Restructuring, Turnaround and Insolvency Specialists

Creditor’s Petition

A debtor may be declared bankrupt by a creditor applying to the court to make you bankrupt (known as a Creditor’s Petition). This occurs when a creditor applies to the court for a bankruptcy notice against you demanding payments within 21 days which can only be issued if the creditor has obtained a court judgement against you within the last six years with a total or combined amount owing is $5,000 or more. The Court then makes an order (known as a Sequestration Order) on the petition of a creditor making you bankrupt.

Creditors may ask a private Trustee to consent to act if the Court makes a Sequestration Order or may choose to have the Official Trustee (AFSA), who is represented by a Commonwealth Government Officer to administer the bankruptcy.

The Trustee will contact you and make you aware of the restrictions and responsibilities of bankruptcy and advise that a SOA must be filed with AFSA within 14 days of being notified of the order. The usual period of the bankruptcy is three years and this dates from the time the SOA is filed with AFSA.

If you fail to file your SOA, you will be committing an Offence under the Bankruptcy Act 1966 for which you may be prosecuted. You will not be discharged from Bankruptcy until you file your SOA.

The cost of the petitioning creditor becomes a priority payment in the bankruptcy. It is required to be paid in priority to other creditors from the funds realised or if the Bankrupt is required to make compulsory income contributions to the Estate.

For detailed information, please refer to Forms for Bankruptcy by Sequestration Order (9).

Compositions and Schemes of Arrangement

A Bankrupt may seek to make an arrangement similar to a Part X after they have been declared bankrupt. A proposal must be forwarded to the Trustee and the Trustee will call a meeting of creditors to allow them to consider the proposal. If creditors accept the Bankrupt’s proposal, the bankruptcy is annulled from the date of the acceptance and the Bankrupt is no longer subject to the constraints of bankruptcy.


Liability limited by a scheme approved under Professional Standards Legislation