Public Examinations of Certain People
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Introduction
Major Headings
What alternatives are available?
Who may apply for an examination?
Who may be examined?Who may be ordered to appear as a witness?Questioning the Witness
Where is the examination held?
Can a Witness be represented?Witnesses must answer questionsWho conducts the examination?
Can records be demanded?
Questions of Privilege
The Results of the ExaminationTranscripts
Assets discovered during the examination
Overview
Both bankruptcy trustees and liquidators have a duty to investigate insolvent entities, but that duty varies greatly between the Bankruptcy Act and the Corporations Act. Trustees must comply with sections 19 and 19A of the Bankruptcy Act. Liquidators have more limited statutory duties to investigate, and voluntary administrators must only do so in the context of the voluntary administration appointment.
Generally, there is a practical need to investigate to find assets, verify claims, discover offences and provide some sense of resolution to creditors. Some part of the investigation process involves obtaining information from someone. Formal examinations under either Act can prove useful for obtaining information that not is provided willingly. Examinations are conducted under oath or affirmation, so if the witness does not tell the truth, they may be charged with perjury.
A public examination is the common name given to the process of an external administrator formally examining parties. Both the Corporations Act and the Bankruptcy Act have provisions to conduct these types of examinations and both Acts state that they are to be held in public. Anyone can attend and watch public examinations that are held in open Court. Rarely the court will order a closed session.
Bankruptcy Act - 81(2) An examination under this section shall be held in public.
Corporations Act - 597(4) An examination is to be held in public except to such extent (if any) as the Court considers that, by reason of special circumstances, it is desirable to hold the examination in private.
Though the name is not technically correct in all circumstances, we shall use that description for all types of examinations in under both Acts in this fact sheet.
There are a number of reasons that insolvency practitioners conduct public examinations, including:
(i) getting information from uncooperative persons;
(ii) obtaining documentation that would otherwise be unavailable;
(iii) obtaining detailed explanations on difficult matters in the estate;
(iv) uncovering offenses;
(v) determining whether there is a claim that may be made;
(vi) obtaining details of defenses to claims without having to commence proceedings; and
(vii) generally gathering information.
What alternatives are available?
Both the Bankruptcy Act and the Corporations Act provide a few alternatives to holding a public examination. Insolvency practitioners can simply rely on the records available; hold formal interviews; issue 77A notices and hold 77C interviews (both limited to bankruptcies); obtain search warrants; or obtain orders for people to provide affidavits on certain issues (section 597A of the Corporations Act).
Each of these has its uses, but all have limitations in scope, effect and enforceability, and are often of limited benefit.
One of the benefits of the public examination process is that it is an inquisitorial process, not an adversarial one. The insolvency practitioner is not trying to prove a case with another party trying to disprove it. They do not use the usual rules of evidence or cross examination. They have nothing to lose. It is purely a fact-finding process.
Who may apply for an examination?
An 'eligible applicant' may apply for an examination under the Corporations Act. An eligible applicant is the liquidator or provisional liquidator; an administrator or administrator of a deed of company arrangement; the ASIC or someone authorized by the ASIC. Who will ASIC authorize? They have granted authority to Receivers and Managers, creditors, regulatory authorities and trustees of related trusts.
An eligible applicant, in relation to a corporation, means:
(a) ASIC; or
(b) a liquidator or provisional liquidator of the corporation; or
(c) an administrator of the corporation; or
(d) an administrator of a deed of company arrangement executed by the corporation; or
(e) a person authorised in writing by ASIC to make:
(i) applications under the Division of Part 5.9 in which the expression occurs; or
(ii) such an application in relation to the corporation.
The trustee, the Official Receiver or any creditor of the bankrupt may apply to the Federal Court for an examination under Section 81 of the Bankruptcy Act. The main difference between the two Acts is that, under the Bankruptcy Act, any creditor (a person with a provable debt) has a right to ask for a examination of parties in their own right, without requiring the consent of the trustee or the Official Receiver.
BANKRUPTCY ACT 1966 - SECT 81
Discovery of bankrupt's property etc.
(1) Where a person (in this section called the relevant person) becomes a bankrupt, the Court or a Registrar may at any time (whether before or after the end of the bankruptcy), on the application of:
(a) a person (in this section called a creditor) who has or had a debt provable in the bankruptcy;
(b) the trustee of the relevant person's estate; or
(c) the Official Receiver;
summon the relevant person, or an examinable person in relation to the relevant person, for examination in relation to the bankruptcy.
