NSW bankrupt sentenced to 15 months imprisonment

On 29 November 2019, Ms Kathy Stefanac was sentenced in the Downing Centre District Court, after pleading guilty to one charge under Commonwealth bankruptcy legislation.

The charge related to the disposal of property, specifically $250,000, prior to filing for voluntary bankruptcy. Ms Stefanac was convicted and sentenced to 15 months imprisonment by way of an Intensive Correction Order to be completed by 50 hours of community service.

Given Ms Stefanac was previously subject to a Community Corrections Order, her Honour DCJ Sweeney considered imprisonment by the Intensive Correction Order the only option.

Ms Stefanac’s guilty plea was taken into consideration, and resulted in a 25% discount on the sentence. Her Honour also accepted that Ms Stefanac’s mental condition contributed to her offending, and ordered that her current treatment continue. 

The matter was prosecuted by the Commonwealth Director of Public Prosecutions on behalf of the Australian Financial Security Authority (AFSA).

The Director of AFSA’s Enforcement team, Ms Gemma Denton, explained that the personal insolvency system, which includes bankruptcy, can assist people who have fallen on hard times.

“Personal bankruptcy can provide relief from unmanageable debt, and help people make a fresh start,” Ms Denton said.

“However, the community expects that we will regulate in a balanced way, ensuring that those who intentionally misuse the personal insolvency system are dealt with appropriately.

“We work closely with bankruptcy trustees who identify misconduct in the system and refer matters to us. People who take advantage of the system, like Ms Stefanac, risk being investigated and prosecuted.”

In July 2016, Ms Stefanac pleaded guilty and was sentenced in the Bankstown Local Court for an offence of dishonestly obtaining property by deception. She was ordered to perform 350 hours of community service work and pay $100,000 in compensation to her former employer, Bridgestone Earthmover Tyres Pty Ltd.

In the weeks following the court order, Ms Stefanac began to make withdrawals from her bank totalling $259,000. This money included $250,000 which she received in proceeds from her divorce settlement almost a year prior to the order.

In September 2016, after the money had been withdrawn from her bank accounts, Ms Stefanac offered $20,000 to Bridgestone Earthmover Tyres Pty Ltd as payment of her debt. The settlement offer was rejected.

During this time Ms Stefanac was employed by Idraft Group (NSW) Pty Ltd with an annual salary in excess of $89,000.

Bridgestone Earthmover Tyres Pty Ltd sought to enforce the compensation order made by the Bankstown Local Court, and on 21 September 2016, a garnishee order was made for Ms Stefanac’s wages for $100,220 plus interest of $572.75.

On 29 September 2016, Ms Stefanac filed for voluntary bankruptcy, meaning the garnishee order could not be enforced.

Ms Stefanac identified the main cause of her insolvency was adverse legal action. She declared debts totalling $130,546. Of this, $100,792.75 was the debt owed to Bridgestone Earthmover Tyres Pty Ltd.

In August 2019, creditors accepted a payment of 13 cents in the dollar and Ms Stefanac’s bankruptcy was annulled. The money came from a third party.


Bankruptcy Act 1966 (Cth)

Ms Stefanac was convicted of one charge under section 266(3) of the Bankruptcy Act 1966 (Cth).

Useful links:

AFSA Enforcement snap-shot 2018-19

In 2018-19, 96 persons were prosecuted for a total of 145 charges during the year. Of those charges, 11 were withdrawn, 122 proven with conviction, 4 proven without conviction, 7 were dismissed and 1 not proven.