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Bankruptcy is such a situation in which a business owner or a firm gets into financial problem. Then the legal process starts which eases the pressure from the business owner or a firm.

 

According to Business Dictionary website –

 

Legal procedure for liquidating a business (or property owned by an individual) which cannot fully pay its debts out of its current assets. Bankruptcy can be brought upon itself by an insolvent debtor (called ‘voluntary bankruptcy’) or it can be forced on court orders issued on creditors’ petition (called ‘involuntary bankruptcy’). Two major objectives of a bankruptcy are (1) fair settlement of the legal claims of the creditors through an equitable distribution of debtor’s assets, and (2) to provide the debtor an opportunity for fresh start. Bankruptcy amounts to a business-failure, but voluntary winding up does not.

According to Investopedia website –

 

Bankruptcy is a legal proceeding involving a person or business that is unable to repay outstanding debts. The bankruptcy process begins with a petition filed by the debtor, which is most common, or on behalf of creditors, which is less common. All of the debtor’s assets are measured and evaluated, and the assets may be used to repay a portion of outstanding debt.

Laws related to Bankruptcy –

Bankruptcy Act 1966

  • Section 263 Concealment etc. of property etc.
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    (1) A person shall not:
    (a) with intent to defraud the creditors of:
    (i) a bankrupt;
    (ii) a deceased person or the estate of a deceased person; or
    (iii) a debtor who has executed a personal insolvency agreement, a deed of assignment or a deed of arrangement;
    conceal property of the bankrupt, of the deceased person or his or her estate or of the debtor;
    (b) receive property:
    (i) from a bankrupt or a debtor who has executed a personal insolvency agreement, a deed of assignment or a deed of arrangement or a person on behalf of a bankrupt or such a debtor;
    (ii) from the legal personal representative of a deceased person; or
    (iii) from a debtor who subsequently becomes a bankrupt or executes such an agreement or deed, or a person on behalf of such a debtor;
    with intent to defraud, or to assist the bankrupt, the legal personal representative or the debtor to defraud, the creditors of the bankrupt, of the deceased person or his or her estate or of the debtor;
    (c) with intent to defraud, insert or cause to be inserted in the Gazette or in a newspaper an advertisement purporting to be under this Act without authority or knowing it to be false in any particular; or
    (d) with intent to defraud:
    (i) in any proceedings in bankruptcy;
    (ii) in connexion with the administration of the estate of a deceased person; or
    (iii) in connexion with the administration of a debtor’s affairs under a personal insolvency agreement, a deed of assignment, a deed of arrangement, a composition or a scheme of arrangement;
    make a false claim or a declaration or statement of account that is untrue in any particular or lodge a proof of debt that is untrue in any particular.
    Penalty: Imprisonment for 5 years.
    (2) A person commits an offence if:
    (a) the person disposes of, receives, removes, retains or conceals property that has been seized:
    (i) as part of the property of a bankrupt; or
    (ii) as part of the estate of a deceased person; or
    (iii) under a personal insolvency agreement, a deed of assignment; and
    (b) the first mentioned person knows that the property has been so seized.
    Penalty: Imprisonment for 1 year.
    (3) In this section:
    composition does not include a composition entered into for the purposes of a proclaimed law.
    deceased person means a deceased person in respect of whose estate an order for administration has been made under Part XI of this Act.
    deed of arrangement does not include a deed of arrangement executed for the purposes of a proclaimed law.
    scheme of arrangement does not include a scheme of arrangement made or entered into for the purposes of a proclaimed law.

  • Section 263C False claims about a creditor’s entitlement to vote –
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    (1) A creditor must not give to the trustee a voting document knowing or reckless that the document is false or misleading in a material particular.
    Penalty: Imprisonment for 6 months.
    (2) In this section:
    give includes cause to be given.
    trustee means:
    (a) a trustee in a bankruptcy; or
    (b) a trustee of a composition or scheme of arrangement under Division 6 of Part IV; or
    (d) a controlling trustee as defined in Part X; or
    (e) a trustee of a personal insolvency agreement under Part X; or
    (f) a trustee of an estate being administered under Part XI.
    voting document means:
    (a) a statement:
    (i) relating to the amount in respect of which the creditor claims that the bankrupt is indebted to the creditor, the value of the consideration that the creditor gave for any assignment of a debt the bankrupt owes to the creditor, or whether the creditor holds a security interest in respect of the debt; and
    (ii) that is given to the trustee at or before a meeting called for the purposes of Part IV, X or XI or Schedule 2; or
    (b) a form:
    (i) relating to the appointment of a person to represent the creditor at a meeting as the creditor’s proxy; and
    (ii) that is given to the trustee at or before a meeting called for the purposes of Part IV, X or XI or Schedule 2.

