PIR Newsletter - March 2022

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The Personal Insolvency Regulator (PIR) is a quarterly newsletter from AFSA.

New Chief Executive appointed to the Australian Financial Security Authority

Timothy Beresford has been appointed as the new Chief Executive of the Australian Financial Security Authority.

Timothy’s five-year appointment as Chief Executive of AFSA, Inspector-General in Bankruptcy and Registrar of Personal Property Securities will start on 2 May 2022. He joins us from AUSTRADE where he is currently Deputy CEO.

More information is available on our website.

Information for people affected by recent floods

Recent floods have devastated many areas in Queensland and New South Wales, impacting thousands of Australians.

Insolvency practitioners may be administering the estates of bankrupt people who are affected by these floods. The impacts will be various and may include disruption of, or loss of work or income, loss or damage to accommodation, relocation expenses and restricted ability to communicate.

AFSA expects practitioners to act with extra sensitivity and empathy in the current circumstances, taking into consideration the impact of the floods on bankrupt people and other parties, including creditors.

Financial support is also available for people in areas that have been declared a disaster, more information is available on the Services Australia website. The National Debt Helpline (1800 007 007) can also provide information and support to those facing financial hardship.

During this difficult period AFSA is committed to working as flexibly as possible with those who require our services who have been affected by the floods. This includes, amongst other things, an ability to defer certain activities to ensure obligations of bankruptcy do not create an additional burden at what is already a difficult time.

If you need assistance or have any questions, please contact us on 1300 364 785.

AFSA's campaign to support small-medium enterprises

We have recently launched a campaign to support small businesses that may be experiencing financial difficulty, especially because of the COVID-19 pandemic. We understand that the effects of the pandemic are still being felt by many industries and we are committed to helping businesses make sound decisions during these tough times. 

As part of the campaign, we have launched a new page on our website: afsa.gov.au/small-business.

The page includes important information such as:

  • what steps to take when experiencing financial difficulty
  • different options available such as debt agreements, temporary debt protection (TDP), personal insolvency agreements (PIA) and bankruptcy
  • restrictions and impacts on business when entering bankruptcy
  • the importance of seeking trusted advice early.

We have provided links to external websites that provide free, independent and confidential resources and services to small businesses experiencing financial difficulty.

We have also launched a social media campaign on our Facebook page to target businesses and individuals running businesses that may benefit from our information. To receive our campaign updates, you can follow us on Facebook, Twitter or LinkedIn

Insolvency guidance resources updated

Throughout 2021, we explored ways to make our formal insolvency guidance easier to navigate and use. This project formed part of a wider strategic goal to drive willing compliance and engagement, as outlined in the Personal Insolvency Compliance Program 2021-22.

As part of the project, we developed a proposal paper and conducted a wide-ranging survey. Having considered stakeholder feedback, the following four changes have been made to our insolvency guidance: 

  1. Guidance documents renamed – the statutory prefixes in the title of the guidance documents have been removed and retained as an internal reference appearing underneath the title.
  2. Merger of guidance documents – some guidance documents had been merged to avoid duplication.
  3. Filters – filters have been introduced to allow filtering by user type, guidance type and subject.
  4. A-Z index – an A-Z subject index of the guidance documents has been introduced with links to relevant guidance, forms and legislation.

To find out more, visit our website.

Update on the distribution of bankrupt estates to Registered Trustees

At the end of July 2021, AFSA announced a change in the way bankrupt estates would be distributed to registered trustees (RTs). This followed extensive consultation with key stakeholders, including ARITA. 

The change involves a transfer of new estates to registered trustees under s156A of the Bankruptcy Act 1966 where it is clear that a registered trustee may consent to administer the estate. This is in addition to work already transferred by the Official Trustee (OT) under s181A.

The change is designed to increase the overall number of matters distributed to the private sector and increase the number of matters distributed to female trustees. The main priority of the OT is to continue to focus on matters that are in the public interest and build confidence in the personal insolvency system.

To ensure the process was efficient and easy for all stakeholders, the changes were initially trialled as a beta launch. During this period, feedback was sought to refine and improve the new process.

