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Friday, 15 November 2002
Page: 6529

Senator ABETZ (Special Minister of State) (2:09 PM) —These amendments would significantly undermine the purpose of part X, which is to provide debtors and creditors with the opportunity to come to their own arrangements outside bankruptcy for payment of the debtors' debts. It is inappropriate to build a system on the basis that a small number of people may try to abuse it. This disadvantages the many people who are able to use it effectively.

The part X arrangement can only be made following a special resolution of creditors, which requires a majority in number, and at least 75 per cent in value, of creditors voting. The creditors have the power to make decisions under part X and the amendments are setting up a rule which supposes that the creditors cannot be trusted. The amendments could also deny a legitimate related creditor the right to get access to the debtor's property under a part X arrangement. Many family creditors are legitimate creditors and it is up to the trustee to establish the bona fides of creditors. It is already open to the trustee to ask questions of any creditor in determining whether or not to admit a proof of debt. It is also open to creditors at the meeting to ask questions of other creditors about their debts and relationship with a debtor.

The proposed paragraph at 222(5)(5A) (b)(i) contradicts itself and is flawed. It is based on a presumption that the related creditors at the meeting have voted in a particular way to obtain an advantage or to provide the debtor with an advantage. Therefore, it is not possible for the resolution or its failure to be contrary to the interests of the creditors as a whole. It is also unclear what constitutes a class of creditors for the purposes of this provision. The provision also appears to be unnecessary in light of the following subparagraph, which focuses on the interests of the creditors who voted against the resolution.