On 6 February Gold Coast partner and trustee in bankruptcy Jason Bettles was appointed as a receiver over property pursuant to section 29 of the Bankruptcy Act. The applicant for the order was a bankruptcy trustee based in the United Kingdom.
The bankrupt in question entered into an IVA (Individual Voluntary Agreement) under the UK Insolvency Act in 2007. These are similar to our Part X Personal Insolvency Agreements. However the debtor disposed of his assets in the UK and moved to Australia. He was then made bankrupt in the UK in 2008. The trustee (now a bankruptcy trustee) located the bankrupt in Australia and discovered that he owned real property on the Gold Coast in Australia. These properties were owned with another non-bankrupt person.
The trustee wanted to take some action to protect the estate’s interest in those assets as they vested in him pursuant to section 306 of their Insolvency Act. The decision was made to apply to the Australian Federal Court under section 29 of the Bankruptcy Act to appoint a receiver.
That section is titled “Courts to help each other”, and the relevant subsections say:
(1) All Courts having jurisdiction under this Act, the Judges of those Courts and the officers of or under the control of those Courts shall severally act in aid of and be auxiliary to each other in all matters of bankruptcy.
(2) In all matters of bankruptcy, the Court:
(a) shall act in aid of and be auxiliary to the courts of the external Territories, and of prescribed countries, that have jurisdiction in bankruptcy; and
(b) may act in aid of and be auxiliary to the courts of other countries that have jurisdiction in bankruptcy.
(5) In this section, prescribed country means:
(a) the United Kingdom, Canada and New Zealand;
The section gives the Federal Court the power to act in assistance of other courts, and in this case to “act in aid of the foreign court .. to make property in Australia available to the trustee in bankruptcy [in the UK] to enable it to be realized for the benefit of the creditors in the foreign bankruptcy”. The Federal Court has the power to appoint a receiver over property in Australia in aid of a foreign trustee in appropriate circumstances.
The application in the Court was that the bankrupt “be restrained .. from disposing of or dealings with in any way his divisible property .. as would be prohibited if the [bankrupt] was bankrupt under the Bankruptcy Act (1966)”. Jason Bettles was appointed receiver and was specifically entitled to lodge caveats over the titles of the properties to protect the interests of the foreign trustee in bankruptcy.