Amendments to the Bankruptcy Regulations could see details of debt agreements appear on the National Personal Insolvency Index for a limited time only.
The National Personal Insolvency Index (NPII) is and has always been, until now, a permanent record of all formal personal insolvency proceedings. According to the Australian Financial Security Authority it contains records since august 1928. However, in response to amendments regarding retention periods for credit information and personal insolvency information as found in the Privacy Amendment (Enhancing Privacy Protection) Act 2012 (Cth), the Government has undertaken a review of Part IX of the Bankruptcy Act 1966 (Cth) (“the Act”). The review is likely to result in amendments to the Bankruptcy Regulations which will see information published on the NPII subject to limitation periods.
The amendments to the Bankruptcy Regulations (which are expected to occur in November 2015) will mean that details of debt agreements will remain on the NPII for the following periods of time:
· Where obligations of a debt agreement are discharged under s 185N of the Act, information relating to the debt agreement will remain on the NPII for 5 years from the date of the debt agreement or the date the obligations are discharged, whichever is later;
· Where a debt agreement is terminated under ss 185P, 185Q, 185QA or 185R of the Act, information will remain on the NPII for 5 years from the date of the debt agreement or 2 years from the date of termination, whichever is later;
· Where a debt agreement is declared void by the court under s 185U of the Act, information will remain on the NPII for 5 years from the date of the debt agreement or 2 years from the date of the court order, whichever is later;
· Where a debt agreement proposal is withdrawn, not accepted by creditors under s 185EC, cancelled under s 185ED or lapses under s 185G, information will be removed from the NPII within 1 year of the proposal being withdrawn, not accepted, cancelled or lapsing.
The timing limitations will most certainly have an effect on registered trustees who administer debt agreements. Under s 185C(4)(a)(ii) of the Act, a person is ineligible to give the Official Receiver a debt agreement proposal if they have been party (as debtor) to a debt agreement in the previous 10 years. Following the introduction of the above amendments, it will no longer be possible for trustees to search the NPII to determine whether a debtor is eligible to enter a debt agreement. In order to find out debtor information going back 10 years, a trustee will need to conduct a search through AFSA (Business to Government B2G channel) or through the Bankruptcy Register Search (BRS) service (available through AFSA).
For further information regarding bankruptcy, insolvency or restructuring, please contact a Principal of the Matthews Folbigg Insolvency and Restructuring Team:
Jeffrey Brown on (02) 9806 7446 or jeffreyb@matthewsfolbigg.com.au
Stephen Mullette on (02) 9806 7459 or stephenm@matthewsfolbigg.com.au