Generally the trustee of the bankrupt estate, whether the Official Receiver or a registered trustee, will make an application for the examination of the bankrupt, especially when that application also contains an application to examine other parties.
Who may be examined?
Who may be ordered to appear as a witness?
Regardless of under which Act the application is made, the court will have to be convinced that the proposed witness is likely to have information on examinable affairs that would be useful to the external administrator. Only real people may be examined, companies cannot 'take the stand'. Information from companies is usually obtained from an order to produce records or for the proper officer (a real person) to be examined.
The areas of examination are limited to the examinable affairs of the insolvent company or bankrupt. This definition has been stretched over the years to include the witness's ability to meet the claims that may be made against them and issues like the professional indemnity insurance cover that may cover potential claims. At times, the person asking the questions may have to convince the court that the questions fall into this area and should be allowed.
Corporations Act
Section 596A provides for the mandatory examinations of past and present officers of a company. Officers include directors and secretaries, people who make decisions which affect the business or financial standing of the company, and people whose directions are acted upon by the directors. Mandatory means that an application for an examination must, in theory at least, be granted.
CORPORATIONS ACT 2001 - SECT 596A
Mandatory examination
The Court is to summon a person for examination about a corporation's examinable affairs if:
(a) an eligible applicant applies for the summons; and
(b) the Court is satisfied that the person is an officer or provisional liquidator of the corporation or was such an officer or provisional liquidator during or after the 2 years ending:
(i) if the corporation is under administration - on the section 513C day in relation to the administration; or
(ii) if the corporation has executed a deed of company arrangement that has not yet terminated--on the section 513C day in relation to the administration that ended when the deed was executed; or
(iii) if the corporation is being, or has been, wound up--when the winding up began; or
(iv) otherwise--when the application is made.
Section 596B provides the Court with a discretion to order the examination of other people. Almost anyone can be ordered to appear to answer questions and to produce records to the court in an examination under the Corporations Act, if that person has any information on the "examinable affairs" of the Company.
CORPORATIONS ACT 2001 - SECT 596B
Discretionary examination
(1) The Court may summon a person for examination about a corporation's examinable affairs if:
(a) an eligible applicant applies for the summons; and
(b) the Court is satisfied that the person:
(i) has taken part or been concerned in examinable affairs of the corporation and has been, or may have been, guilty of misconduct in relation to the corporation; or
(ii) may be able to give information about examinable affairs of the corporation.
(2) This section has effect subject to section 596A.
Examinable affairs in relation to a company is defined in the Act as follows:
(a) the promotion, formation, management, administration or winding up of the corporation; or
(b) any other affairs of the corporation (including anything that is included in the corporation's affairs because of section 53); or
(c) the business affairs of a connected entity of the corporation, in so far as they are, or appear to be, relevant to the corporation or to anything that is included in the corporation's examinable affairs because of paragraph (a) or (b).
Before granting an order to examine someone under this section, the court will have to be convinced by the applicant that the person has information that falls under examinable affairs, and that this person has either refused or neglected to give the information to the applicant, or that the information is best obtained under oath for some reason. The applicant must give an affidavit to the court setting out the type of information required from the witness, reasons why the applicant thinks the witness has that information, relate that information to the company's examinable affairs.
CORPORATIONS ACT 2001 - SECT 596C
Affidavit in support of application under section 596B
(1) A person who applies under section 596B must file an affidavit that supports the application and complies with the rules.
(2) The affidavit is not available for inspection except so far as the Court orders.
Bankruptcy Act
Section 81 provides for an examination of the bankrupt and other "examinable persons". Examinable persons include directors of associated entities, spouses of the bankrupt, people in possession of records, creditors of the bankrupt and debtors of the bankrupt, and accountants and solicitors.
BANKRUPTCY ACT 1966 - SECT 81
Discovery of bankrupt's property etc.
(1) Where a person (in this section called the relevant person) becomes a bankrupt, the Court or a Registrar may at any time (whether before or after the end of the bankruptcy), on the application of:
..
summon the relevant person, or an examinable person in relation to the relevant person, for examination in relation to the bankruptcy.
