| In our first
article, I set out briefly the first stages of commencing Bankruptcy
proceedings.
The second part of the article covers the presentation of a Creditors
Petition; the final step in having a debtor declared bankrupt.
The Creditors Petition ....
The filing of a Creditors Petition is the beginning of the end. I do not
propose to explain the manner of creating a Creditors Petition here. For me to
explain the process of creating a Creditors Petition would require too much time
as the process is far too complex for the time and space I have allocated for
this article. What I aim to do is merely describe the process associated with a
Creditors Petition so that you have an understanding of what steps are to be
taken and the work behind it.
A Creditors Petition must be prepared properly; it is a complex document and
there several parts of it which require completion, and an element of legal
knowledge to do so, so my recommendation is that you retain a firm of lawyers to
prepare the document, but for those who wish to see what a creditors petition
looks like and see the amount of information that needs to be completed, you can
see a blank one here.
A Creditors Petition is filed in either the Federal Court of Australia or the
Federal Magistrates Court. The filing fee in the Federal Court is (at the time
of writing) $1,762 for a corporation and $735 for an individual. The filing fee
in the Federal Magistrates Court is $698.00 for a corporation or $350.00 for an
individual. There is no difference in filing a Creditors Petition in either
Court except the filing fee and as you will expect, most are brought within the
Federal Magistrates Court.
At the time a Creditors Petition is filed, there is also an Affidavit
Verifying Paragraphs 1, 2 and 3 of the Petition ( which is located at Part 2 of
the Petition). The Affidavit must be properly attested before a Justice of the
Peace or Solicitor no more than the day prior to filing it. Failure to do this
will result in your Creditors Petition being rejected by the staff at the
Registry.
Its a good idea to seek the consent of a Trustee in Bankruptcy before the
hearing date. You do this by obtaining a Consent to Act As Trustee from a
Registered Trustee in Bankruptcy. Like solicitors, not all registered Trustees
are the same and nor do they provide the same quality of work, so you need to
make enquiries about the registered trustee before asking for their consent. A
List of Registered Trustees can be found here
This document needs to be filed with the Creditors Petition and also served at
the same time.
One further document must be prepared. This is called an Affidavit of Search.
A search must be done of the Federal Court and Federal Magistrates Courts
Records to ascertain that the defendant is not already the subject of a
sequestration order. There may be a fee for this.
The Creditors Petition must be filed in triplicate together with
- A copy of the affidavit verifying the petition;
- A copy of the affidavit of search;
- A copy of the affidavit of service of the bankruptcy notice; and
- A copy of the Consent to Act as trustee (if applicable).
At the time of filing the Creditors Petition, the Registry will allocate a
date for the matter to come before the Court; usually 3 to 6 weeks from the date
of filing. The hearing date will be endorsed on the document and the court seal
placed on each page of the document. Two copies of the document will be given
back to you for service.
Once the Creditors Petition has been filed it must be served. Service must be
effected personally; that is delivered to the debtor personally. It cannot be
left with someone or posted or placed in say a letter box. At the time it is
served, certain questions must be asked which properly identify the respondent
as the debtor named in the Creditors Petition as the debtor; you should use a
licensed process server to serve the documents. The Creditors Petition must be
served at least 5 clear days prior to the date the Petition is before the
Court.
An Affidavit of Service must be completed by the person who served the
Creditors Petition and properly attested. An example of an affidavit of service
can be found here.
On the day of the hearing, prior to it coming before the Court, there are
three things that must be done. The first is to make sure the Affidavit of
Service of the Petition is properly attested. The Second thing that needs to be
done is to have an Affidavit of Debt sworn which confirms that the debt is still
owing and lastly, an Affidavit of Search must be also be completed and properly
attested. The affidavit of search deposes to the fact that the debtor is not
already a bankrupt
The matter will be brought on before a Registrar of the Court. The Registrar
will on the material before him, either make the sequestration order, dismiss it
or adjourn it, depending on the circumstances. Usually if your material is
correct and the debtor is not already a Bankrupt, the sequestration order will
be made.
Immediately after the sequestration order is made, you must notify the
trustee that provided the Consent (if any) that the Order has been made.
If no trustee provided their consent then you must deliver a copy of the
Petition and the Order made to ITSA, who will process the material and act as
the registered trustee.
Now you have bankrupted someone, what happens next ?
See part three of my article series to be published soon.
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