Creditor meetings: Obligations and Inspector-General delegates
Manipulation of personal insolvency proposals and creditor meetings to avoid bankruptcy, defeat creditors and protect wealth is a focus area under our Regulatory Action Statement 2025–26.
Creditor meetings are a key step in insolvency administrations, particularly where Personal Insolvency Agreements (PIAs) are proposed. These meetings give creditors the opportunity to understand proposals, ask questions and make informed decisions on the resolutions put forward by the trustee.
In some circumstances, Inspector‑General (IG) delegates may attend creditor meetings. Their attendance supports transparency and helps ensure the meetings are conducted in accordance with legislative requirements.
The role of the IG delegate
An IG delegate at a creditors’ meeting is not there as an observer, despite this sometimes being recorded in minutes. Under section 75‑30 of the Insolvency Practice Schedule, the IG or their delegate is entitled to attend and participate in meetings of creditors, subject to the Bankruptcy Act 1996 (Cth) (Bankruptcy Act). This role supports proper processes and the protection of creditors’ rights.
What trustees need to consider
Trustees must consider whether a meeting of creditors is required, having regard to Rule 42.75 and section 19(1)(j) of the Bankruptcy Act. Where a meeting is held, trustees should ensure:
- any delegation of the chair is documented
- related creditors are clearly identified
- voting entitlements and quorum are correctly determined
- statutory timeframes are applied
- resolutions are clearly stated, voted on and results recorded
- correct procedures are followed for adjournments and casting votes.
Where AFSA has raised questions or concerns prior to a meeting, trustees are expected to address these at the meeting so all stakeholders can benefit from the discussion.
More guidance
Practitioners are encouraged to refer to Inspector-General Practice Direction ( IGPD) 14 – Proper performance of duties of a bankruptcy trustee and AFSA’s Meeting of Creditors – Guidance for practical support.
When would a financial contribution be made voluntarily by a debtor?
Voluntary financial contributions from a debtor to their estate are likely to be relatively uncommon. There are strict conditions around them, which this article will unpack.
Inspector-General Practice Direction 6 (IGPD 6) outlines the principles governing the remuneration of bankruptcy trustees. It also addresses the circumstances under which a debtor or a related third party may make a voluntary financial contribution towards a trustee’s remuneration. Unless specific conditions are met, The IG considers such payments inappropriate and contrary to bankruptcy law and practice.
Conditions for acceptable voluntary contributions:
- The debtor has been informed that any payments beyond the income contribution regime are entirely voluntary.
- The debtor has been advised of alternative trustee options if they are unwilling to make a voluntary payment.
- The trustee reports to creditors on the source and basis of the funds received.
- The trustee does not enter into legally enforceable contracts for payment and does not pursue the debtor for any such payment.
- The trustee’s remuneration complies with Division 60 of the Bankruptcy Act.
Trustee duties and ethical considerations
Registered trustees have a duty to exercise their powers in a manner that serves the objectives of the legislation. At a minimum, trustees must properly manage assets and recovery actions (in line with IGPD 14) to:
- maximise returns for creditors
- provide the best possible surplus for the debtor.
It is inconsistent with these duties for trustees to prioritise activities that enhance their own remuneration, especially if such activities compromise asset realisation or investigative outcomes.
The ARITA Code of Professional Practice reinforces this principle by prohibiting contingent fees or indemnity arrangements which:
- impair the trustee’s independence
- conflict with fiduciary obligations
- create a perception that the trustee is acting in their own interest rather than those of creditors.
Indicators of potential concern
When reviewing Annual Administration Returns (AARs) over time, the IG will likely take strong interest in recurring patterns. These include large amounts:
- recorded as ‘other receipts,’ outside a section 188 controlling trusteeship or a Personal Insolvency Agreement
- received late in administration, particularly after discharge.
Important reminders
Inappropriate handling of voluntary contributions by debtors can raise concerns about unauthorised access to trust funds for personal gain. This is a key focus area under our Regulatory Action Statement 2025–26.
Voluntary contributions by debtors must be approached with caution and transparency. Trustees must ensure such payments do not compromise their own independence or fiduciary duties.
Cyber resilience and education across the regulated community
Cyber incidents are no longer a hypothetical risk for professional practices. They are a real business issue with potential regulatory consequences. Our recent Cyber Resilience Webinar for Registered Trustees and Registered Debt Agreement Administrators reinforced that cyber risk management is a core responsibility of running a compliant practice.
Cyber risk is a business risk
The session was delivered in partnership with The Project Lab and IDCARE. These organisations have frontline experience supporting small businesses and professional practices when responding to cyber incidents.
It highlighted that cyber threats continue to evolve and can affect practices of all sizes. Many incidents arise from everyday issues such as weak passwords, outdated systems, or phishing attempts, rather than sophisticated attacks. Addressing these basic vulnerabilities can significantly reduce risk.
Preparation matters more than response
A key takeaway is the importance of preparation over reaction. Simple measures can limit the impact of a cyber incident, including:
- secure access controls
- regular software updates
- staff awareness
- a clear incident response plan.
Practitioners are encouraged to report cyber incidents to AFSA early, particularly where protected information or system integrity may be affected. Early reporting supports system integrity and allows emerging risks to be identified across the regulated community.
Regulatory expectations
From a regulatory perspective, the webinar reinforced our expectations under Inspector General Practice Guidance 2 (IGPD 2) – Security of Information.
- Cyber resilience is not just an IT issue. It is a governance and risk management responsibility.
- Practitioners are encouraged to review their current arrangements and consider what practical steps they can take now to reduce future risk.
Upcoming webinar for Registered Trustees
AFSA will continue to support the regulated community by sharing guidance and providing education and updates. Our next webinar in June 2026 will focus on continuing the conversation about AFSA’s expectations for Personal Insolvency Agreements.
An invitation to Registered Trustees will be sent out this month.
Live on the website: Practitioner Vulnerability Toolkit
The Practitioner Vulnerability Toolkit is now live on the AFSA website. The Toolkit provides resources to support trustees in working effectively with people experiencing vulnerability.
Thank you to everyone who provided feedback on the draft Toolkit during the consultation period. Your consideration and engagement with this process is greatly appreciated.
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