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I Object!: The Importance of Strict Compliance with the Notice of Objection Regime

By Bonnie McMahon an Associate of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

In the recent decision of Jones and Inspector-general in Bankruptcy [2018] AATA 3260 (“Jones”), the Administrative Appeals Tribunal has made it clear that a trustee in bankruptcy who files a notice of objection to discharge, needs to comply strictly with the requirements of the s 149D(1) of the Bankruptcy Act 1966 (Cth) (“the Act”), otherwise it is likely that the decision will be cancelled on review, either by the Inspector-General in Bankruptcy or the Tribunal.

The Ground

In Jones, the trustee in bankruptcy (“the Trustee”), had filed a notice of objection to discharge, on the ground set out in s 149D(1)(d) of the Act, that:

the bankrupt, when requested in writing by the trustee to provide written information about the bankrupt’s property, income or expected income, failed to comply with the request.”

As identified by the Tribunal, this provision contains five equally important elements which are as follows:
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Special Delivery

By Bonnie McMahon a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group

The Federal Court has recently considered the effect of special proxies in a judgment which is important for those considering how special proxies operate, both in corporate and in personal insolvency. The decision also disallowed retrospective approval of remuneration in bankruptcy, making only prospective fee approval available for trustees.

On 16 December 2015, a bankruptcy trustee held a creditor’s meeting (“the Creditor’s Meeting”), with the main purpose of considering and passing a resolution approving his remuneration. At this meeting the Trustee’s remuneration was approved, on the basis of certain special proxies in favour of the chairperson and minutes secretary.

In Fewin Pty Ltd v Prentice [2016] FCA 1239 (“Fewin”), one of the creditors of the Bankrupt’s estate challenged the procedure undertaken by the Trustee at the Creditor’s Meeting and the validity of the approval of his remuneration.

The Federal Court found that the Trustee’s remuneration was not validly approved at the meeting for a number of reasons, mainly relating to the procedure followed at the creditor’s meeting.
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