We have released a progress report to evaluate the beta launch and its effectiveness.

To read the full report, visit our website.

AFSA is seeking feedback from debtors and creditors

In April 2022, AFSA will be seeking feedback from debtors and creditors to seek their perspectives of personal insolvency administration.

This will involve qualitative and quantitative research, undertaken by an independent social research agency, Whereto. Debtors and creditors will be directly invited by Whereto to take part in the research.

The aim of the research is to better understand the experience of debtors and creditors, and inform improvements in AFSA’s ability to support both groups.

When we last surveyed debtors in 2017, we found that some sought reassurance from insolvency practitioners to confirm that the survey was legitimate. Please feel free to provide such reassurance and any further enquiries can be directed to AFSA.

Updates from the ATO

Unfair Preference Claims Forms

To improve the efficiency of processing an unfair preference claim against the Commissioner of Taxation, the ATO has developed separate forms for liquidators and bankruptcy trustees.

Bankruptcy Trustees should complete the Bankruptcy preference payment claim form to make a claim against the Commissioner of Taxation for payment believed to be preference payments in accordance with section 122 of the Bankruptcy Act 1966.

Completing this form with all required information will expedite the processing of an unfair preference claim.

Request for documents and online self-service

Insolvency practitioners can obtain copies of documents that the ATO holds without making a request under the Freedom of Information Act 1982. The confidentiality provisions in the Taxation Administration Act 1953 allows the ATO to disclose taxpayer information in certain circumstances. Request for information should be limited to:

  • situations where the information is not accessible via online services for business
  • information about an insolvent entity (the incapacitated entity) you formally represent
  • the period two years before the date of your appointment as the entity's representative

Where third-party information or substantial amounts of information are requested, The ATO require specific reasons for the documents, including the purpose they will serve in the liquidation or administration process.

The ATO’s Online Services for business provide 24-hour access to information and allows practitioners to conduct transactions in a secure online environment.

If the information you require is not available on the portal or you are unable to access specific information for the entities you represent, you can send a message using secure mail. This function is accessed via the ‘Communication’ tab in online services for business. You will need to ensure that you select the ‘Request for Documents’ subject heading.

Online Education sessions

WebEx Meeting Centre is the ATO's enterprise web conferencing solution that enables the ATO to meet with clients and collaborate anywhere and at any time.

The Insolvency Industry Engagement team uses WebEx Meeting Centre to conduct Online Services for business education sessions with insolvency practitioners.

The platform allows for the real time demonstration of Online Services functionality using your systems, allowing us to answer any enquiries as we go to help your firm get the most out of the service. The sessions can be arranged at short notice.

More information

If you would like to find out more about using the ATO Online Services for business, managing access or our WebEx education sessions, please email your contact details to InsolvencyPractitionerServices@ato.gov.au

For general information refer to the insolvency practitioners section on ato.gov.au/insolvency

Case notes

Valder & Saklani [2021] FamCAFC 142


The effect, if any, of the second respondent’s discharge from bankruptcy and whether, after discharge s79A of the Family Law Act 1975 (Cth) should be construed so that only the trustee in bankruptcy had standing (the right to appear) or whether it is possible for both a creditor and the trustee to both be ‘a person affected by an order made by a court under section 79 in property settlement proceedings’ and, hence, ‘the’ person affected for s79A(1).


In 2009 Ms Valder (the appellant) unsuccessfully sued Mr Saklani (the second respondent), seeking a declaration that she held an equitable interest in properties owned by him (the Suburb W properties) and the payment of equitable compensation. The claims were subsequently dismissed on appeal in 2012. However, in 2013 a successful appeal saw the matter remitted for assessment of appropriate equitable compensation. Later in 2013, the Family Court made consent orders dividing all property of Ms Saklani (first respondent) and Mr Saklani (second respondent). The effect was to transfer the second respondent’s interests in the Suburb W properties to the first respondent. Notice was not served on the appellant before that order was made.

