Personal Bankruptcy (Creditor) - Creditor's Petition (Acts of Bankruptcy)

When must the creditor's petition be served on the debtor?: Unless the Court orders otherwise, at least 5 days before the hearing date the applicant creditor must serve the petition, the verifying affidavit, the rule 4.04 affidavits and any consent of a registered trustee to act (r 4.05). An order for substituted service of the petition is sought by interim application in Form B3 (r 2.01, Note 2). The creditor must also give the Official Receiver a copy of the petition within 2 business days after the Court files it (Bankruptcy Regulations 2021 s 13).

What evidence is needed at the hearing?: Before the hearing the creditor files an affidavit of service, an affidavit of a search of the National Personal Insolvency Index made no earlier than the day before the hearing, and an affidavit sworn as soon as practicable before the hearing that the debt is still owing (r 4.06). The Court requires proof of the matters stated in the petition, service and that the debt is still owing, and may dismiss the petition if not satisfied or if the debtor shows ability to pay debts or other sufficient cause (s 52(1) and (2)).

What must the creditor do after a sequestration order is made?: The order is in accordance with Form B7 (r 4.07(1)). On the day it is made the creditor must notify the trustee of the appointment in writing (r 4.07(2)), and the creditor must give a copy of the order to the Official Receiver within the 2 days beginning on the day it was made, a strict liability offence (s 52(1A) and (1B)).

Jurisdiction: Federal Court of Australia or Federal Circuit and Family Court of Australia (Division 2), which have concurrent jurisdiction in bankruptcy (Bankruptcy Act 1966 s 27). In the Federal Circuit and Family Court, Registrars may make or dismiss sequestration orders (Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 Schedule 1, items 10 and 11), and a Registrar's decision may be reviewed on an application filed within 21 days (r 2.02(3) of each Court's bankruptcy rules).

The Process at a Glance: Confirm the act of bankruptcy and that the petition will be presented within 6 months after it (s 44(1)(c)). Prepare Form B6 with the verifying affidavit and the rule 4.04 affidavits, file it and give the Official Receiver a copy. Serve the debtor at least 5 days before the hearing, seeking substituted service if needed. Shortly before the hearing file the affidavits of service, search and debt still owing. Attend the hearing with a draft Form B7 order, then complete the post-order notifications.

Key Legislation: Bankruptcy Act 1966 (Cth) ss 27, 40(1)(g), 43, 44, 52 and 58. Bankruptcy Regulations 2021 s 13. Federal Court (Bankruptcy) Rules 2016 rr 1.07, 2.01, 2.02, 2.06 and Part 4 (rr 4.02 to 4.09). The Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 contain matching rules, with Form B3A for review of a Registrar's decision (r 2.02(3)).

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