Bankruptcy Legislation Amendment Act 2004 (80 of 2004)

Schedule 1   Amendments relating to statements of affairs and Part X agreements

Part 1   Amendment of the Bankruptcy Act 1966

Division 2   Amendments relating to Part X agreements

155   After section 227

Insert:

229 Personal insolvency agreement to bind all creditors

(1) A personal insolvency agreement that:

(a) is entered into in accordance with this Part; and

(b) complies with the requirements of this Part;

is, upon being duly executed by the debtor and the trustee, binding on all the creditors of the debtor.

(2) If a personal insolvency agreement has become binding on the creditors of the debtor, it is not competent for a creditor, so long as the agreement remains valid:

(a) to present a creditor's petition against the debtor, or to proceed with such a petition presented before the agreement became so binding, in respect of a provable debt; or

(b) to enforce any remedy against the person or property of the debtor in respect of a provable debt; or

(c) to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.

(3) This section does not:

(a) affect the right of a secured creditor to realise or otherwise deal with the creditor's security; or

(b) prevent a creditor, after all the obligations that a personal insolvency agreement created have been discharged, from taking any proceeding or enforcing any remedy in respect of a provable debt from which the debtor is not released by the operation of the agreement.

(4) This section does not prevent a creditor from enforcing any remedy against:

(a) a debtor who has executed a personal insolvency agreement; or

(b) any property of such a debtor that is not subject to the agreement;

in respect of any liability of the debtor under a maintenance agreement or maintenance order (whether entered into or made, as the case may be, before or after the commencement of this subsection).

230 Release of provable debts

(1) If a personal insolvency agreement provides for a debtor to be released from a provable debt, the agreement operates to release the debtor from that provable debt unless the agreement is set aside or terminated under this Part.

(2) Subsection (1) has effect subject to subsections (3), (4) and (5).

Exceptions

(3) Subsection (1) does not operate to release the debtor from a debt that would not be released by his or her discharge from bankruptcy if he or she had become a bankrupt on the day on which he or she executed the personal insolvency agreement.

(4) Subsection (1) does not affect the right of a secured creditor, or a person claiming through or under a secured creditor, to realise or otherwise deal with the creditor's security:

(a) if the secured creditor has not proved under the agreement for any part of the secured debt - for the purpose of obtaining payment of the secured debt; or

(b) if the secured creditor has proved under the agreement for part of the secured debt - for the purpose of obtaining payment of the part of the secured debt for which the creditor has not proved under the agreement;

and, for the purposes of enabling the secured creditor, or a person claiming through or under a secured creditor, so to realise or deal with the creditor's security, but not otherwise, the secured debt, or the part of the secured debt, as the case may be, is taken not to have been released.

(5) A personal insolvency agreement does not release from any liability a person who, at the date on which the debtor executed the agreement, was:

(a) a partner or a co-trustee with the debtor; or

(b) jointly bound or had made a joint contract with the debtor; or

(c) surety or in the nature of a surety for the debtor.

231 Application of general provisions of Act to personal insolvency agreements

(1) Sections 77, 77A, 77AA, 77C, 77D, 77E, 77F, 78 (other than paragraphs 78(1)(a), (b) and (c)) and 81 apply, with the prescribed modifications (if any), in relation to a debtor who has executed a personal insolvency agreement as if:

(a) the debtor were a bankrupt; and

(b) the trustee of the agreement were the trustee of the estate of the bankrupt debtor.

(2) Section 78 (other than paragraphs 78(1)(d) and (f)) applies, with the prescribed modifications (if any), in relation to a debtor who has executed a personal insolvency agreement as if the debtor were a debtor against whom a bankruptcy notice has been presented.

(3) Subsection 58(4) and sections 60, 61, 62, 70, 71, 72, 82 to 118, 127 to 130 and 133 to 139H, Subdivisions I and J of Division 4B of Part VI and sections 140 to 147 apply, with the prescribed modifications (if any), in relation to such an agreement as if:

(a) a creditor's petition had been presented against the debtor by whom the agreement was executed on the day on which the special resolution requiring the execution of the agreement was passed; and

(b) a sequestration order had been made against him or her on that petition on the day on which he or she executed the agreement; and

(c) the trustee of the agreement were the trustee in his or her bankruptcy.

(4) In the application, by virtue of subsections (1), (2) and (3), of the provisions referred to in those subsections:

(a) a reference to the property of the bankrupt is to be read as a reference to the divisible property of the debtor; and

(b) a reference to a provable debt is to be read as a reference to a provable debt within the meaning of this Part; and

(c) a reference to the end of the bankruptcy is to be read as a reference to the end of the personal insolvency agreement.

(5) Part VIII applies, with any modifications prescribed by the regulations, in relation to a trustee of a personal insolvency agreement as if:

(a) the debtor by whom the agreement was executed were a bankrupt; and

(b) the trustee of the agreement were the trustee in his or her bankruptcy.

(6) If, after taking into account the prescribed modifications and the provisions of subsection (4), a provision specified in subsection (1), (2), (3) or (5) is incapable of application in relation to a personal insolvency agreement, or the trustee of such an agreement, as the case requires, or is inconsistent with this Part, that provision does not so have application.

(7) This Division does not empower the Court to stay any proceedings under a proceeds of crime law.

231A Right of debtor to remaining property

(1) The debtor to whom a personal insolvency agreement relates is entitled to any property remaining after payment in full of:

(a) the costs, charges and expenses of the administration of the agreement; and

(b) all provable debts; and

(c) interest on interest-bearing provable debts.

(2) The Court may make an order directing the trustee not to pay or transfer the property, or a specified part of the property, referred to in subsection (1), to the debtor if:

(a) the Director of Public Prosecutions, or a person who is entitled to apply for an interstate confiscation order under a corresponding law, applies to the Court for an order under this subsection; and

(b) the Court is satisfied that proceedings are pending under a proceeds of crime law; and

(c) the Court is satisfied that property of the debtor may:

(i) become subject to a forfeiture order or interstate forfeiture order made in the proceedings; or

(ii) be required to satisfy a pecuniary penalty order or interstate pecuniary penalty order made in the proceedings.

(3) The Court, on application made to it, may vary or revoke an order made under subsection (2).

232 Certificate relating to discharge of obligations

(1) If the trustee of a personal insolvency agreement is satisfied that all the obligations that the agreement created have been discharged, the trustee must, on written request by the debtor, give the debtor a certificate signed by the trustee to that effect.

(2) A certificate signed by a trustee under this section is prima facie evidence of the facts stated in it.