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In this issue: Bob Siemon Many of you would have been assisted by Bob Siemon who has retired from ITSA. Bob contributed to the establishment of the Debt Agreement Service, assisted many creditors and administrators and worked hard to make debt agreements a viable option for debtors and creditors. Information Sessions Information Sessions will be held in Brisbane, Sydney and Melbourne during November for major creditors and administrators. Sessions will be held in other states next year. Further information regarding the sessions will be available soon. Disclosure of Debtor’s Assets Assets that the debtor owns or are to be retained during the debt agreement need to be disclosed at Item C on the Explanatory Statement. To ensure that full and true disclosure of the debtor’s affairs are made to creditors, all assets need to be listed. Items not requiring to be disclosed here are those subject to rental agreements. The debtor is the owner of any property over which security is held. The secured creditor has an equitable property right over the property to seize and sell the asset as set out in the original contract. The debtor, however has legal title and concurrent equitable property rights to the asset. By not disclosing the debtor’s assets this leads to a delay in sending the proposal to creditors, it may not be able to be accepted to send to creditors for voting and if disclosed during the voting period may lead to the Official Receiver cancelling the proposal. Signing of documents The Act requires that the debt agreement proposal, Explanatory Statement and Statement of Affairs must be signed and dated by the debtor and lodged at ITSA within 14 days of signing. Practices such as another person inserting a date next to the debtor’s signature or attaching signature pages to documents do not meet these requirements. Where it is identified that proposals have been prepared using these practices, the proposals cannot be accepted to send to creditors for voting as the debtor cannot be sure of the contents of the document to which they are declaring to be correct. Eligibility of debtors There have been several instances where proposals have been lodged where the debtor has been subject to an administration under the Bankruptcy Act in the last 10 years. These proposals are unable to be accepted to send to creditors to vote as the debtor is ineligible. Administrators need to confirm with the debtor through close questioning, a search of the NPII or other method to determine if the debtor has been subject to an administration in the last 10 years before preparing a proposal for a debtor who is ineligible. Treatment of secured creditors A paper prepared by ITSA on the treatment of secured creditors in debt agreements from 1 July was circulated to major creditors and debt agreement administrators in August. The rights of secured creditors to vote, to receive dividends or choose not to receive dividends, to receive an equalising dividend if a shortfall arises on realisation of their security during the debt agreement are explained and illustrated by worked examples including an example of completion of the Explanatory Statement. A copy of the paper is available upon request. The proposal and Explanatory Statement are in the process of being changed to accurately disclose the debtor’s situation in relation to secured creditors. Consultation with a selection of major creditors and administrators in relation to the draft forms has been positive with some constructive feedback on the changes to the forms. The forms will be available soon. It is important that debt agreement proposals fully disclose the debtor’s position in relation to secured debts such as the status of the debt and whether the creditor intends to participate in receiving dividends so that creditors voting on the proposal can make an informed decision. Debt agreement administrators are encouraged to enter into discussions with secured creditors when formulating proposals to produce an equitable outcome for the debtor and secured creditors. Quarterly Figures for Debt Agreements
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, Operations 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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