Essentially, anyone who has advised or dealt with the bankrupt, or may have information on dealings with the bankrupt, may be examined. These people are called examinable persons or relevant persons and are defined as:
(a) if the relevant person is a debtor and property of the debtor is known or suspected to be in the possession of a person - that person;
(b) if the relevant person has become a bankrupt and any of the property of the bankrupt is known or suspected to be in the possession of a person--that person;
(c) in any case--a person who is believed to be indebted to the relevant person;
(d) if a person, including:
(i) a person who is an associated entity of the relevant person; or
(ii) a person with whom an associated entity of the relevant person is or has been associated;
may be able to give information about the relevant person or any of the relevant person's examinable affairs - that person; or
(e) if books (including books of an associated entity of the relevant person):
(i) are in the possession of a person, including a person of a kind referred to in subparagraph (d)(i) or (ii); and
(ii) may relate to the relevant person or any of the relevant person's examinable affairs;
that person.
As with the Corporations Act, witnesses can only be examined under the Bankruptcy Act on the 'examinable affairs' of the bankrupt. The Bankruptcy Act unhelpfully defines examinable affairs in relation to a person as:
(a) the person's dealings, transactions, property and affairs; and
(b) the financial affairs of an associated entity of the person, in so far as they are, or appear to be, relevant to the person or to any of his or her conduct, dealings, transactions, property and affairs.
The Court will allow appropriate questions to be put to the witness as long as those questions relate to the examinable affairs of the bankrupt, and in the areas where that witness may be able to supply information. Given the definitions above, the range of questions that may be put to the witness is wide, and the Court will only limit those questions in exceptional circumstances. Given that the process is inquisitive not adversarial, the court will generally allow most, even slightly relevant, questions.
BANKRUPTCY ACT 1966 - SECT 81
Discovery of bankrupt's property etc.
(10) The Court, the Registrar or the magistrate may put, or allow to be put, to a person being examined under this section such questions about the relevant person or any of the relevant person's examinable affairs as the Court, the Registrar or the magistrate, as the case may be, thinks appropriate.
Where is the examination held?
These examinations are held in court. The advantage of holding them in a court settling is that the witness sits in a court of law, with a Judge or Magistrate or Registrar, a bailiff, a witness box and most of the rules and protocols of the legal system. They are placed under oath and warned of the consequences of perjury.
Very few witnesses fail to be intimidated by this setting and this gives an immediate tactical advantage to the insolvency practitioner. Witnesses are then asked a series of questions, and they must provide answers. The immediacy of the answers gives little time to concoct a believable lie.
Generally under the Corporations Act, the Supreme Court will give the Order for an examination and then pass the actual conduct of the examination to the magistrates or similar Court.
CORPORATIONS ACT 2001 - SECT 596D
Content of summons
(1) A summons to a person under section 596A or 596B is to require the person to attend before the Court:
(a) at a specified place and at a specified time on a specified day, being a place, time and day that are reasonable in the circumstances; and
(b) to be examined on oath about the corporation's examinable affairs.
The Bankruptcy Act has very similar provisions but the court that grants the Order - generally the Federal Magistrates Court - will also hear the examination.
BANKRUPTCY ACT 1966 - SECT 81
Discovery of bankrupt's property etc.
(1A) A summons to a person by the Court or the Registrar under subsection (1) shall require the person to attend:
(a) at a specified place and at a specified time on a specified day, being a place, time and day that are reasonable in the circumstances; and
(b) before the Court or the Registrar or, if the Court or the Registrar thinks fit, a magistrate;
to be examined on oath under this section about the relevant person and the relevant person's examinable affairs.
Can a Witness be represented?
Witnesses have the right to be represented by counsel or a solicitor, but their role is very limited compared to their role in a trial, as there is no case to prove or defend. The Bankruptcy Act allows for counsel or a solicitor to re-examine the witness. They will generally only ask questions to clarify a point, and they cannot call witnesses themselves.
BANKRUPTCY ACT 1966 - SECT 81
Discovery of bankrupt's property etc.
(7) A person summoned to attend before the Court, the Registrar or a magistrate for examination under this section is entitled to be represented, on his or her examination, by counsel or a solicitor, who may re-examine him or her after his or her examination.
The position is probably better explained in the Corporations Act. It provides that questions may be asked to explain or qualify any answers or evidence given by the witness.
