If a debtor wants to go into voluntary bankruptcy, they can present a debtor’s petition. In this article, we look at the requirements for making a debtor’s petition and the possible consequences that can stem from it.

Who Can Present a Debtor’s Petition?

A debtor’s petition can be presented to the Official Receiver by either an individual debtor, joint debtors or debtors in partnership.

A debtor’s petition cannot be accepted by the Official Receiver unless it meets the following requirements:

  • The debtor was personally present or is ordinarily a resident in Australia; or
  • The debtor had a dwelling house or place of business in Australia; or
  • The debtor was carrying on business in Australia, either personally or using an agent or manager; or
  • The debtor was a member of a firm or partnership carrying on business in Australia using a partner or partners or of an agent or manager.

Rejection of a Debtor’s Petition

If a debtor presents a debtor’s petition for some purpose other than protection from creditors through bankruptcy, then it is likely to be deemed an abuse of process and the application will be rejected.

If a debtor is not insolvent or does not believe they are insolvent, and they present a petition, this may constitute an ‘improper purpose.’ In such cases, it is up to the creditor to show that the debtor is making a petition for an improper purpose.

If a debtor’s petition is presented pending a creditor’s petition, the relevant date of bankruptcy will be from the date of the creditor’s petition.

Individual Debtors

An individual debtor must file a statement of affairs which lists all their assets and liabilities.

  • The Official Receiver can reject a debtor’s petition if:
  • It fails to comply with the approved form;
  • It fails to include a statement of affair; or
  • The statement of affairs is inadequate.

The Official Receiver may also reject a petition if it appears from the information provided that the debtor would likely be able to pay all their debts if the debtor did not become bankrupt. The Official Receiver may also consider whether the debtor is unwilling to pay the debts, either specific creditors or creditors in general or if the debtor has previously been bankrupt.

Where creditors have accepted a Part X personal insolvency agreement or a Part IX debt agreement, a debtor cannot present a debtor’s petition unless they obtain leave of the court.

The individual becomes bankrupt at the time that the Official Receiver endorses the petition.

Joint Debtors

Where there are joint debtors, for example, a husband and wife, the debtors can file a joint petition. A statement of affairs is filed for each individual along with a joint statement of affairs.

Debtors in Partnership

Creditors can pursue individual partners in a partnership as a partnership itself is not a separate legal entity. The Official Receiver administers the individual partners’ estates however the assets are available for joint and several debts.

If any individual partners are parties to a Part X personal insolvency agreement or a Part IX debt agreement, they cannot participate in presenting the debtor’s petition to the Official Receiver.

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If you are a debtor or a creditor and require advice in respect of bankruptcy or alternative debtor arrangements, get in touch with our insolvency lawyers on 1300 544 755.

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