Tutorial for Week11

Bankruptcy

1. What kinds of security are recognised by the law? (ABL ¶13-039)

2. What does “default” mean? What remedies are available to a secured lender
in the event of ‘default’ by the borrower? (ABL ¶13-030)
3. Which security interests, if any, can be registered on a public register? What
is the point of registering a security interest? (ABL ¶13-050)
4. What is the Personal Property Security Register (PPSR)?
5. How can a person become bankrupt? (ABL ¶13-580)
6. What is the significance of an “act of bankruptcy”? (ABL ¶13-590)
7. What are some of the debts which cannot be proved in bankruptcy? (ABL
¶13-610)
8. Which property of the bankrupt is property available for the payment of debts?
(ABL ¶13-710)
9. What is the purpose of the doctrine of relation back? (ABL ¶13-640)

10. The Bankruptcy Act 1966 (Cth) exempts certain property of the bankrupt from
sequestration. Which of the following assets of Lee, a bankrupt, is property
exempt from payment of debts? (ABL ¶13-710)

a) Lee’s car worth $3,000.

b) Lee’s tools of trade worth $1,850.
c) A life insurance policy on Lee’s life taken out 19 months before the
bankruptcy.
d) The proceeds of a negligence action brought by Lee in respect of
damage to her car.

11. Are there any questions arising from the insurance law material that need
attention?
Problem Questions

1. Are any of the following an act of bankruptcy?

a) A fails to comply with a bankruptcy notice within the time on the notice.
b) B leaves Australia suddenly to help a sick relative overseas. Six months later,
the relative has passed away, but D has not yet returned. (ABL ¶13-590)
c) On the advice of his physiotherapist, C goes on a three-month holiday to
escape from back pain brought on by the stress of the pressure of business
creditors.
d) P sues D for $1,500 and gets judgment against D. D refuses to pay, so P then
obtains a writ of execution against D. The sheriff is unable to find D to serve
the writ on her, and returns the writ to the Sheriff’s Office.

2. Over the past two years Frank has experienced financial difficulty and he is
currently being pursued by creditors. Frank owes $809,000 to 10 different creditors
and the total debt is comprised of secured and unsecured creditors. As a
consequence of his unmanageable financial situation, Frank has decided to petition
for bankruptcy. Between the date of his petition and the date his petition is accepted
by the Federal Court, he sells his camper van valued at $20,000 to Linda his
girlfriend for $5,000. Further, Frank gives away his boat to Leo his friend and pays
off his own a personal loan owed to his long standing family member Jessica, valued
at $20,000. In addition, in order to preserve property of sentimental value he leaves
these low value assets with his Father. You are required to identify the legal issues
arising from this scenario in bankruptcy. Where relevant you should justify and
support your answers with reference to statute and/or case law