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Proposed bankruptcy changes.



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ATTORNEY-GENERAL THE HON PHILIP RUDDOCK MP

NEWS RELEASE

Parliament House, Canberra ACT 2600  Telephone (02) 6277 7300  Fax (02) 6273 4102 www.law.gov.au/ag

23 July 2004 127/2004

PROPOSED BANKRUPTCY CHANGES

The Government has decided to withdraw and revise its exposure draft Bankruptcy Legislation mendment (Anti-Avoidance and Other Measures) Bill 2004.

To encourage debate on the issue, an exposure draft of the Bill was released on 14 May 2004 and was referred to the House of Representatives Standing Committee on Legal and Constitutional Affairs.

The Committee has received 174 submissions and has conducted public hearings canvassing aspects of the Bill in particular, those relating to the power of bankruptcy trustees to recover property held by third parties, including family members.

The purpose of the draft Bill is to address issues arising from the ability of some high income earners to use bankruptcy to avoid paying debts, while maintaining their lifestyle through assets held in other entities.

“The Government remains determined to address these issues by ensuring that bankrupts who actively seek to avoid paying their debts are brought to task,” Mr Ruddock said.

“However, we are aware of the criticisms which have been raised since the exposure draft was released and have decided it is important to resolve these to avoid unintended consequences,” he said.

Changes to be addressed by the Government include:

ï¿» The provisions which reverse the onus of proof that the bankrupt had a ‘tainted purpose’ in making the original transfer of assets; ï¿» Introducing realistic time limits to determine how far back bankruptcy trustees could look in seeking to recover transferred property; and ï¿» Ensuring the provisions do not have unintended consequences in cases where

bankruptcy results from business or professional failure.

“I thank those people who have taken the time to raise their concerns directly with me or with the Committee,” Mr Ruddock said.

“The draft Bill contains other important amendments particularly those designed to address difficulties arising from the interaction between family law and bankruptcy.

“Although the Committee will not be continuing its current inquiry into the provisions allowing for recovery of property from third parties, I will be asking it to report to the Government on the remainder of the Bill,” Mr Ruddock said.

Media Contact: Steve Ingram 0419 278 715