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In this issue: Debt Agreement legislation passed The Bankruptcy Legislation Amendment (Debt Agreements) Act 2007 introduced a registration system for debt agreement administrators and commenced on 10 April. Significant amendments relating to duties of administrators and new debt agreement proposals which improve the debt agreement system will take effect from 1 July 2007. Click here for more information about changes to the debt agreement system. Training for Debt Agreement system from 1 July Twenty-five information training sessions were conducted jointly by Bankruptcy Regulation and the DAS in all capital cities during April except for Darwin which is planned for June. Over four hundred clients participated and evaluations show that the content of the sessions was valuable. Any questions about how the system will work from July can be directed to the DAS Practice Manager Michelle Tilke on (07)33605470. We appreciate that there are many changes to the way in which the new debt agreement system will operate from 1 July. Examples of changes to practice include the date when debts must be calculated, how partially debts are treated and care to be taken in paying dividends where there are joint debtors. ITSA is ready to assist debtors, creditors, administrators and others during what will be a challenging implementation period. Revised forms We appreciate the assistance of major creditors in forums during March to express their needs as a party to debt agreements regarding the content of the new Debt Agreement Proposal including the debtor’s Explanatory Statement, Statement of Claim and Voting and Variation forms. Administrators gave useful feedback on the proposal form which was incorporated. The new forms for Debt Agreement Proposal, Explanatory Statement, Statement of Affairs and the Certificate have been approved and will be distributed to administrators within a week. Feedback on the craft two page Prescribed Information sheet has been passed onto the designers and the new document will soon be available. DAS compliance program The DAS is currently increasing its focus on ensuring that the remuneration and expenses for administering debt agreements shown on proposals are approved by the debtor and comply with the law. Expenses shown on the proposal should only include those expenses directly related to an individual debt agreement that are reasonably expected to occur in administering a debt agreement such as property searches and bank dishonour fees and not include the overhead costs of the administrator. This will become particularly important in July when amendments allow fees to be taken only as a percentage of payments by the debtor. Court upholds debt agreement An application to set a debt agreement aside pursuant to s185U for material nondisclosure in the statement of affairs was dismissed because it was not in the interest of creditors to void the agreement, see Kenny v Carkeek  [2007] FMCA 510 (12 April 2007). The applicant creditor claimed unliquidated damages for breach of contract two years after the debt agreement was made. The proper approach for the creditor was to lodge a Statement of Claim and Voting or a written claim with the administrator.Limits for Debt Agreements The current limit for after tax income is $57,765.75 and for unsecured debts or divisible property is $77,021.00. Proposals will not be accepted if the debtor’s income, unsecured debts or property exceed the limits. Quarterly debt agreements and bankruptcies
Feedback ITSA values the participation of our stakeholders in the debt agreement system. Your comments and suggestions for the DAS are welcomed by Digby Ross, National Manager of the DAS on (07) 3360 5400 and Vanessa Goodey, Operational Manager on (07) 3360 5435. Please continue to direct your queries on individual matters to the DAS teams in Perth and Brisbane. OFFICE ADDRESS: Level 12, Durack Centre, 263 Adelaide Terrace, PERTH WA 6000 / Level 16, 340 Adelaide Street, BRISBANE QLD 4000 POSTAL ADDRESS: GPO Box H536, PERTH WA 6841 / PO Box 10443 ADELAIDE STREET, BRISBANE QLD 4000 TELEPHONE: 1300 364 785 FACSIMILE: (08) 9268 1218 / (07) 3360 5466 EMAIL itsa.wa.da@itsa.gov.au / itsa.qld.da@itsa.gov.au INTERNET: www.itsa.gov.au OFFICES IN ADELAIDE BRISBANE CANBERRA HOBART MELBOURNE PERTH SYDNEY TOWNSVILLE |
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