As you will appreciate, occasionally in our work, in both bankruptcy and liquidation work, we can be faced with difficult situations.
A recent matter that our Melbourne office has been involved in was one such difficult matter. This matter involved a gentleman who was a high income earner. Unfortunately, he also had a propensity to gamble. As a result, it appeared as quickly as he made money, it would be lost on gambling. This resulted in him continuously struggling to make his income contributions and at various points in bankruptcy refusing to make such contributions. He subsequently had a large win which came to the attention of the trustees. The trustees were successful in obtaining the majority of those funds before they were subsequently dissipated by the bankrupt. The trustees obviously had to consider whether the win was income or in fact after acquired property. After significant investigations, we determined it was after acquired property, given that it was property that subsequently was obtained by the bankrupt and was property that was obtained prior to his discharge. As a result, Section 58 of the Bankruptcy Act, deems it to vest in the trustee as soon as it devolved upon the bankrupt.
Unfortunately, it appears the bankrupt continued in his ways of gambling and also tried to hide his income from the trustees. As a result, he was not paying his income contributions and the trustees had a duty to object to his discharge, thereby extending his bankruptcy to eight years. Suffice to say, this meant the bankrupt was in a rapidly deteriorating cycle. His outstanding income contributions continued to grow, he said that he had no ability to continue to meet those contributions, all as a result of the gambling addiction. As you will appreciate, significant animosity developed between the trustees and the bankrupt to the point where the bankrupt was making death threats against the trustees, a matter which incited the police to obtain personal protection safety orders against the bankrupt.
The life of a trustee is much easier when the bankrupt complies with their obligations under the Bankruptcy Act!