CORPORATIONS ACT 2001 - SECT 597
Conduct of examination
(16) A person ordered to attend before the Court or another court for examination under this Division may, at his or her own expense, employ a solicitor, or a solicitor and counsel, and the solicitor or counsel, as the case may be, may put to the person such questions as the Court, or the other court, as the case may be, considers just for the purpose of enabling the person to explain or qualify any answers or evidence given by the person.
Having counsel present and re-examining the witness usually proves to be useful to the practitioner. Witnesses tend to answer their own counsel's questions more fully and provide more information. A lot of information can be obtained from the re-examination of witnesses.
Should people be represented at a public examination? Some people feel comfortable without representation when they know that they have nothing to hide. Some people feel more comfortable with their lawyer in the room, even if they expect not to need them. It is a personal question and most insolvency practitioners would not try to influence an examinee's decision to be represented.
Questioning the Witness
Witnesses must answer questions
There is no right to refuse to answer questions. However, if the witness formally objects to any question that may be incriminating to them, the answer may not be used against them in a later offense prosecution. But, they must still answer the question fully and truthfully.
In reality, this policy of objections does not usually concern the liquidator or trustee, as they do not take offense prosecutions and will not be using the information for that purpose. The information obtained is generally used by the liquidator or trustee for a commercial recovery action.
Corporations Act
The Corporations Act achieves this through 4 sub-sections. The first two state that questions can be put to the witness about the examinable affairs of the company, and state that the witness must take an oath or affirmation and answer the questions. False, untruthful or misleading statements could result in the witness being charged with perjury, with all of its consequences.
CORPORATIONS ACT 2001 - SECT 597
Conduct of examination
(5B) The Court may put, or allow to be put, to a person being examined such questions about the corporation or any of its examinable affairs as the Court thinks appropriate.
(7) A person who attends before the Court for examination must not:
(a) without reasonable excuse, refuse or fail to take an oath or make an affirmation; or
(b) without reasonable excuse, refuse or fail to answer a question that the Court directs him or her to answer; or
(c) make a statement that is false or misleading in a material particular; or
(d) without reasonable excuse, refuse or fail to produce books that the summons requires him or her to produce.
The other two state that the witnesses cannot refuse to answer questions because the answers may be incriminatory. All questions must be answered truthfully and fully, but some protection is available to witnesses against self-incrimination - but only against later actions involving criminal proceedings or where a penalty may be imposed. The answers will be available for use by the liquidator in any commercial proceedings taken by the liquidator, or other parties.
CORPORATIONS ACT 2001 - SECT 597
Conduct of examination
(12) A person is not excused from answering a question put to the person at an examination on the ground that the answer might tend to incriminate the person or make the person liable to a penalty.
(12A) Where:
(a) before answering a question put to a person (other than a body corporate) at an examination, the person claims that the answer might tend to incriminate the person or make the person liable to a penalty; and
(b) the answer might in fact tend to incriminate the person or make the person so liable;
the answer is not admissible in evidence against the person in:
(c) a criminal proceeding; or
(d) a proceeding for the imposition of a penalty;
other than a proceeding under this section, or any other proceeding in respect of the falsity of the answer.
Bankruptcy Act
The Bankruptcy Act has the same provisions, except for the protection against self-incrimination. The Bankruptcy Act says that the witness must answer the questions, and the person presiding at the examination can direct the witness to answer the question, but these answers may be used in later proceedings. Generally trustees will have no interest in criminal or any non-commercial proceedings against any party.
BANKRUPTCY ACT 1966 - SECT 81
Discovery of bankrupt's property etc.
(11) A person being examined under this section shall answer all questions that the Court, the Registrar or the magistrate puts or allows to be put to him or her.
(11AA) Subject to any contrary direction by the Court, the Registrar or the magistrate, the relevant person is not excused from answering a question merely because to do so might tend to incriminate the relevant person.
Can records be demanded?
A public examination is a fact finding or fact confirming process, and often those facts are located in the records of the company or bankrupt, and just as often in the records of associated or third parties that have dealt with the company or bankrupt. These records may not be immediately available to the practitioner.
Sometimes one of main purposes of the examination is to obtain records from various parties, not particularly to examine those parties about those records at that time. Certain parties will, or can, only produce these records to the practitioner with an order of the Court.
The Corporations Act has provision for the court to include the production of certain books and records as part of the summons for a person to attend for an examination. Care must be taken by the practitioner to ensure that they have summonsed the correct person, or entity, to produce these records. Companies themselves cannot be summons, so the company will have to be summons through the proper officer of the company, who will have to produce the records under the summons.
