Bankruptcy Legislation Amendment (Debt Agreements) Act 2007 (44 of 2007)

Schedule 2   Amendments commencing on 1 July 2007

Bankruptcy Act 1966

32   After section 185E

Insert:

185EA Processing of debt agreement proposal

Processing of proposals by the Official Receiver

(1) If the Official Receiver is required by subsection 185E(5) to process a debt agreement proposal, the Official Receiver must write to each of the affected creditors who is known to the Official Receiver, asking each affected creditor to indicate whether the proposal should be accepted.

Writing to creditors to deal with a proposal

(2) When writing to each affected creditor under subsection (1) about a debt agreement proposal, the Official Receiver must:

(a) provide the creditor with a copy of:

(i) the debt agreement proposal; and

(ii) the debtor’s subsection 185C(2B) statement; and

(b) ask the creditor to give a written statement setting out whether or not the debt agreement proposal should be accepted; and

(c) inform the creditor of the person to whom the statement should be given and of the need to give the statement before the applicable deadline.

(3) The paragraph (2)(b) statement must be in the approved form.

185EB Inspection of creditor’s statement

If an affected creditor gives a paragraph 185EA(2)(b) statement:

(a) the debtor; or

(b) any other affected creditor;

may, without fee and either personally or by an agent:

(c) inspect the statement; and

(d) obtain a copy of, or make extracts from, the statement.

185EC Acceptance of a debt agreement proposal

Acceptance in writing

(1) A debt agreement proposal is accepted if:

(a) the Official Receiver writes to affected creditors of a debtor under section 185EA; and

(b) a majority in value of the creditors who reply before the applicable deadline state that the proposal should be accepted.

Timing of acceptance

(2) A debt agreement proposal that is accepted under subsection (1) is taken to be accepted at the applicable deadline.

Value of a creditor

(3) In assessing, for the purposes of paragraph (1)(b), the value of a creditor who is a related entity of the debtor, any debt that was assigned to the creditor is taken to have a value equal to the value of the consideration that the creditor gave for the assignment.

(4) For the purposes of paragraph (1)(b), the value of a creditor is to be assessed as at the time when the acceptance of the debt agreement proposal for processing was recorded on the National Personal Insolvency Index.

(5) For the purposes of paragraph (1)(b), a secured creditor is taken to be a creditor only to the extent (if any) by which the amount of the debt owing to the creditor exceeds the value of the creditor’s security.

185ED Cancellation of acceptance of debt agreement proposal for processing

Scope

(1) This section applies if:

(a) the Official Receiver has accepted a debt agreement proposal for processing; and

(b) the applicable deadline has not arrived.

Cancellation

(2) The Official Receiver may cancel the acceptance of the debt agreement proposal for processing if:

(a) the Official Receiver becomes aware that one or more affected creditors were not disclosed in the debtor’s statement of affairs; or

(b) the Official Receiver becomes aware that:

(i) the debtor’s statement of affairs; or

(ii) the debtor’s subsection 185C(2B) statement;

was deficient because it omitted a material particular or because it was incorrect in a material particular; or

(c) the Official Receiver becomes aware of a material change in the debtor’s circumstances that:

(i) was not foreshadowed in the debtor’s subsection 185C(2B) statement or the debtor’s statement of affairs; and

(ii) in the opinion of the Official Receiver, is capable of affecting an affected creditor’s decision whether or not to accept the proposal; or

(d) the Official Receiver becomes aware of a matter that, if it had been known to the Official Receiver at the time of acceptance of the debt agreement proposal for processing, would have resulted in a refusal of acceptance on the grounds that subsection 185C(4) had not been complied with.

Notification of cancellation

(3) If the Official Receiver cancels the acceptance of a debt agreement proposal for processing, the Official Receiver must give written notice of the cancellation, and the reasons for it, to:

(a) the debtor; and

(b) affected creditors who are known to the Official Receiver.

Review

(4) If the Official Receiver decides to cancel the acceptance of a debt agreement proposal for processing, the debtor may apply to the Administrative Appeals Tribunal for review of the decision.