Guide to Filing a Creditor's Petition
This document is a brief summary of the practice and procedure in presenting a creditor's petition in the Federal Magistrates Court. The staff at the Court Registry cannot give legal advice or assist with the content of any document. You must still make your own enquiries and do your own assessment and legal research.
References to Legislation
PROCEDURE
1. Prior to lodging creditor's petition
Before presenting a creditor's petition the applicant creditor may consider conducting a search of the National Personal Insolvency Index (NPII) to ensure the debtor has not already become a bankrupt. There is a fee for this search.
The NPII is maintained at the Insolvency and Trustee Service Australia
(ITSA). The internet address is www.itsa.gov.au
If the debtor is already a bankrupt, the applicant creditor's debt may be a debt
provable in that bankruptcy. If that is the case, the debt cannot be made the basis of another creditor's petition.
2. Presentation of a creditor's petition
A creditor's petition must be presented for filing within six months of the date of the
"act of bankruptcy" (s 44(1)(c) of the Act). Refer to s 40(1) of the Act for the different "acts of bankruptcy" that a creditor can rely upon. The most common act of bankruptcy relied upon is
the failure to comply with a bankruptcy notice served on the debtor (s 41(1)(g) of the Act). Refer to the Regulations for the prescribed form of the bankruptcy notice (reg 4). A copy can be
downloaded from ITSA's website.
3. Filing fee
A fee is payable for filing a creditor's petition. Different amounts are payable
depending on whether the applicant is an individual or a corporation.
4. Documents required (rules 4.02 & 4.04)
a) Creditor's petition (Form 6).
b) Affidavit verifying paragraphs 1, 2 and 3 of petition by someone who knows the
relevant facts verifying the petition. The affidavit may be in accordance with the affidavit set out in Part 2 of Form 6, or may be a separate document. Refer to paragraph 8 below for
further details.
c) Affidavit verifying paragraph 4 of petition verifying whether or not an
application has been made for an order setting aside the bankruptcy notice. Refer to paragraph 11 below for further details.
d) Affidavit of service of the bankruptcy notice, with a signed copy of the
bankruptcy notice and copy of the judgment attached.
5. Formal requirements for documents
FMC Rules 2.01 to 2.04 set out the formal requirements of forms in the Federal Magistrates Court. In bankruptcy proceedings, the documents are headed in accordance with Form 1 as follows:
IN THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
REGISTRY: (Registry)
IN THE MATTER OF (name of debtor or bankrupt)
(name of applicant)
APPLICANT
Rules 15.25 to 15.28 set out the formal requirements of affidavits filed in the Court. Section 59 of the Federal Magistrates Act 1999 sets out the requirements for swearing of affidavits.
6. Footer
A document prepared by a party for use in the Court shall have a horizontal line drawn
at the foot of the first page below which shall be shown the party on whose behalf the document is filed, and the address, telephone number and facsimile number of the party or their legal
representative.
7. Copies of documents
All copies of the petition and the verifying affidavits must be clear and
legible. Any alterations in the original documents must be initialled by the person executing or swearing that document and the person who witnessed the execution or swearing (if applicable).
Extra copies of the petition and verifying affidavits will need to be prepared and
presented for filing with the original documents. Two copies of each of the documents per respondent debtor are required. The copies will be returned to the applicant for service and proof of
service purposes.
8. Creditors petition and affidavit verifying paragraphs 1, 2 & 3 of petition (s 47(1) & rule 4.02)
The creditor's petition should be in Form 6 and be executed by either the applicant or by the applicant's authorised agent or solicitor.
The affidavit verifying the petition pursuant to s 47(1) of the Act and rule 4.02 should be sworn by a person who knows the relevant facts and should refer to the creditor's petition it verifies. The affidavit may be accordance with the affidavit set out in Part 2 of Form 6, or may be a separate document. If it is a separate document, a copy of the creditor's petition must be attached to the
affidavit.
Before presenting the creditor's petition ensure it is dated and signed and that the affidavit verifying it does not pre-date the date the petition was executed.
If the petition is founded on an act of bankruptcy mentioned in s 40(1)(d) of the Act
(ie issue of execution), further affidavit material is required (rule 4.03).
9. Address for service
The creditor's petition must reveal an address for service as provided for in Form 6.
10. Notice to respondent debtor
Form 6 (creditor's petition) contains a form of Listing Notice addressed to the respondent debtor. In the Listing Notice the address of the Court will be:
(Name of registry)
Federal Magistrates Court of Australia
Commonwealth Law Courts
(physical address)
(CITY)
The date and time of the hearing will be completed in the
Registry. The petition will then be signed and sealed. Completed service copies will be given back to the applicant to effect service on the respondent.
IMPORTANT NOTE: A copy of the creditor's petition must be given to the Official Receiver's Office (ITSA) within three days of filing (reg 4.05).