In 2014, the Supreme Court found that the appropriate amount of equitable compensation to be paid by the second respondent to the appellant was $594,028, plus costs of the proceedings (in excess of $250,000). In 2016, the Federal Court of Australia gave the appellant leave pursuant to s58(3)(b) of the Bankruptcy Act 1966 (Cth) to bring proceedings in the Family Court.

In 2016, the appellant filed an Initiating Application in the Family Court of Australia seeking to set aside property settlement orders made by consent between the first respondent and the second respondent, who were married to each other at that time. The appellant asserted that she was an unpaid creditor of the second respondent and therefore, ‘affected by the orders’ for the purpose of s79A of the Family Law Act, entitled to apply to have the consent orders set side.

The application was dismissed at first as the second respondent had become bankrupt on 6 March 2015 and was discharged from that bankruptcy on 7 March 2018. The primary judge found that upon that discharge, the second respondent was released from the debt he owed the appellant, who thereby ceased to become a person affected by the consent orders.


The court started by noting that the precise meaning of a word such as “creditor” may vary according to the proper construction of the particular provision in question. The label “creditor” may not always be assigned to a person who has all of the rights of a creditor attributed to them by law. The court concluded that, “for some purposes at least, a reference to a creditor in the Bankruptcy Act includes a creditor whose debt has been released by the operation of s153 of the Bankruptcy Act. They continue to be described as a creditor. It follows that the release of a debt, by way of the bankrupt being discharged from their bankruptcy, does not mean that their creditors cease to be “creditors” for all purposes, especially where the relevant statute points in a different direction.” [20-21]

The Court observed that since 2005, s79A(4) of the Family Law Act has provided that a creditor of a party is taken to be a person whose interests are affected by the order if the creditor may not be able to recover their debt because the order has been made. [23]

The Court also explained that s79A(5) of the Family Law Act does not give the trustee standing at the expense of a creditor and noted that the possibility of competing claims by a creditor and the trustee is avoided by the need for a creditor to obtain leave under s58(3)(b) of the Bankruptcy Act before proceedings can be taken under s79A of the Act.[39]

Where the Bankruptcy Act allows either a creditor with leave or the trustee to take proceeding under s79A of the Act, a sensible reading of s79A(4) and (5) would permit both to be regarded as a person affected. This conforms with the natural meaning of the words used in the subsections and the Explanatory Memorandum. [40]

The Court then considered the effect, if any, of the second respondent’s discharge from bankruptcy. The Court considered the effect of the discharge of the second respondent in 2018 and noted that the bankrupt estate continues until it is annulled because the debts have been paid in full, by court order or because the creditors have accepted a payment under a composition or arrangement. The implication is that even after discharge the appellant remains a creditor for several purposes and provisions of the Bankruptcy Act.

The Court rejected a contention based on utility; that the effect of any varied or substituted s79A order would be to revest property in the former bankrupt individual. The Court considered that is by no means the necessary outcome as an appropriate variation or substituted order could see the provision for the payment of those creditors, either directly or indirectly. [47]

The Court set out its reasoning justifying its conclusion briefly as follows:

So long as her right to receive a dividend remained on foot, the appellant remained a person affected by the consent orders. Similarly, the leave granted by the Federal Court remained. We see no reason at all to limit the word “creditor” in s58 of the Bankruptcy Act to a creditor whose debt has not been released by the operation of s153 of the Bankruptcy Act. That would unduly restrict the operation of the Bankruptcy Act for no good purpose.[45]


The appeal was successful and the case has been remitted for further hearing.

Ambrose v Badcock, in the matter of Badcock [2021] FCA 1647

The application concerned only one issue: whether income transferred to an interest-bearing bank account becomes an after-acquired property to which s58 and 116 of the Bankruptcy Act 1966 (Cth).

Background to proceedings

The application was heard by a single judge (White J) in the General Division of the Federal Court of Australia (in the South Australia registry) and decided on the papers.

The applicant, Mr Ambrose was a trustee in bankruptcy. The respondent was an undischarged bankrupt (Mr Badcock). Mr Badcock became bankrupt on 21 December 2001 and was not discharged from his bankruptcy because he never provided his Statement of Affairs to the Trustee.