  • Section 264A Failure of person to attend before the Court etc.-
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    (1) This section applies to a person who:
    (a) is served, whether before or after the commencement of this subsection, with a summons under this Act to attend for examination under a provision of this Act (other than section 81), or to appear as a witness before the Court, and is tendered a reasonable sum for expenses; or
    (b) is not a relevant person within the meaning of section 81 but is served, whether before or after the commencement of this section, with a summons to attend for examination under that section and is tendered a reasonable sum for expenses; or
    (c) is a relevant person within the meaning of section 81 and is served, on or after the commencement of this section, with a summons to attend for examination under that section.
    (1A) A person to whom this section applies must not, after the commencement of this section:
    (a) fail to attend as required by the summons served on the person; or
    (b) fail to appear and report from day to day, unless excused or released from further attendance by the Court, the Registrar or the magistrate, as the case may be.
    Penalty: Imprisonment for 6 months.
    (1B) Subsection (1A) does not apply if the person has a reasonable excuse.
    Note: A defendant bears an evidential burden in relation to the matter in subsection (1B) (see subsection 13.3(3) of the Criminal Code).
    (2) Nothing in this section limits the power of the Court to punish persons for contempt of court, but a person shall not be punished under this section and for contempt of court in respect of the same act or omission.

  • Section 264B Arrest of person failing to attend before the Court etc.

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    1) Subject to subsection (2), where a person who is served, whether before or after the commencement of this section, with a summons referred to in subsection 264A(1):
    (a) fails to attend before the Court, the Registrar or the magistrate, as the case may be, as required by the summons; or
    (b) fails to appear and report himself or herself from day to day as required by the Court, the Registrar or magistrate, as the case may be;
    the Court, the Registrar or the magistrate, as the case may be, may, on proof by affidavit of the service of the summons, issue a warrant for the apprehension of the person.
    (2) The Court, the Registrar or the magistrate shall not issue a warrant under subsection (1) for the apprehension of a person mentioned in paragraph 264A(1)(a) or (b) who has failed to attend for examination under a provision of this Act, or to appear as a witness before the Court, as required by a summons under this Act unless the Court, the Registrar or the magistrate, as the case may be, is satisfied, on proof by affidavit, that the person was tendered a reasonable sum for expenses.
    (3) A warrant issued under subsection (1) authorizes the apprehension of the person and his or her being brought before the Court, the Registrar or the magistrate, as the case may be, and his or her detention in custody until he or she is released by order of the Court, the Registrar or the magistrate, as the case may be.
    (4) A warrant issued under subsection (1) may be executed by a constable and a constable executing the warrant has the power to break and enter any place or building for the purpose of executing the warrant.
    (5) The Court, the Registrar or the magistrate, as the case may be, may order a person apprehended under this section to pay the costs of the apprehension.
    (6) The apprehension of a person under this section does not relieve him or her from any liability incurred by him or her by reason of his or her failure to attend before the Court, the Registrar or the magistrate, as the case may be.
  • Section 264C Refusal to be sworn or give evidence etc.
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    (1) A person appearing before the Court, the Registrar or a magistrate for the purpose of being examined under this Act, or appearing as a witness before the Court, shall not:
    (a) refuse or fail to be sworn or to make an affirmation;
    (b) refuse or fail to answer a question which he or she is required to answer by the Court, the Registrar or the magistrate, as the case may be; or
    (c) refuse or fail to produce any books that he or she is required by the Court, the Registrar or the magistrate, as the case may be, or by a summons under this Act, to produce.
    Penalty: Imprisonment for 6 months or 10 penalty units, or both.
    (1A) Subsection (1) does not apply if the person has a reasonable excuse.
    Note: A defendant bears an evidential burden in relation to the matter in subsection (1A) (see subsection 13.3(3) of the Criminal Code).
    (2) Nothing in this section limits the power of the Court to punish persons for contempt of court, but a person shall not be punished under this section and for contempt of court in respect of the same act or omission.