11. Affidavit verifying paragraph 4 of petition (rule 4.04)
If the petition is founded on failure to comply with a bankruptcy notice, the applicant
or representative must conduct a search of the records of both the Federal Court of Australia and the Federal Magistrates Court of Australia. Searches can either be conducted in person at the
Registry or electronically using eSearch. eSearch is a searchable database of selected information on cases initiated in the Federal Court of Australia and in the federal law jurisdiction of the
Federal Magistrates Court of Australia. It is accessed at www.fedcourt.gov.au.
The search is by name of the respondent debtor. There is no fee for the search of
either Court's electronic records, but a fee may be payable if you conduct a file search of a court file. The object of the search is to see if the respondent has filed any application to set aside
the bankruptcy notice or any other related application, such as to extend time for compliance.
Note that if any such application exists, it will appear in the index by reference to
the respondent's name. It will not have the same number as the bankruptcy notice. The Federal Court or Federal Magistrates Court file number allocated to any application filed by the respondent
will not be the bankruptcy notice number allocated by ITSA when it issued the bankruptcy notice.
If the respondent has not filed an application, it will be in order for the person
conducting the search to swear an affidavit deposing to these facts. The form of affidavit merely swears to whether any application has been made in respect of the bankruptcy notice. There is
no need to be any more specific if no application exists. The affidavit will need to be presented for filing with the creditor's petition and affidavit verifying paragraphs 1, 2 & 3 of the
petition.
If the search mentioned above reveals that the respondent has filed material in response
to the bankruptcy notice, the solicitor handling the file for the petitioning creditor should be informed immediately and guidance sought as to further action, if any, that is to be
taken. Generally, that action will involve preparing the affidavit to set out what the search revealed, namely the existence of a particular type of application and its outcome. The affidavit
must also be accompanied by a copy of the order finally deciding the application (rule 4.04(2)).
If an act of bankruptcy (other than failure to comply with a bankruptcy notice) is
relied upon, the affidavit verifying paragraph 4 of the petition must set out the facts which establish the particular act of bankruptcy.
12. Consent of registered trustee
Bankruptcy Regulation 8.06 provides that a trustee who signs a Consent to Act pursuant
to s 156A of the Act must file that Consent with the Official Receiver (ITSA) as soon as practicable after signing it, or, if a sequestration order is made against the debtor's estate, no later than two
working days after the day on which the order is made.
The original of the Consent to Act is not filed with the Court. However, the
affidavit of service of the petition must state how any Consent to Act as trustee was served.
13. Service of petition documents (rule 4.05)
Rule 4.05 provides that the applicant must, at least 5 days before the hearing date of the creditor's petition, serve personally on the respondent the following documents:
Creditor's petition;
A copy of the affidavit verifying the petition required by s 47(1) of the Act and
rule 4.02;
A copy of the affidavit of search of both Courts' electronic records required by
rule 4.04;
A copy of the affidavit of service of the bankruptcy notice; and
A copy of the Consent to Act as trustee (if applicable).
When reckoning time under the Rules, regard should be had to FMC rule 3.04, which states, in
part, that where time is reckoned by reference to a given day, the given day shall not be counted and that where the period in question is a period of 5 days or less and includes a day on which the
Registry is closed, that day must not be counted. In other words, 5 clear business days service is required.
14. Affidavit of service of petition documents (rule 4.05)
After service of all the documents referred to in rules 4.02 & 4.04, an affidavit of service should be filed as soon as
possible. The affidavit of service should depose to when and how the documents were served and the means by which the identification of the person served was established.
The affidavit of service must have attached to it a copy of the documents that were
served.
15. Affidavits required at the hearing (rule 4.06)
The applicant must file the following documents for the hearing pursuant to rule 4.06:
Affidavit of a person who has conducted a search of the NPII no earlier than the day
before the hearing. The affidavit must set out the details of any references to the debtor in the Index and state that there are no details of any debt agreement in relation to the debt on which
the applicant relies on the day the petition was presented. A copy of the search extract from the NPII must be attached to the affidavit.
Affidavit of a person who knows the relevant facts stating that each debt on which
the applicant relies is still owing. This affidavit must be sworn as soon as practical before the hearing.
Affidavit of search if the debt stated in the creditor's petition is an amount
payable pursuant to a judgment of a court that ordered the amount to be paid into the court.
While the affidavit of service of the petition should be filed as soon as possible, the
remaining affidavits required by rule 4.06 may be filed by leave of the Court at the hearing. If it is not practical for the applicant to file the original of either of the affidavits, rule 4.07 enables a facsimile copy to be filed. The applicant must keep the original affidavit and produce it if directed by the Court.
16. Hearing of the petition (s 52 Act)
Section 52 of the Act sets out the matters that the Court shall require proof of before
making a sequestration order. A sequestration order is in Form 7.
17. Post sequestration steps (rule 4.08)
Once the sequestration order is made, unless the order is entered in the Court at the
time it is made, the applicant creditor must enter the order by filing an order in accordance with Form 7 within one day after the order is made (rule 4.08).
On the day the sequestration order is made, the applicant must advise the trustee in
writing of the making of the order and his/her appointment (rule 4.08).
A copy of the sequestration order must be served upon the Official Receiver (ITSA) and
the trustee within two working days of the order (rule 4.08). |
