Legislative and administrative reporting

Amendments to the Bankruptcy Act and associated instruments

Bankruptcy Amendment (Debt Agreement Reform) Act 2018

The Bankruptcy Amendment (Debt Agreement Reform) Act 2018 received royal assent on 27 September 2018. The majority of the amendments commenced on 27 June 2019.

These reforms provide tighter regulation of the debt agreement regime. They improve industry standards by setting enhanced registration and practice requirements, introducing tougher penalties for wrongdoing, and granting the Inspector-General in Bankruptcy additional investigative powers to address administrator misconduct. The reforms include changes to:

• the length of a debt agreement a debtor can propose
• debtor eligibility to enter into a debt agreement
• the Official Receiver’s powers to refuse to accept a debt agreement proposal in exceptional circumstances
• creditor voting rules around debt agreements
• debt agreement administrator registration requirements
• the Inspector-General’s investigation and inquiry powers.

Bankruptcy Amendment (Debt Agreement Reform) Regulations 2019

The Bankruptcy Amendment (Debt Agreement Reform) Regulations 2019 commenced on 27 June 2019 and support the measures contained in the Bankruptcy Amendment (Debt Agreement Reform) Act 2018. They amended the Bankruptcy Regulations 1996 to update the educational qualifications required for registration as a debt agreement administrator, and prescribe equivalent qualifications from foreign institutions and membership of professional accounting bodies. This ensures that people with relevant expertise are not excluded from becoming registered as debt agreement administrators.

The new regulations also align registration renewal requirements for debt agreement administrators with those of trustees, by preventing the Inspector-General in Bankruptcy from approving the renewal of a debt agreement administrator’s registration if the administrator has outstanding estate charges of more than a prescribed amount, and removed a redundant reference.

National Redress Scheme for Institutional Child Sexual Abuse (Consequential Amendments) Act 2018

The National Redress Scheme for Institutional Child Sexual Abuse (Consequential Amendments) Act 2018 commenced on 1 July 2018 and established a National Redress Scheme for survivors of institutional child sexual abuse to operate for a 10-year period from 1 July 2018.

The Act implements the Commonwealth’s and each participating institution’s response to the recommendations in the Redress and Civil Litigation Report of the Royal Commission into Institutional Responses to Child Sexual Abuse. It amended, inter alia, subsection 116(2) of the Bankruptcy Act 1966 to add a new paragraph 116(2)(ga). This paragraph provides that a payment under the National Redress Scheme is not able to be divided among creditors for the purpose of recovering money under bankruptcy proceedings, regardless of whether the person receiving the payment was bankrupt before or after the payment was made.

The new paragraph also provides that a payment under the scheme is exempt from being able to be divided among creditors regardless of whether the payment was made to the person who suffered the sexual abuse to which the payment relates (this may occur where the eligible person dies prior to a decision being made on the application or dies before accepting or declining the offer).

Civil Law and Justice Legislation Amendment Act 2018

The Civil Law and Justice Legislation Amendment Act 2018 amended section 35 of the Bankruptcy Act 1966. Section 35 deals with the Family Court’s jurisdiction in bankruptcy where a bankruptcy trustee is a party to property settlement or spousal maintenance proceedings. The amendments, which commenced on 26 October 2018, clarified that the Family Court of Australia has bankruptcy jurisdiction when a trustee applies to have a financial agreement set aside under the Family Law Act 1975.

The Law Council of Australia submitted to the Senate Legal and Constitutional Affairs Legislation Committee that the Family Law Act should be further amended to define the term ‘bankrupt’ to cover undischarged bankruptcy and discharged bankruptcy where the bankrupt person’s estate remains vested in the Official Trustee in Bankruptcy. The submission was made in response to the decision in Official Trustee in Bankruptcy & Galanis and Anor [2017] FamCAFC 20, which held that the Family Court’s jurisdiction was limited to proceedings involving a person who is an undischarged bankrupt.

In response to that submission, section 4 of the Family Law Act was amended to provide that a reference in that Act to a person, being a party to a marriage or a party to a de facto relationship, who is bankrupt includes a reference to a person who has been discharged from bankruptcy, and whose property remains vested in the bankruptcy trustee under the Bankruptcy Act.

Amendments to the Personal Property Securities Act and associated instruments

There were no amendments to the Personal Property Securities Act 2009 and associated instruments in 2018–19.

Registrar actions under the Personal Property Securities Act

Table 3 shows the number of registrations that were removed or otherwise amended by the Registrar of Personal Property Securities in 2018–19. The Personal Property Securities Act 2009 (PPS Act) provides the Registrar with the power to amend and/or remove data on the PPSR, including an entire registration. This may occur as a result of the administrative amendment demand process (Part 5.6); the exercise of the discretion under Part 5.7; or, with respect to migrated data, if the Registrar is satisfied that it was not in the determined class for migration (Part 9.4).

Table 4 provides the date, time and reason for refusal of access to, or suspension of, the PPSR.

In 2018–19, the Registrar decided, pursuant to subsection 147(5) of the PPS Act, to refuse access to or otherwise suspend the operation of the PPSR on six occasions.

In accordance with subsection 147(6) of the PPS Act and the associated regulations, the Registrar may also refuse access to, or otherwise suspend, the operation of the PPSR with notice for a period not longer than four hours. This power is generally used for scheduled maintenance of the PPSR.

From 1 July 2018 to 30 June 2019, the standing outage period for scheduled maintenance was 9.00 p.m. to 11.59 p.m. on Wednesdays (Canberra time). The scheduled maintenance period did not include the Wednesday falling between 21 December 2018 and 1 January 2019.