Debt Agreement Service Newsletter April 2008

Clarity of Debtor’s Circumstances on Proposals
Improving the quality of proposals prepared by administrators will hasten the acceptance of debt agreement proposals to send to creditors for voting and allow creditors to assess and respond in a timely manner.

The DAS performs compliance checks to ensure the debtor’s proposal is in the approved form and provides clarity of the debtor’s circumstances and offer. Where necessary, DAS clarify the debtor’s circumstances with either the debtor or administrator. In most cases ambiguities are explained by recording an Official Receiver Comment on the report to creditors. Administrators are urged to provide clarity of individual circumstances in documents to ensure the proposal can be quickly sent to creditors for voting.

The DAS are reviewing proposals by each administrator to assist in providing feedback about issues of clarity and practice on an on-going basis so administrators can seek to improve their quality assurance process. Feedback to date shows that administrators would find this valuable.

Voting by Assigned Creditors on Pre 1 July 2007 Debt Agreements
Where a debt agreement proposal was lodged before 1 July 2007, a creditor who purchased a debt must disclose and vote for the amount that creditor paid for the assignment. Where there is a proposal to vary or terminate a debt agreement which resulted from a proposal given before 1 July 2007, this same rule applies. These creditors will be asked to provide this information when voting on proposals to vary or terminate a pre-1 July 2007 debt agreement.

For debt agreement proposals given after 1 July 2007, a creditor who purchased a debt, other than a ‘related entity’ creditor, may vote for the full amount of the debt assigned to them.

Debt Agreement Status Information from Administrators
The DAS relies on information from administrators to perform compliance checks and thereby ensure the NPII is updated with verified information.

To ensure the DAS is able to issue debtors with letters certifying completion in a timely manner administrators must list in their notification of completion letters to the DAS the date on which the debtor completed their payments and obligations and the total payments received from the debtor.

In order for the DAS to accept a proposal to terminate a debt agreement, a status report from the administrator must accompany the proposal. This is to encourage creditors to talk with administrator and ascertain if the debtor is in arrears before lodging a termination proposal. The approved termination proposal form outlines the information required. Administrators should provide a timely response to creditors where requests for this information are made.

Realisations Charge
The realisations and interest charges apply to all debt agreement proposals lodged after 1 July 2007 with the exception of self administered debt agreements.

To ensure timely receipt of funds trustees and administrators are encouraged to make the payment, accompanied by the relevant form, to the Perth ITSA office.

Trustees and administrators may choose to make realisations charge and interest charge payments at any time before the due date. However the assessment of the total liability is carried out after 4 August each year and coincides with the lodgement of an Annual Estate Return by the trustee or administrator. ITSA will reconcile the amount paid during the year with the total liability as disclosed in the Annual Estate Return.

Debt Agreement Service Workshop
The employees of the DAS in Perth and Brisbane will be attending their annual workshop on 27 to 29 May for training and development and to improve the level of service to you. Please minimise calls over these days until the teams are available again on Friday 30 May. The DAS will ensure voting results are updated and parties advised during these times, however new debt agreement proposals or proposals to vary or terminate will not be sent.

Limits for Debt Agreements
The current limit for after tax income is $60,196.50 and for unsecured debts or divisible property is $80,262.00. Proposals can not be accepted if the debtor’s income, unsecured debts or property exceed the limits.

Quarterly Debt Agreements and Bankruptcies

	Mar 2007	Jun 2007	Sept 2007	Dec 2007	Mar 2008
Debt Agreements	1492	1992	1624	1452	1504
Bankruptcies	6585	6572	6330	6267	6306

The number of debt agreements made in the March quarter is an increase of 0.80% over the same quarter in 2006. The number of bankruptcies made in the March quarter is a reduction of 4.22% over the same quarter last year.

Feedback
ITSA values the participation of our stakeholders in the debt agreement system. Digby Ross, Official Receiver and National Manager of the DAS can be contacted on (07) 3360 5400 and Vanessa Goodey, Deputy Official Receiver and Operations Manager on (07) 3360 5435. Please continue to direct your queries on individual matters to the DAS teams in Perth and Brisbane.

Do your employees find these newsletters helpful in developing their knowledge?

OFFICE ADDRESS: Level 12, Durack Centre, 263 Adelaide Terrace, PERTH WA 6000 / Level 16, 340 Adelaide Street, BRISBANE QLD 4000
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