Chapter 20 - Bankruptcy law. At the end of this chapter you should understand: the objectives of bankruptcy law, the advantages and disadvantages of bankruptcy from the perspective of the creditor and the debtor, how the Bankruptcy Act 1966 (Cwlth) is administered, the difference between a debtor’s petition and a creditor’s petition, | This is the prescribed textbook for your course. Available NOW at your campus bookstore! 20- Copyright © 2000 McGraw-Hill Australia Bankruptcy law Chapter 20 Bankruptcy Where legal possession is taken of a debtor’s possessions, for the benefit of that person’s creditors. 20- Copyright © 2000 McGraw-Hill Australia Purpose of Bankruptcy Act 1966 (Cwlth) Provides for the investigation of the bankrupt to determine if all assets have been disclosed or other offences have been committed. Ensures an equitable distribution of the bankrupt’s property among creditors. Enables a discharged bankrupt to start anew, free from the demands of creditors and the bankruptcy trustee. Benefits the community, by allowing the bankrupt to make his/her own living. 20- Copyright © 2000 McGraw-Hill Australia Advantages and disadvantages for creditors Advantages Equitable and proportionate distribution of the debtor’s assets. Recovery of property that was distributed prior to bankruptcy. Public examination may uncover property available for distribution to creditors. Disadvantages Significant fees for administering the estate, and court costs associated with the recovery of costs are paid before creditors. Delays and complications Bankrupt must stop trading. 20- Copyright © 2000 McGraw-Hill Australia Advantages and disadvantages for debtors Advantages Enables bankrupt to avoid being sued by creditors for debts incurred prior to the bankruptcy. New start in six months to three years, with cooperation. Bankrupt maintains ‘necessary property’. Disadvantages Debtor’s property available for settlement of debts. Earnings may be used as contribution towards debts. Stigma attached to bankruptcy. Restrictions in obtaining credit without notifying credit provider of bankruptcy. Bankrupt’s passport to be surrendered. Cannot be director of company without permission of Supreme Court. Cannot conduct a business without disclosure of bankruptcy. Details of bankruptcy published in . | This is the prescribed textbook for your course. Available NOW at your campus bookstore! 20- Copyright © 2000 McGraw-Hill Australia Bankruptcy law Chapter 20 Bankruptcy Where legal possession is taken of a debtor’s possessions, for the benefit of that person’s creditors. 20- Copyright © 2000 McGraw-Hill Australia Purpose of Bankruptcy Act 1966 (Cwlth) Provides for the investigation of the bankrupt to determine if all assets have been disclosed or other offences have been committed. Ensures an equitable distribution of the bankrupt’s property among creditors. Enables a discharged bankrupt to start anew, free from the demands of creditors and the bankruptcy trustee. Benefits the community, by allowing the bankrupt to make his/her own living. 20- Copyright © 2000 McGraw-Hill Australia Advantages and disadvantages for creditors Advantages Equitable and proportionate distribution of the debtor’s assets. Recovery of property that was distributed prior to bankruptcy. Public .
