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

Schedule 2   Amendments commencing on 1 July 2007

Bankruptcy Act 1966

55   After section 185P

Insert:

185PA Procedures for dealing with proposals to terminate debt agreements

Processing of proposals by the Official Receiver

(1) If the Official Receiver is required by subsection 185P(2) to process a proposal to terminate a debt agreement, 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 proposal to terminate a debt agreement, the Official Receiver must:

(a) provide the creditor with a copy of:

(i) the proposal; and

(ii) the relevant subsection 185P(1B) statement; and

(b) ask the creditor to give a written statement setting out whether or not the 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.

185PB Inspection of creditor’s statement

If an affected creditor gives a paragraph 185PA(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.

185PC Acceptance of a proposal to terminate a debt agreement

Acceptance in writing

(1) A proposal to terminate a debt agreement is accepted if:

(a) the Official Receiver writes to affected creditors of a debtor under section 185PA; 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 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 relevant 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.

185PD Withdrawal of proposal to terminate a debt agreement

Scope

(1) This section applies if:

(a) a proposal to terminate a debt agreement is given under section 185P; and

(b) the applicable deadline has not arrived; and

(c) the proposal has not been accepted.

Withdrawal of proposal

(2) If:

(a) the Official Receiver becomes aware that the relevant subsection 185P(1B) statement was deficient because it omitted a material particular or because it was incorrect in a material particular; or

(b) the Official Receiver becomes aware of a material change in circumstances that:

(i) was not foreshadowed in the relevant subsection 185P(1B) statement; 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;

the Official Receiver may declare in writing that the proposal is withdrawn.

Notification of withdrawal

(3) If the Official Receiver makes a declaration under subsection (2), the Official Receiver must give written notice of the declaration, 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 make a declaration under subsection (2), the debtor or an affected creditor may apply to the Administrative Appeals Tribunal for review of the decision.