There was a history of litigation between Mr Badcock and the Trustee concerning the sequestration order made against Mr Badcock and the appointment of the Trustee. White J considered Mr Badcock’s bankruptcy and the Trustee’s appointment had been satisfactorily determined in earlier proceedings.

The Trustee applied for a declaration that certain assets of Mr Badcock were after-acquired property to which the Bankruptcy Act refers, together with consequential relief. Mr Badcock opposed that application.

The Trustee and Mr Badcock each prepared written submissions and affidavits and waived their right to cross-examine the makers of the affidavits or object to the contents.

Property in contest

In October 2018, Mr Badcock received $73,433.21 into a ‘Complete Freedom’ account (opened by himself) at the Bank of South Australia. Mr Badcock received the money from a former employer in response to a claim for underpayment of wages made by Mr Badcock.

On 15 August 2019, Mr Badcock transferred $73,000 from the Complete Freedom account to an ‘Incentive Saver’ account which was also held by him at the same bank. The Incentive Saver account terms paid interest to Mr Badcock. Upon being moved from one account to the other, the funds were ‘frozen’ by the bank.

The Trustee (through the Official Receiver) issued a notice to the bank requiring payment of $31,279 to the bankrupt estate as income contributions under s139ZL of the Bankruptcy Act. The bank made that payment to the estate and this left a balance of $44,937.31 in the Incentive Saver Account.

Next, the Trustee filed a statement of claim seeking (among other things) a declaration that the balance of funds remaining in the Incentive Saver account (plus accrued interest) represented after-acquired property which vested in the bankrupt estate and was divisible amongst Mr Badcock’s creditors.

Considerations in decision

The Trustee’s submissions relied on the judgment of the Full Court (Edmonds, Gordon and Beach JJ) in Di Cioccio v Official Trustee in Bankruptcy [2015] FCAFC 30; (2015) 229 FCR 1 at [6]-[23] to say that the bankrupt individual’s act of moving funds to an account which paid interest was essentially creating an investment and as a consequence, the funds became an after-acquired property which vests in the bankrupt estate. The argument follows the reasoning from Di Cioccio where the court held a bankrupt individual’s use of after-acquired income to purchase shares became a form of property which would vest in the bankrupt estate.

Mr Badcock’s defense was that the funds remaining in the Incentive Saver account were not after-acquired property to which the Bankruptcy Act would apply.


White J dismissed the application for Mr Ambrose to have a declaration that bankrupt estate be paid the monies. The Court’s reasoning was that:

  • a change in the account in which the monies were held could not reasonably be regarded as changing the character of the monies from income to another form of property
  • changing the contractual terms between banker and customer did not alter the nature of the property
  • it was not realistic to regard a transfer of monies to a bank account which carried interest as the making of an investment. The court considered the Complete Freedom and Incentive Saver were accounts used for holding income in a secure place while retaining accessibility and that earning some interest on monies deposited there was simply incidental [at 74-75].

Utility of decision in insolvency practice

The decision:

  • is authority for the proposition that movement of monies between accounts owned by a bankrupt individual within a single bank will not necessarily cause an acquisition of property to take place
  • maintains the acceptance of the reasoning of French J in Re Gillies; Ex parte Official Trustee in Bankruptcy v Gilles [1993] FCA 289; (1993) 42 FCR 571 (a decision which preceded Di Cioccio) that the income of a bankrupt individual does not vest in a trustee and their liability is confined to making income contributions under Division 4B of the Act.

Changes to AFSA’s fortnightly statistics

At the beginning of the COVID-19 pandemic in March 2020, AFSA provided additional aggregations of insolvency statistics on a fortnightly basis.

These statistics tracked personal insolvency numbers in Australia, by type of administration and industry (if the insolvency was business-related). The frequency of the statistics and the additional information aimed to provide a more comprehensive understanding of how the pandemic was impacting the economy.

From April 2022, these statistics will be released monthly. Find out more on our website: afsa.gov.au/about-us/statistics