  • Section 264D Prevarication or evasion in the course of examination
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    (1) Where a person who is being examined before the Court, the Registrar or a magistrate under this Act is guilty of prevarication or evasion, the person commits an offence punishable upon conviction by imprisonment for a period not exceeding 6 months or a fine not exceeding 10 penalty units, or both.
    (2) Nothing in this section limits the power of the Court to punish persons for contempt of court, but a person shall not be punished under this section and for contempt of court in respect of the same conduct.

  • Section 264E Offences in relation to Registrar or magistrate conducting an examination
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    (1) A person shall not:
    (a) insult or disturb a Registrar or magistrate before whom an examination under this Act is being held;
    (b) interrupt an examination under this Act before a Registrar or magistrate;
    (c) create a disturbance, or take part in creating or continuing a disturbance, in or near a place where an examination under this Act is being held before a Registrar or magistrate;
    (d) use insulting or threatening language towards a Registrar or magistrate before whom an examination under this Act is being held; or
    (e) by writing or speech use words calculated:
    (i) to influence improperly a Registrar or magistrate before whom an examination under this Act is being held; or
    (ii) to bring a Registrar or magistrate before whom an examination under this Act is being held into disrepute.
    Penalty: Imprisonment for 6 months or 10 penalty units, or both.
    (2) For the purposes of an offence against subsection (1), strict liability applies to the following physical elements of circumstance of the offence:
    (a) that the Registrar or magistrate is a Registrar or magistrate before whom an examination under this Act is being held;
    (b) that the examination is an examination under this Act being held before a Registrar or magistrate.

  • Section 265 Failure of bankrupt or debtor to disclose property etc.
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    (1) A bankrupt:
    (a) shall fully and truly disclose to the trustee all of the property of the bankrupt, and its value;
    (b) shall fully and truly disclose to the trustee particulars of any disposition of property made by him or her within the period of 2 years immediately preceding the date on which he or she became a bankrupt;
    (c) shall not refuse or fail to comply with a direction by the trustee to deliver to the trustee property in the possession of the bankrupt, being all or part of the property of the bankrupt;
    (ca) shall fully and truly disclose to the trustee such information about any of the bankrupt’s conduct and examinable affairs as the trustee requires;
    (d) shall not refuse or fail to tell the trustee where the books (including books of an associated entity of the bankrupt) relating to the bankrupt’s examinable affairs may be found;
    (e) shall not refuse or fail to comply with a direction by the trustee to deliver to the trustee books (including books of an associated entity of the bankrupt) that are in the possession of the bankrupt and relate to any of the bankrupt’s examinable affairs;
    (f) shall not omit any material particular from a statement relating to any of the bankrupt’s examinable affairs;
    (g) shall, if he or she knows that a person has lodged a proof of debt in the bankruptcy that is false, forthwith inform the trustee of the fact; and
    (h) shall give to the trustee a full and proper explanation of any loss or depreciation of any of his or her assets or part of any of his or her assets that occurred within the period of 2 years immediately preceding the date on which he or she became a bankrupt.
    Penalty: Imprisonment for 1 year.
    (1A) A bankrupt is taken to have complied with paragraph (1)(a), (b) or (ca) if he or she has fully and truly disclosed to the best of his or her knowledge and belief as required by that paragraph.
    Note: A defendant bears an evidential burden in relation to the matter in subsection (1A) (see subsection 13.3(3) of the Criminal Code).
    (2) A bankrupt shall be deemed to have complied with paragraph (1)(b) in respect of any property if he or she shows that that property has been disposed of in the ordinary way of his or her business or in meeting the ordinary expenses of his or her family.
    Note: See also subsection 5(6).
    (3) A bankrupt shall not, with the intention of obtaining the consent of his or her creditors or any of them to any matter relating to any of the bankrupt’s examinable affairs, make a false representation or commit any fraud.
    Penalty: Imprisonment for 5 years.
    (4) A person who, after the presentation of a petition on which, or by virtue of the presentation of which, he or she becomes a bankrupt:
    (a) conceals, removes, disposes of or deals with any part of his or her property to the value of $20 or more;
    (b) conceals a debt due to or by him or her;
    (c) conceals, parts with, destroys, mutilates, falsifies, alters or makes a false entry in, or omits a material particular from, a book (including a book of an associated entity of the person) affecting or relating to any of the person’s examinable affairs;
    (d) attempts to account for any part of his or her property by falsely stating that he or she has incurred a loss or expense;
    (e) otherwise than in the ordinary way of his or her business, disposes of, or gives security over, property that he or she has obtained on credit and for which he or she has not paid; or
    (f) prevents the production of a book (including a book of an associated entity of the person) affecting or relating to any of the person’s examinable affairs;
    commits an offence and is punishable, upon conviction, by imprisonment for a period not exceeding 1 year.
    (5) A person who, after the presentation of a petition on which, or by virtue of the presentation of which, he or she becomes a bankrupt, either alone or jointly with another person:
    (a) obtains property by fraud; or
    (b) incurs any debt or liability by fraud;
    commits an offence and is punishable, upon conviction, by imprisonment for a period not exceeding 5 years.
    (6) Subsections (4) and (5) extend to an act or omission done or made after the commencement of this Act where the petition was presented before the commencement of this Act but do not apply to an act or omission done or made after the person by whom it was done or made has been discharged from the bankruptcy or after his or her bankruptcy has been annulled.
    (7) A person who has become a bankrupt after the commencement of this Act and, within 12 months before the presentation of the petition on which, or by virtue of the presentation of which, he or she became a bankrupt, has done any of the things specified in any of paragraphs (4)(a) to (f) or paragraph (5)(a) or (b), whether before or after the commencement of this Act, commits an offence and is punishable, upon conviction, by imprisonment for a period not exceeding the maximum period of imprisonment applicable to the doing of that thing under subsection (4) or subsection (5), as the case may be.
    (8) A person who has become a bankrupt and, within 2 years before he or she became a bankrupt and after the commencement of this Act, has contracted a debt provable in the bankruptcy without having at the time of contracting it any reasonable or probable ground of expectation, after taking into consideration his or her other liabilities (if any), of being able to pay the debt, commits an offence and is punishable, upon conviction, by imprisonment for a period not exceeding 1 year.
    (9) It is a defence to a charge under this section (not being a charge under paragraph (1)(c) or (e) or subsection (3), (5) or (8)) if the defendant proves that the act or omission to which the charge relates was done or made without intent to defraud any of his or her creditors.

