Case study: Maria

Sequestration order obligations

Maria used to own a restaurant in Townsville, Queensland. The restaurant failed and Maria owed debts to several suppliers. She owed $25,000 to District Food Supplies, who took Maria to Court. The Federal Circuit Court made a sequestration order against Maria which meant she became bankrupt.

The Official Trustee (whose functions are carried out by AFSA) was appointed as the trustee of the bankruptcy. District Food Supplies gave Maria’s contact details (including her address and mobile number) to AFSA.

AFSA sent Maria the following documents by registered post:

  • a letter telling her she had been made bankrupt by the Court
  • information about the sequestration order process
  • a Statement of Affairs for her to complete
  • instructions for completing the Statement of Affairs.

The letter told Maria she must complete a Statement of Affairs and lodge it with AFSA within 14 days. It also said the three-year bankruptcy period would not start until AFSA had accepted the Statement of Affairs. If Maria never submitted the Statement of Affairs she would be bankrupt forever.

AFSA called Maria to discuss her bankruptcy. Maria argued with her case officer. She was angry about being made bankrupt. Maria argued that she should not have to fill out the Statement of Affairs as she did not agree with the court decision. The case officer reminded her that she was required by law to lodge her Statement of Affairs in 14 days and there were penalties for not doing so.

Maria failed to lodge her Statement of Affairs so AFSA issued Maria with a formal notice. This notice instructed Maria to file her Statement of Affairs with AFSA within 14 days. Failing to comply with this notice is an offence and a person can be prosecuted.

Maria failed to comply with the notice. AFSA’s Enforcement team investigated the matter. The matter was prosecuted by the Office of the Commonwealth Director of Public Prosecutions (CDPP).

At court, Maria pleaded guilty. She was convicted, received a fine and was ordered to pay costs. Maria filed her Statement of Affairs later that week.

Failure to submit a Statement of Affairs is a serious offence. AFSA, in partnership with the CDPP, is committed to investigating and prosecuting those who deliberately avoid their obligations.

*These case studies do not constitute legal or financial advice. You should consider whether the options referred to in the case studies are appropriate for you, and seek advice if necessary, before taking any action.