would otherwise apply. This preserves Court orders made to backdate a statement of affairs filing date to where a person reasonably believed a statement of affairs had been filed. These Court orders will be read to have determined a person's discharge reference date under this Part.

Item 33 - Entry of information on the National Personal Insolvency Index

Item 33 provides an application provision for the entry of information on NPII. The Official Receiver must enter relevant information, as required by the Regulations, into the NPII. Prior to commencement of this item, the regulations required the Official Receiver to include the date of filing of a statement of affairs in some instances.

Subitem 33(1) provides that the item applies where the Official Receiver accepted a statement of a debtor's affairs for filing, and the regulations required that the date of filing of the statement of affairs was to be entered in the NPII.

Subitem 33(2) provides that the reference to the date of filing of a statement of affairs in those regulations, are taken to apply and always have applied, to discharge reference date for the bankruptcy.

The above validates and regularises dates on the NPII which may have been entered incorrectly under any Regulations during the affected bankruptcy period.

Item 34 - Compensation for acquisition of property

Subitem 34(1) sets out circumstances in which the Commonwealth may be liable to pay compensation. These circumstances arise if the operation of Schedule 1 of this Bill would result in an acquisition of property (within the meaning of paragraph 51(xxxi) of the Constitution) from a person otherwise than on just terms (within the meaning of that paragraph), and that acquisition would be invalid because of that paragraph. In these circumstances, the Commonwealth will be liable to pay a reasonable amount of compensation to the person.

Where the Commonwealth and the person do not agree on the amount of the compensation, Subitem 34(2) provides that the person may institute proceedings in the Federal Court of Australia for the recovery from the Commonwealth of such reasonable amount of compensation as the Court determines.