  • Section 265A Offences relating to exercise of powers under section 77A or 130
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    (1) A person shall not refuse or fail to comply with a requirement under section 77A or 130.
    (1A) Subsection (1) does not apply if the person has a reasonable excuse.
    Note: A defendant bears an evidential burden in relation to the matter in subsection (1A) (see subsection 13.3(3) of the Criminal Code).
    (2) A person shall not, in purported compliance with a requirement under section 77A or 130, give information, or make a statement, that is, to the person’s knowledge, false or misleading in a material particular.
    (3) A person shall not:
    (a) obstruct or hinder a person in the exercise of a power under section 77A; or
    (b) obstruct or hinder a person who is executing a warrant issued under section 130.
    (3A) Subsection (3) does not apply if the person has a reasonable excuse.
    Note: A defendant bears an evidential burden in relation to the matter in subsection (3A) (see subsection 13.3(3) of the Criminal Code).
    (4) The occupier, or person in charge, of premises that a person enters under a warrant issued under section 130 shall provide to the last mentioned person all reasonable facilities and assistance for the effective exercise of his or her powers under the warrant.
    Penalty: Imprisonment for 12 months.

  • Section 266 Disposing or charging of property by person who becomes, or has become, a bankrupt
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    (1) A person who, after the presentation of a petition on which, or by virtue of the presentation of which, he or she becomes a bankrupt dispose of, or creates a charge on, any property with intent to defraud his or her creditors commits an offence and is punishable, upon conviction, by imprisonment for a period not exceeding 5 years.
    (2) Subsection (1) does not apply to the disposal of, or the creation of a charge on, property after the person by whom the disposal is affected or the charge is created is discharged from bankruptcy or after his or her bankruptcy has been annulled.
    (3) A person who has become a bankrupt after the commencement of this Act and, within 12 months before the presentation of the petition on which, or by virtue of the presentation of which, he or she became a bankrupt and after the commencement of this Act, has disposed of, or created a charge on, any property with intent to defraud his or her creditors commits an offence and is punishable, upon conviction, by imprisonment for a period not exceeding 5 years.

