One-year bankruptcy is back on the table – Insolvency/Bankruptcy/Re-structuring – Australia – Mondaq News Alerts

Australia: One-year bankruptcy is back on the table

06 February 2022

Worrells Solvency & Forensic Accountants

To print this article, all you need is to be registered or login on Mondaq.com.

You may recall that way back in October 2017 the governmentintroduced the Bankruptcy Amendment (Enterprise Incentives)Bill to amend the Bankruptcy Act 1966 toreduce the automatic bankruptcy period from three years to oneyear. The Bill lapsed in 2019 but was still floating around thehalls of government and the Attorney-General has put it back on thetable by seeking submissions to reform the Bankruptcy Act inrelation to:

However, it is not all plain sailing for those facingbankruptcy! The government is particularly interested in gettingstakeholders thoughts on excluding bankrupts from being eligiblefor a one-year bankruptcy where in the last 10 years they have:

Been bankrupt

This is proposed to be staged such that if the reform becomeseffective and you've already had a one-year bankruptcy in a10-year period, then any future bankruptcy will be two years. Ifyou go bankrupt again in the next 10 years, then it will be threeyears. After that (hopefully very few get to that!) it resets toone year.

Been banned as a director

No staging here; the bankruptcy is automatically three years.However, those automatically banned as a result of going bankruptget the one, two, or three years outlined above.

Had a bankruptcy extended through an objection todischarge

So, if you had been bankrupt in the last 10 years and thebankruptcy trustee objected to your automatic discharge frombankruptcy, then you're not entitled to the one-yearbankruptcy.

Have been convicted of certain offences

If you had been convicted of a Bankruptcy Act or fraud-relatedoffence you are straight to the maximum three years.

Promoting debt agreements & targeting untrustworthyadvisors

The government is concerned about the reduction in Part IX, debtagreements use. National volumes reduced from 11,549 in the 2018-19period, to 3,731 in the 2020-21 period. No doubt some of thereduction has been as a result of the government's and majorlender's financial responses to the pandemic. However, sincethe numbers have not materially increased, consideration is beinggiven to:

In an effort to further detect and stamp out pre-insolvencyadvice by untrustworthy advisors the Attorney-General is seekingstakeholder views on expanding the Bankruptcy Act to:

Details of the consultation can be found here, with submissions closing on 25 February2022.

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.

POPULAR ARTICLES ON: Insolvency/Bankruptcy/Re-structuring from Australia

Continued here:

One-year bankruptcy is back on the table - Insolvency/Bankruptcy/Re-structuring - Australia - Mondaq News Alerts