By Ellen Ferris, a Solicitor in Matthews Folbigg’s Insolvency, Restructuring and Debt Recovery Group.
On 3 December 2020, the Exposure Draft of the Bankruptcy Regulations 2021 was released for consultation. These regulations are an updated version of the Bankruptcy Regulations 1996, and the draft copy can be found here.
The consultation period expires on 10 January 2021, and the Bankruptcy Regulations 1996 are due to sunset on 1 April 2021. Submissions can be submitted by email to Bankruptcy@ag.gov.au
Main changes
As the existing Regulations were drafted in 1996, the Attorney-General’s Department have proposed a number of drafting changes to bring the Regulations up to date. This includes minor technical amendments to remove redundant or outdated references to legislative schemes which have been repealed, and modifying references to “the Official receiver” to consistently refer to “an Official receiver”. Some interesting changes and additions are as follows:
- The addition of a definition which clarifies the expenses a trustee can be paid for carrying on business under a section 50 order. The definition outlines what can be paid for work done and for expenses incurred.
- Household property exempt from vesting under regulation 6.03 has been updated to ensure compliance with the modern standard of living. For example, it now includes a set of equipment for providing internet access to the members of the household.
- Section 31 of the new Regulations proposes a class of transfer which are exempt from being void against the trustee for the purposes of section 120(2)(d) of the Bankruptcy Act 1996 (Cth). This will come into effect if the costs of recovering the transferred property would be likely to exceed the value of the property to the transferor’s creditors. Submissions are sought on whether stakeholders consider this addition to be necessary given the broader duties of a trustee.
- Superannuation contributions will count as income under new paragraph 34(2)(a), which replaces regulation 6.12B(2)(a), to be counted as a bankrupts’ income for the purpose of making a contribution assessment.
- A new section, section 36, will replace regulation 6.15A and simplify the determination of the maximum income a person can earn before that are classified as a bankrupts’ dependant when conducting a bankrupt’s contributions assessment.
- Scheduled 8 of the existing Regulations will be significantly amended to ensure users clearly understand their obligation to enter information into the National Personal insolvency Index.
For the Attorney-General’s Department’s overview of the main changes in the new regulations, see here.
More to come soon.
If you would like more information or advice on this area, please contact a Principal of Matthews Folbigg Insolvency, Restructuring & Debt Recovery Team:
Jeffrey Brown on (02) 9806 7446 or jeffreyb@matthewsfolbigg.com.au
Stephen Mullette on (02) 9806 7459 or stephenm@matthewsfolbigg.com.au.
