Annulments & Drawing of Remuneration and Costs - s.153A

Reviews undertaken of trustee remuneration over the last 12 months have shown that some trustees are drawing remuneration and/or costs after an annulment has been effected under s.153A of the Bankruptcy Act 1966.

Annulment of bankruptcy under s153A occurs if the trustee is satisfied that all of the bankrupt’s debts (which includes the costs, charges and expenses of the administration, including the remuneration and expenses of the trustee) have been paid in full, and the bankruptcy is annulled, by force of s153A(1), on the date on which the last such payment was made. Within 2 days after that date, the trustee must give the Official Receiver (OR) a written certificate setting out the former bankrupt’s name and bankruptcy number and the date of the annulment.

It is relevant to note that s153A(1) annuls the bankruptcy on the date the last payment of the bankrupt’s debts, as defined in s153A(6), was made. The tense is important here. The subsection clearly indicates that the annulment can only occur after all the debts have been paid. It does not contemplate that annulment can occur, for example, when the trustee has received sufficient funds to pay all of the bankrupt’s debts, but has not yet applied those funds in payment of the debts.

Once the trustee has issued the certificate to the OR under s153A(2), there is no ability for the trustee to thereafter claim any expenses or remuneration (unless this was sanctioned by a court). Once the annulment has occurred under s153A(1), if the trustee wished to claim remuneration or expenses for work undertaken after this date, the trustee would effectively be arguing that they were not in fact satisfied that all of the debts had been paid in full at the time they previously indicated.

In situations where, after annulment, additional work is required that was not foreseen or foreseeable at the time annulment occurred under s153A(1), it would not be possible for the trustee to unilaterally change their mind as to whether the debts had been paid in full and for this reversal to bind the bankrupt (or any other party for that matter).

Mark Findlay - Director Regulation