Practice Interview Questions for RT Registration Applicants

These questions provide applicants seeking registration as a trustee in bankruptcy with a broad understanding of the level of technical complexity of questions asked at a registration interview. The questions and answers reflect the law at the time of publication.

The questions do not cover all topics that could be asked about in an interview. It also does not reflect the total number of questions asked in an interview.

Committee members and delegates of the Inspector-General in Bankruptcy may ask other questions to satisfy themselves that an applicant shows the requisite knowledge and ability to be registered as a trustee.

Further information on the registration process can be found at Inspector-General Practice Statement 13 for registered trustee applicants.

Questions

Publication date: 03 February 2021

Commencement of Administration

1.1 You become trustee after a sequestration order is made. The bankrupt’s solicitor calls you up and explains that his client is solvent and will be approaching the Court to have the sequestration order set aside. What approach do you take?

1.2 You are appointed trustee of a bankrupt estate involving a husband and wife with a corner store. What steps will you take at the start of the bankruptcy?

Property

2.1 At the date of her bankruptcy, Ann and her husband Bill (who is not bankrupt), are the joint registered proprietors of a house property.  The bankrupt values the property at $550,000 in her statement of affairs and estimates that a sum of $230,000 is owing to the mortgagee.  As a registered trustee, what action would you take to secure your interest and what methods would you consider in realising it for the benefit of creditors?

2.2 How long will real property vest if it had been disclosed in the statement of affairs? How long will it vest if it had not been disclosed?

2.3 Joe decides to retire and receives a $350,000 lump sum payment from his superannuation fund. He deposits the money into a savings account where it remains when he later becomes bankrupt.

  1. Do the funds represent divisible property? What provision of the Bankruptcy Act 1966 (‘the Act’) is relevant?
  2. What if he received the $350,000 after the date of bankruptcy?

Income Contributions 

3.1 What enforcement options does a trustee have available to it where a bankrupt is not paying their assessed income contributions when due?

3.2 Can a trustee issue an assessment for a contribution assessment period (in respect to a period during bankruptcy) after a bankrupt is discharged?

(i.e. can an assessment be carried out after discharge in respect to pre-discharge income)

Annulments

4.1 You are a registered trustee of an estate where funds available to pay dividends are in excess of proved debts. You determine that there will be a surplus if all proved debts are paid. Prior to paying the dividend, what steps should you take?

4.2 A bankrupt approaches you shortly before his discharge about putting an offer of composition to creditors. What factors will you need to consider?

Dividends

5.1 You are a registered trustee of an estate where dividends have been paid to creditors. These were paid after waiting for the expiration of the period required under the Bankruptcy Act 1966. There are no funds left for further dividends, and no further realisations are expected in the administration.

A creditor, ABC Bank, had initially acknowledged receipt of the Notice of Intention to Declare Dividend, but failed to send in their proof of debt in time. One month after paying the dividend, ABC Bank submits their proof of debt and requests they be paid a dividend. What do you advise this creditor?

Realisations Charge

6.1 During the course of a bankruptcy administration of which you are trustee you have realised assets totalling $50,000. On 1 May 2020, a number of artworks are sold for $30,000. You incurred auctioneer’s fees of $1,000 in selling these artworks. On 15 May 2020, you also sell the bankrupt’s boat to a third party for $20,000. There was a secured debt against this boat in the sum of $15,000. What are the relevant realisations charge calculations?

Antecedent Transactions

7.1 You are appointed trustee of a bankrupt estate at the date of bankruptcy on 1 January 2020. Your investigations reveal that the bankrupt transferred 500 Commonwealth Bank shares on 1 January 2019 to her husband for “love and affection”. There were no other known acts of bankruptcy or creditors petitions pending.

  1. What possible actions could you take in relation to this transaction?
  2. Would you answer differ if the transfer of shares happened on 31 December 2014?

Meeting of Creditors

8.1 A resolution for the removal of a trustee of a bankrupt estate is put at a meeting of creditors. Proxies are received from all 3 creditors, and their intentions to vote are as follows:

Creditor A

$5,000

In favour of removal of trustee

Creditor B

$10,000

In favour of removal of trustee

Creditor C

$50,000

Against removal of trustee

At the meeting of creditor, the trustee asks the creditors if any of them would like to request a poll. Creditor A requests a poll. The trustee takes a poll immediately, and the outcome was the above table.

  1. Has the resolution passed or not? Why or why not?
  2. Based on the above circumstances, does the trustee have any options that they could consider exercising under the Act or Insolvency Practice Rules (Bankruptcy) 2016?

8.2 A debt collection agency has submitted a Statement of Claim and Proxy form which discloses the debt owed to the original creditor being $10,000. Is there any other information you need before deciding whether to admit the claim for voting purposes at a meeting of creditors?

Offence Referrals

9.1 You are trustee of an estate with no reasonable prospect of asset realisations. You are made aware of several offences the bankrupt has committed that will require several hours of yours and your Senior Manager’s time in collating the necessary referral to AFSA Enforcement. How can you approach the preparation of a timely referral to Enforcement if there are no funds in the estate to pay for your time?

Ethical / Fit and Proper

10.1 You have recently been registered to practice as a trustee and have been approached by a solicitor who can channel insolvency work to you.  You recognise this as an opportunity to establish yourself in the profession, but the solicitor requires some financial reward for this assistance.  What issues, if any, would you take into consideration?

Answers

Find out the Practice Registration Interview Answers for Registered Trustees here.