  • Section 267 False declaration by debtor or bankrupt
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    (1) This section applies to a declaration contained in a statement that:
    (a) is filed under paragraph 54(1)(a) or (2)(a); or
    (aa) accompanies a declaration presented under section 54A; or
    (b) accompanies a petition presented under paragraph 55(2)(b) or subsection 56B (1); or
    (c) is filed under paragraph 56F(1)(a) or (b); or
    (d) accompanies a petition presented under subsection 57(1); or
    (da) is given to the Official Receiver under section 77CA; or
    (e) is given to the Official Receiver under:
    (i) subsection 185C(2B); or
    (ii) subsection 185M(1B); or
    (iii) subsection 185P(1B); or
    (ea) is given to the Official Receiver under section 185D with a debt agreement proposal; or
    (f) is given under subsection 188(2C) or (2D).
    (2) A person must not make a declaration to which this section applies that the person knows to be false.
    Penalty: Imprisonment for 12 months.
    Presumed maker of declaration in electronic statement
    (3) If a declaration is contained in a statement that:
    (a) was received by the Official Receiver electronically; and
    (b) purported to be made by a particular person;
    the declaration is presumed to have been made by the person, in the absence of evidence to the contrary.
    (4) Subsection (3) applies whether the statement was filed, accompanied a declaration or petition or was given to the Official Receiver, as described in subsection (1).
    (5) Subsection (3) does not affect by implication the operation of a law of the Commonwealth outside this section.

  • Section 267B Failure of person to provide information
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    (1) A person must not refuse or fail to comply with a notice given to the person under subsection 6A (3), subsection 77C (1) or section 77CA or 139V.
    Penalty: Imprisonment for 12 months.
    (2) Subsection (1) does not apply if the person has a reasonable excuse.

  • Section 267D Failure of person to attend
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    (1) A person who is required by a notice under subsection 77C (1) to attend before the Official Receiver or an authorised officer and to whom an advance is offered in accordance with subsection 77E(1) must not:
    (a) fail to attend as required by the notice; or
    (b) fail to appear and report from day to day, unless excused or released from further attendance by the Official Receiver or authorised officer, as the case may be.
    Penalty: Imprisonment for 6 months.
    (2) Subsection (1) does not apply if the person has a reasonable excuse

  • Section 267E Arrest of person failing to attend before Official Receiver or authorised officer
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    (1) Subject to subsection (2), if a person who is required by a notice under subsection 77C(1) to attend before the Official Receiver or an authorised officer:
    (a) fails to attend as required by the notice; or
    (b) fails to appear and report from day to day, as required by the Official Receiver or authorised officer;
    the Registrar, on proof by affidavit of the service of the notice, may issue a warrant for the arrest of the person.
    (2) The Registrar must not issue a warrant under subsection (1) for the arrest of a person unless:
    (a) the Registrar is satisfied, on proof by affidavit, that the person was offered an advance in accordance with subsection 77E(1); or
    (b) both:
    (i) the person is or has been a bankrupt; and
    (ii) the person’s attendance was required for the purpose of giving evidence or producing books relating to the person’s bankruptcy.
    (3) A warrant issued under subsection (1) authorises the arrest of the person and his or her being brought before the Registrar, and his or her detention in custody until he or she is released by order of the Registrar.
    (4) A warrant issued under subsection (1) may be executed by a constable, and a constable executing the warrant has the power to break in and enter any premises for the purpose of executing the warrant.
    (5) The Registrar may order a person arrested under this section to pay the costs of the arrest.
    (6) The arrest of a person under this section does not relieve the person from any liability incurred because of his or her failure to attend before the Official Receiver or authorised officer.

  • Section 267F Refusal to be sworn or give evidence etc.
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    (1) A person attending before the Official Receiver or an authorised officer as required by a notice under subsection 77C (1) must not:
    (a) refuse or fail to be sworn or to make an affirmation; or
    (b) refuse or fail to answer a question that the person is required to answer by the Official Receiver or authorised officer, as the case may be; or
    (c) refuse or fail to produce any books that the person is required by the notice to produce.
    Penalty: Imprisonment for 6 months.
    (2) Subsection (1) does not apply if the person has a reasonable excuse.

  • Section 267G Prevarication or evasion in the course of giving evidence
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    Where a person who is giving evidence before the Official Receiver or an authorised officer as required by a notice under subsection 77C (1) is guilty of prevarication or evasion, the person commits an offence punishable upon conviction by imprisonment for a period not exceeding 6 months.

