The Inspector-General in Bankruptcy has commenced proceedings in the Federal Court against former Registered Trustee Paul Leroy, following extensive investigations into his administration of multiple bankrupt estates. These actions follow Mr Leroy's deregistration as a registered trustee by the Australian Financial Security Authority (AFSA) in 2024.
Mr Leroy is alleged to have misappropriated more than $4 million, across at least 5 bankrupt estates between 2021 and 2023.
AFSA is seeking court orders declaring that Mr Leroy breached his duties, is not a fit and proper person to act as a bankruptcy trustee and must repay misappropriated funds and improper remuneration. Specifically, AFSA's application will seek:
- Declarations that Mr Leroy breached his statutory and fiduciary duties.
- A declaration that Mr Leroy is not a fit and proper person to be a bankruptcy trustee.
- An order prohibiting Mr Leroy from applying for registration as a bankruptcy trustee for a period of 15 years.
- Orders that Mr Leroy repay the amounts of the alleged misappropriated funds to the affected bankrupt estates now administered by the Official Trustee and to an individual whose bankruptcy was annulled.
- An order directing Mackay Goodwin, the firm that employed Mr Leroy, to account for all remuneration approved and/or received by Mr Leroy, Mackay Goodwin, or its agents in connection with the relevant bankrupt estates or property.
- An order requiring Mr Leroy and/or Mackay Goodwin repay such remuneration to the affected bankrupt estates and the individual whose bankruptcy was annulled.
This marks the first application of its kind by the Inspector-General in Bankruptcy, reinforcing AFSA's strengthened regulatory posture and its commitment to holding insolvency professionals and firms to account.
Among the affected estates administered by Mr Leroy is the second Bankrupt Estate of former Health Services Union secretary Kathy Jackson.
AFSA's proceedings will complement existing court actions brought by the current Registered Trustees of the Jackson estate (No.2), who are also seeking recovery of allegedly misappropriated funds. These proceedings are listed to be heard before Justice O'Callaghan in the Federal Court at Melbourne on 12 November 2025.
Investigations by those Registered Trustees into the administration of the second Bankrupt Estate of Kathy Jackson were funded by AFSA on behalf of the Commonwealth under section 305 of the Bankruptcy Act 1966. That funding was approved on the basis that it furthers AFSA's regulatory aims in the AFSA Regulatory Action Statement 2025–26, including to ensure the proper administration of bankruptcies and prevent unauthorised access to trust funds for personal gain.
AFSA has also assisted the Official Trustee and the current Registered Trustees of the Jackson estate (No.2) through the commissioning of a forensic accounting report that identifies the alleged instances of misappropriated funds.
AFSA Chief Executive and Inspector-General in Bankruptcy, Tim Beresford, said 'Our regulatory actions are focused on protecting the integrity of Australia's personal insolvency system. These actions send a clear message, if you misuse trust funds or breach your obligations as a trustee, we will hold you to account.'
These proceedings against Mr Leroy follow the recent Federal Court decision to declare Jon Angelo George Adgemis bankrupt. AFSA had raised serious concerns about Mr Adgemis' use of a Personal Insolvency Agreement (PIA), which was viewed by the Inspector-General as unfair to creditors and contrary to public interest.
Mr Beresford said the Court's decision place Mr Adgemis into bankruptcy reflects AFSA's commitment to ensuring the system is not used to shield personal wealth or obstruct investigations.
'Our regulatory actions are focused on protecting the integrity of Australia's personal insolvency system. I am sending a clear message – if you seek to exploit the system or vulnerable Australians, you will be held to account.'
'Trust is the foundation of a fair and functioning insolvency system. AFSA's actions are not just about recovering funds, they are about protecting the public good, delivering public value and ensuring that Australians can rely on the system to be fair, transparent and accountable.'
These regulatory interventions form part of AFSA's broader harms-based regulatory reset, which focuses on:
- Manipulating personal insolvency proposals and creditor meetings to protect wealth
- Unauthorised access to trust funds for personal gain
- Harmful insolvency advice and debt agreements
- Not removing registrations on the Personal Property Securities Register – the PPSR.
AFSA is working closely with government regulators and law enforcement agencies to ensure that alleged misconduct is investigated thoroughly and prosecuted where appropriate.
