The Bankruptcy Act 1966 (Cth) (the Act) provides a regime by which a debtor can compromise with his/her creditors outside formal bankruptcy. The provisions are found in Part X (Personal Insolvency Agreements) and Part IX (Debt Agreements) of the Act.
DEBT AGREEMENTS
The High Court has recently clarified what is required for the creation of an express trust (Korda & Ors v Australian Executor Trustees (SA) Ltd [2015] HCA 6 (Korda)).
To be effective, express trusts must satisfy the three certainties of intention, subject matter and object. That is:
CLARITY OF INTENTION KEY TO CREATION OF EXPRESS TRUSTS: A WIN FOR RECEIVERS
The High Court has recently clarified what is required for the creation of an express trust (Korda & Ors v Australian Executor Trustees (SA) Ltd [2015] HCA 6 (Korda)).
To be effective, express trusts must satisfy the three certainties of intention, subject matter and object. That is:
SUMMARY
The Full Court of the Federal Court of Australia have confirmed that a judgment on assessed costs is a final orders for the purposes of the Bankruptcy Act 1966 (Cth) (Act), and therefore that a costs order can ground a bankruptcy notice for the purposes of the Act.
THE PERILS OF AMBIGUITY IN BANKRUPTCY NOTICES
The Bankruptcy Act ('the Act') is prescriptive as to the form and content of bankruptcy notices. Courts have often observed that close observance of the rules is necessary in light of the serious consequences faced by debtors upon bankruptcy and failure to do so may result in the notices being rendered invalid.
ABILITY TO SEEK AN EXTENSION OF TIME
Section 588FF(3) of the Corporations Act 2001 (the Act) provides liquidators with a mechanism by which to obtain an extension of time within which proceedings against the recipients of voidable transactions may be commenced.
The UK Treasury and Financial Conduct Authority (FCA) have been drip-feeding the industry rules and practical details of the transfer of consumer credit (CC) regulation to FCA. FCA has now published the final form of its detailed rules in its Consumer Credit Sourcebook (CONC), with feedback and practical advice. The rules apply from 1 April 2014 with limited grace periods only. It is critical that all firms carrying on credit-related regulated activities know what the changes mean for them.
FRC has issued guidance to banks' directors on financial reporting of solvency and liquidity risks, and the definition of going concern, in the context of post-crisis reforms and central bank and government support. (Source: Guidance for Directors of Banks)
The Government has decided to create a Special Administration Regime (SAR) for systemically important payment and securities settlement systems. It is concerned that, were one of these market infrastructures to become insolvent, the administrator or liquidator would have to work towards maximising value for creditors, rather than keeping critical payment and settlement services running. The Bank of England would have the power to apply to court for an order declaring the start of SAR proceedings. Ensuring continuity of service would be among the special administrator’s objectives.
The Government has fed back on the responses to DBIS’s consultation on the effect of bankruptcy on the ability to access a basic bank account. Responses to the consultation have shown that only 27% of people subject to a bankruptcy order are able to retain their bank account. A bank's decision not to offer a bank account to a bankrupt is mainly based on the bankrupt's credit record, rather than on the risk of the trustee making a claim against the bank, a risk that the consultation process has shown is more perceived than real.