CORPORATIONS ACT 2001 - SECT 596D
Content of summons
(2) A summons to a person under section 596A or 596B may require the person to produce at the examination specified books that:
(a) are in the person's possession; and
(b) relate to the corporation or to any of its examinable affairs.
(3) A summons under section 596A is to require under subsection (2) of this section the production of such of the books requested in the application for the summons as the summons may so require.
The records will have to be produced to the court. Sometimes the court may order that the records be delivered to the court some days before the examination is held so that the practitioner and their representatives can access these records and prepare questions to be put to witnesses.
CORPORATIONS ACT 2001 - SECT 597
Conduct of examination
(9) The Court may direct a person to produce, at an examination of that or any other person, books that are in the first‑mentioned person's possession and are relevant to matters to which the examination relates or will relate.
(9A) A person may comply with a direction under subsection (9) by causing the books to be produced at the examination.
(10) Where the Court so directs a person to produce any books and the person has a lien on the books, the production of the books does not prejudice the lien.
This limits the need to have the examination over two separate days, the first to get the records, and the second - after a delay to inspect the records - to question the witness.
The Bankruptcy Act has very similar provisions, and can require the production of various records related to the examinable affairs of the company. Again, it is possible for the court to summons delivery of these records at some time before the conduct of the questioning of witnesses to allow inspection of the records by the trustee.
BANKRUPTCY ACT 1966 - SECT 81
Discovery of bankrupt's property etc.
(1B) A summons to a person under subsection (1) may require the person to produce at the examination books (including books of an associated entity of the relevant person) that:
(a) are in the possession of the first‑mentioned person; and
(b) relate to the relevant person or to any of the relevant person's examinable affairs.
(11A) The Court, the Registrar or the magistrate may direct a person who is being examined under this section to produce at the examination specified books, or specified classes of books, that are in the possession of the person and are relevant to matters about which the person is being, or is to be, examined.
(11B) Without limiting the generality of subsection (11A), a direction under that subsection may relate to books of an associated entity of the relevant person.
Questions of Privilege
Accountants and solicitors are often called to give evidence when their client becomes an insolvent under some form of administration, usually liquidation (company clients) or bankruptcy (for individuals). Sometimes the accountant or solicitor has some sensitive information - usually the information that the liquidator or trustee wants - and is hesitant to disclose it. Accountants may have had these clients for some time and feel some personal responsibility to protect them in some manner. To do so they sometimes claim professional or other privilege on some documents or information to avoid answering questions.
Privilege is one of those widely argued points of law, a subject that could be the sole topic of a book. But there are a few points that should be considered before trying to make such a claim.
In all likelihood in a liquidation the company is the client (rather than the director). The liquidator, having taken control of the company by resolution or court order, now controls the client. Effectively the witness is simply providing evidence to their own client (the liquidator becoming the client) and no claim for privilege can be made. In most cases, the same situation will apply in bankruptcies with the trustee being the client, standing in the shoes of the bankrupt.
In cases where transactions or files involve or advice has been given to the bankrupt or liquidated company and another party, the witness will have to provide all of the information except that part that relates solely to the other party. Even if the advice or document relates to the other party, if it is part of a file to which the insolvent is involved, and in normal circumstances the bankrupt or insolvent company would be entitled to access to it, the file must be provided to the insolvency practitioner.
Who conducts the examination?
It is common for a solicitor or barrister to be engaged to ask the questions, though the liquidator or trustee may do so. A solicitor will usually be involved in the examination process to make sure that all of the legal protocol is observed and, when needed, to give legal advice.
Barristers are usually engaged due to their knowledge of the court process and their skill in examining and cross examining witnesses. But there are pros and cons to this approach. On one hand, barristers make their living by asking questions, listening to the answers and exploring the detail with follow up questions. This is what they do, and they generally do it very well. On the other hand, no one is more conversant with the background of the matter than the trustee or liquidator, no matter how detailed the brief. Also the lawyers may not be as conversant with the financial details and accounting statements, ledgers etc, as the trustee or liquidator who is usually an accountant.
Examinations held under the Corporations Act are usually conducted by the liquidator or his representative. The ASIC may become involved in the process under section 597(5A), but will generally only do so when there is a large public interest factor in the matter, of where they suspect significant offenses have been committed.