  • Section 268 Offences in relation to personal insolvency agreements
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    (1) A debtor shall not knowingly give a false or misleading answer to a question put to him or her at a meeting called under Part X.
    Penalty: Imprisonment for 1 year.
    (2) A debtor who has executed a personal insolvency agreement under Part X:
    (a) shall fully and truly disclose to the trustee of the agreement all the property subject to the agreement and its value;
    (b) shall not refuse or fail to comply with a direction of the trustee of the agreement to deliver up to the trustee property subject to the agreement that is in the possession of the debtor;
    (ba) shall fully and truly disclose to the trustee of the agreement such information about any of the debtor’s conduct and examinable affairs as the trustee requires;
    (c) shall not refuse or fail to comply with a direction by the trustee of the agreement:
    (i) to tell the trustee where books (including books of an associated entity of the debtor) relating to any of the debtor’s examinable affairs may be found; or
    (ii) to deliver to the trustee such books that are in the possession of the debtor;
    (d) shall not omit any material particular from a statement relating to any of the debtor’s examinable affairs;
    (e) shall, if he or she knows that a person has lodged a proof of debt under the agreement that is false, forthwith inform the trustee of the fact;
    (f) shall execute such instruments and do all such acts and things in relation to property subject to the agreement and its realization as are required by this Act or by the trustee or as are ordered by the Court upon the application of the trustee; and
    (g) shall aid to the utmost of his or her power in the administration of his or her property and affairs under the agreement.
    Penalty: Imprisonment for 1 year.
    (2A) A debtor is taken to have complied with paragraph (2)(a) or (ba) if he or she has fully and truly disclosed to the best of his or her knowledge and belief as required by that paragraph.
    Note: A defendant bears an evidential burden in relation to the matter in subsection (2A) (see subsection 13.3(3) of the Criminal Code).
    (3) A debtor who has executed a personal insolvency agreement under Part X shall not make a false representation or commit any fraud with the intention of obtaining the consent of his or her creditors or any of them to any matter relating to any of the debtor’s examinable affairs.
    Penalty: Imprisonment for 5 years.
    (4) Subsections (2) and (3) do not apply to an act or omission that is done or made after:
    (a) all the obligations that the personal insolvency agreement created have been discharged; or
    (b) the personal insolvency agreement has been set aside or terminated.
    Note: A defendant bears an evidential burden in relation to the matter in subsection (4) (see subsection 13.3(3) of the Criminal Code).
    (5) If a personal insolvency agreement specifies that the antecedent transactions provisions of this Act apply to the debtor, the debtor must fully and truly disclose to the trustee of the agreement particulars of any disposition of property made by him or her within the period of 2 years immediately preceding the date on which he or she signed the authority under section 188 authorizing the calling of the meeting of his or her creditors at which the resolution requiring the execution of the agreement was passed.
    Penalty: Imprisonment for 1 year.
    (5A) A debtor is taken to have complied with subsection (5) if he or she has fully and truly disclosed to the best of his or her knowledge and belief as required by that subsection.
    Note: A defendant bears an evidential burden in relation to the matter in subsection (5A) (see subsection 13.3(3) of the Criminal Code).
    (6) A debtor shall be deemed to have complied with subsection (5) in respect of any property if he or she shows that that property has been disposed of in the ordinary way of his or her business or in meeting the ordinary expenses of his or her family.
    Note: See also subsection 5(6).
    (7) A debtor who has signed an authority under section 188, and has, within 12 months before the date on which he or she signed that authority and after the commencement of this Act:
    (a) done any of the things specified in any of paragraphs 265(4)(a) to (f) or paragraph 265(5)(a) or (b); or
    (b) disposed of, or created a charge on, any property with intent to defraud his or her creditors;
    commits an offence and is punishable, upon conviction, if the offence relates to the doing of a thing specified in paragraph 265(5)(a) or (b) or a thing specified in paragraph (b) of this subsection, by imprisonment for a period not exceeding 5 years or, in any other case, by imprisonment for a period not exceeding 1 year.
    (8) It is a defence to a charge under this section (not being a charge under paragraph (2)(b) or (c) or subsection (3) of this section or a charge relating to the doing of a thing specified in paragraph 265(5)(a) or (b) or paragraph (7)(b) of this section) if the defendant proves that the act or omission to which the charge relates was done or made without intent to defraud any of his or her creditors.

