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CREDITORS’ PETITIONS SOME PRACTICAL CONSIDERATIONS

CREDITORS’ PETITIONS SOME PRACTICAL CONSIDERATIONS. By M.D. Martin Barrister-at-Law. JURISDICTION TO MAKE SEQUESTRATION ORDERS – s.43. Act of bankruptcy. At the time when the act of bankruptcy was committed the debtor:- (i) was personally present or ordinarily resident in Australia;

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CREDITORS’ PETITIONS SOME PRACTICAL CONSIDERATIONS

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  1. CREDITORS’ PETITIONSSOME PRACTICAL CONSIDERATIONS By M.D. Martin Barrister-at-Law

  2. JURISDICTION TO MAKE SEQUESTRATION ORDERS – s.43 • Act of bankruptcy. • At the time when the act of bankruptcy was committed the debtor:- (i) was personally present or ordinarily resident in Australia; (ii) had a dwelling, house or a place of business in Australia; (iii) was carrying on business in Australia either personally or by means of an agent or manager; or (iv) was a member of a firm or partnership carrying on business in Australia by means of a partner or partners or of an agent or manager.

  3. CONDITIONS ON WHICH A CREDITOR MAY PETITION – s.44 • The creditor is owed at least $2,000.00. • The amount owing is a liquidated sum payable either immediately or at a certain future time. • The act of bankruptcy on which the petition is founded was committed within six months before the presentation of the petition.

  4. SECURED CREDITORS A secured creditor:- • can only petition for the amount for which his or her debt exceeds the value of the security. • may petition for his or her entire debt provided the petition contains a statement that the security will be surrendered for the benefit of creditors generally in the event of a sequestration order being made. • must set out particulars of the security in the petition.

  5. PROCEEDINGS AND ORDERS ON CREDITOR’S PETITION – s.52 At the hearing of a creditor’s petition the Court shall require proof of: • the matters stated in the petition; • service of the petition; and • the debt on which the petitioning creditor relies is still owing.

  6. GOING BEHIND JUDGMENT • Special circumstances. • Default judgment. • Two stage process.

  7. SOLVENCY s.52(2)(a) • “able” but not “willing”. • Evidence. • Will creditor be paid by other means.

  8. OTHER SUFFICIENT CAUSE – s.52(2)(b) • Fraud or abuse of process. • Litigation or cross claim against creditor.

  9. PAYMENT OF DEBT TO PETITIONING CREDITOR • No basis to prosecute petition. • Is another liquidated debt still owed. • Costs.

  10. SUBSTITION OF PETITIONER – s.49 • Petition not prosecuted with due diligence. • Payment of petitioning creditor. • Liquidated debt. • Stand in the shoes of the petitioning creditor.

  11. ADJOURNMENT TO ALLOW APPEAL • Appeal must be genuine and arguable. • Evidence.

  12. ADJOUNRMENT TO CONVENE MEETING - PART X • No adjournment as a matter of course. • Interests of creditors as a whole.

  13. ADJOURNMENT TO ADDUCE FURTHER EVIDENCE • Petition not adjourned on first return date as a matter of course. • Must show adjournment will actually produce cogent evidence.

  14. DEBTOR’S PETITION • Approved form. • Accompanied by statement of affairs. • Sufficient connection with Australia. • Rejection of petition by Official Receiver. • Referral of petition to Court. • Creditor’s petition pending.

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