  • Section 269 Bankrupt or debtor who is a party to a debt agreement obtaining credit etc. without disclosing bankruptcy or debt agreement
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    (1) An undischarged bankrupt or a debtor who is a party to a debt agreement shall not:
    (a) either alone or jointly with another person, obtain credit to the extent of $3,000 or more from a person without informing that person that he or she is an undischarged bankrupt or a party to a debt agreement (as the case requires);
    (aa) either alone or jointly with another person, obtain goods or services from a person:
    (i) by giving a bill of exchange or cheque drawn, or a promissory note made, by him or her either alone or jointly with another person, being a bill, cheque or note under which the sum payable is $3,000 or more; or
    (ii) by giving 2 or more such instruments under which the sums payable amount in the aggregate to $3,000 or more;
    without informing that person that he or she is an undischarged bankrupt or a party to a debt agreement (as the case requires);
    (ab) either alone or jointly with another person, enter into a hire purchase agreement with a person, or enter into a contract or agreement for the leasing or hiring of any goods from a person, being a hire purchase agreement, contract or agreement under which the amounts payable to that person amount in the aggregate to $3,000 or more, without informing that person that he or she is an undischarged bankrupt or a party to a debt agreement (as the case requires);
    (ac) either alone or jointly with another person, obtain goods or services from a person by promising to pay that person or another person an amount of, or amounts aggregating, $3,000 or more without informing that person that he or she is an undischarged bankrupt or a party to a debt agreement (as the case requires);
    (ad) either alone or jointly with another person, obtain an amount of, or amounts aggregating, $3,000 or more from a person by promising to supply goods to, or render services for, that person or another person without informing that person that he or she is an undischarged bankrupt or a party to a debt agreement (as the case requires); or
    (b) carry on business under an assumed name, in the name of another person or, either alone or in partnership, under a firm name without disclosing to every person with whom he or she or, if he or she is carrying on business in partnership under a firm name, the partnership deals, his or her true name and the fact that he or she is an undischarged bankrupt or a party to a debt agreement (as the case requires).
    (2) This section has effect subject to section 304A.
    Penalty: Imprisonment for 3 years.

  • Section 270 Failure to keep proper books of account
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    (1) A person who has become a bankrupt after the commencement of this Act and:
    (a) has not kept such books, accounts and records as are usual and proper in any business carried on by him or her and as sufficiently disclose his or her business transactions and financial position during any period while the business was being carried on within the period of 5 years immediately preceding the date on which he or she became a bankrupt; or
    (b) having kept such books, accounts or records, has not preserved them;
    commits an offence and is punishable, upon conviction:
    (c) in the case of a person who has previously been either a bankrupt whose bankruptcy has not been annulled or a person whose affairs have been administered under a personal insolvency agreement, a deed of assignment or a deed of arrangement under this Act or the repealed Act or who has made a composition or arrangement with creditors under this Act or the repealed Act—by imprisonment for a period not exceeding 3 years; and
    (d) in the case of any other person—by imprisonment for a period not exceeding 1 year.
    (2) It is a defence to a prosecution under subsection (1) if the accused proves that in the circumstances his or her failure to keep or preserve the books, accounts or records was honest and excusable.

  • Section 271 Gambling or hazardous speculations
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    A person who has become a bankrupt after the commencement of this Act and:
    (a) within 2 years before the presentation of the petition on which, or by virtue of the presentation of which, he or she became a bankrupt, whether the petition was presented before or after the commencement of this Act, materially contributed to, or increased the extent of, his or her insolvency; or
    (b) during any period between the presentation of that petition and the date on which he or she became a bankrupt, lost any of his or her property;
    by gambling or by speculations that, having regard to his or her financial position at the time and any other material circumstance, were rash and hazardous, being gambling or speculations not connected with
    a trade or business carried on by him or her, commits an offence and is punishable, on conviction, by imprisonment for a period not exceeding 1 year.

  • Section 272 Leaving Australia with intent to defeat creditors etc.
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    (1) A person who:
    (a) within 6 months before the presentation of the petition on or by virtue of which he or she became a bankrupt, left Australia, or did an act preparatory to leaving Australia, with intent to defeat or delay his or her creditors; or
    (b) after the presentation of the petition on or by virtue of which he or she became a bankrupt and before he or she became bankrupt, left Australia, or did an act preparatory to leaving Australia, with intent to defeat or delay his or her creditors; or
    (c) after he or she has become a bankrupt and before he or she is discharged from the bankruptcy, without the consent in writing of the trustee of his or her estate, leaves Australia, or does an act preparatory to leaving Australia;
    commits an offence and is punishable, on conviction, if the offence relates to the doing of a thing specified in paragraph (a) or (b), by imprisonment for a period not exceeding 5 years or, in any other case, by imprisonment for a period not exceeding 3 years.
    (2) The trustee may impose written conditions on a consent given for the purposes of paragraph (1)(c). If the bankrupt is liable to make a contribution to the trustee under section 139P or 139Q, the conditions may include conditions regarding the payment of that contribution.
    (3) If the bankrupt contravenes any condition imposed by the trustee, the bankrupt commits an offence and is punishable, on conviction, by imprisonment for a period not exceeding 1 year.

  • Section 273 Trial of offences constituted by refusal, failure or omission to act
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    (1) This section applies to an offence against this Act, a physical element of which is:
    (a) a refusal, failure or omission to act; or
    (b) a contravention constituted by a refusal, failure or omission to act.
    (2) A person may be charged with, and convicted of, the offence as if the place of the refusal, failure, omission or contravention were any of the following:
    (a) the place where the person should have done the act;
    (b) the person’s usual place of residence at the time the act should have been done;
    (c) the person’s place of residence last known to the Official Receiver.
    (3) Subsection (2) is subject to section 80 of the Constitution.
    (4) Subsection (2) does not apply to an offence against subsection 264A(1A), 264C (1) or 267F (1).

  • Section 275 Criminal liability not affected by discharge etc.
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    A person may be prosecuted for an offence against this Act although:
    (a) he or she has been discharged from bankruptcy or his or her bankruptcy has been annulled;
    (b) a composition or a scheme of arrangement has been accepted or approved under Division 6 of Part IV; or
    (c) a personal insolvency agreement has become binding on his or her creditors.

  • Section 276 Trustee acting under a personal insolvency agreement that has been set aside
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    1) A person who acts as trustee under a personal insolvency agreement that has, to his or her knowledge, been set aside or been terminated is liable, on conviction by the Court or a court of summary jurisdiction, to a fine not exceeding $20 for each day on which he or she has so acted, not being a day on which his or her acting as a trustee was confined to taking such steps as were necessary for the protection of the property of the debtor.
    (2) It is a defence to proceedings brought under subsection (1) if the person alleged to have acted as trustee proves that his or her acting as a trustee was confined to taking such steps as were necessary for the protection of the property of the debtor.

  • Section 277 Punishment of contempt of court
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    Where by this Act it is provided that a person is guilty of contempt of court, that person may be dealt with by any court having jurisdiction in bankruptcy as if he or she were guilty of a contempt of that court, but a person is not liable to be punished by more than one court in respect of the one contempt.

  • Section 277A Keeping of books in respect of period of bankruptcy
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    (1) Subject to this section, a bankrupt must:
    (a) keep books that record and explain any income derived by the bankrupt, record the particulars of any employment of the bankrupt, and record and explain any other dealings, transactions or other financial or business affairs of the bankrupt, during the period of the bankruptcy; and
    (b) retain the books until discharged from the bankruptcy.
    (2) The bankrupt must:
    (a) keep the books in writing in the English language or so as to enable the books to be readily accessible and convertible into writing in the English language; and
    (b) keep the books so as to enable any liability of the bankrupt arising under this Act by virtue of any acts, transactions or other matters occurring during the period of the bankruptcy to be readily ascertainable.
    (3) A person who has possession of any books referred to in subsection (1) must:
    (a) produce the books to the trustee or to the Official Receiver when requested to do so; and
    (b) retain the books until the bankrupt is discharged.
    (4) A person is not required to retain books if the trustee or the Official Receiver, by written notice given to the person, has told the person that the retention of those books is not necessary.
    Penalty: Imprisonment for 6 months.

FAQs

  • Police has to prove in the Court –

    • Accused is in real terms bankrupt.
    • Accused has obtained the property through illegal ways.
    • Accused is keeping books in respect of period of bankruptcy.
    • Accused is doing contempt of Court.
    • Accused was trying to leave Australia.
    • Accused is gambling during the period of bankruptcy.
    • Accused should not be found guilty according to the various sections of Bankruptcy Act 1966.
  • It depends upon the gravity of the matter which court will give justice to such matters.

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