CORPORATIONS ACT 2001 - SECT 597
Conduct of examination
(5A) Any of the following may take part in an examination:
(a) ASIC;
(b) any other eligible applicant in relation to the corporation;
and for that purpose may be represented by a lawyer or by an agent authorised in writing for the purpose.
The trustee or the Official receiver will generally conduct examinations, if for no other reason than very few creditors will apply for an examination. Generally the person that applied for the examination, of their representative, will conduct it. But the Bankruptcy Act allows any creditor or their representative to ask questions, regardless of whether they applied for the examination or not. Under the Bankruptcy Act, any creditor may attend the examination and put questions to any witness.
BANKRUPTCY ACT 1966 - SECT 81
Discovery of bankrupt's property etc.
(8) Where a person is summoned for examination under this section, a creditor, the trustee or the Official Receiver may take part in the examination and, for that purpose, may be represented by counsel or a solicitor or by an agent authorized in writing for the purpose.
In practical effect, a creditor can turn up at an examination that is being conducted by the trustee and be allowed to put questions to a witness. The court will try to ensure that the questions are not repeats of questions already asked, and that they are limited to the examinable affairs of the bankrupt, but the Act allows any creditor to participate in the examination and be represented.
The Results of the Examination
Transcripts
Apart from any records produced, the only tangible result of many examinations is the transcript of examination. It is (or should be) a complete recording of the questions and evidence given by the witnesses. Both Acts state that transcripts should be produced. Both Acts also allow for the court to have the persons examined sign the transcript as a true copy of the evidence given. This transcript proves the evidence given.
The Bankruptcy Act says:
BANKRUPTCY ACT 1966 - SECT 81
Discovery of bankrupt's property etc.
(15) The Court, the Registrar or the magistrate, as the case may be, may cause such notes of the examination of a person under this section to be taken down in writing as the Court, the Registrar or the magistrate, as the case may be, thinks proper, and the person examined shall sign the notes.
(17) Notes taken down and signed by a person in pursuance of subsection (15), and the transcript of the evidence given at the examination of a person under this section:
(a) may be used in evidence in any proceedings under this Act whether or not the person is a party to the proceeding; and
(b) shall be open to inspection by the person, the relevant person, the trustee or a person who states in writing that he or she is a creditor without fee and by any other person on payment of the fee prescribed by the regulations.
The Corporations Act says:
CORPORATIONS ACT 2001 - SECT 597
Conduct of examination
(13) The Court may order the questions put to a person and the answers given by him or her at an examination to be recorded in writing and may require him or her to sign that written record.
(14) Subject to subsection (12A), any written record of an examination so signed by a person, or any transcript of an examination of a person that is authenticated as provided by the rules, may be used in evidence in any legal proceedings against the person.
Both Acts also provide that the transcripts may be used in other proceedings, including against the person that gave the evidence. The only limitation to that right is the use of incriminating evidence given in examinations under the Corporations Act, where the witness claimed privileged against self-incrimination.
CORPORATIONS ACT 2001 - SECT 597
Conduct of examination
(12) A person is not excused from answering a question put to the person at an examination on the ground that the answer might tend to incriminate the person or make the person liable to a penalty.
(12A) Where:
(a) before answering a question put to a person (other than a body corporate) at an examination, the person claims that the answer might tend to incriminate the person or make the person liable to a penalty; and
(b) the answer might in fact tend to incriminate the person or make the person so liable;
the answer is not admissible in evidence against the person in:
(c) a criminal proceeding; or
(d) a proceeding for the imposition of a penalty;
other than a proceeding under this section, or any other proceeding in respect of the falsity of the answer.
Assets discovered during the examination
The Bankruptcy Act has two sub-sections that are not mirrored in the Corporations Act. They relate to the powers of the court to deal with assets that are discovered during the examination process.
The first section deals with money owed to the bankrupt. If the witness admits to owing money to the bankrupt, they can be ordered to pay that money, or part of that money, to the trustee at a specific point in time. This is an order of the court - and while we have seen no cases on the matter - we assume would hold the same standing as a Judgment, and could be used to issue a statutory demand (against a company) or Bankruptcy Notice (against a person) if the money is not paid as ordered.
BANKRUPTCY ACT 1966 - SECT 81
Discovery of bankrupt's property etc.
(12) Where a person admits on examination under this section that he or she is indebted to the relevant person, then, the Court, the Registrar or the magistrate, as the case may be, may, on the application of the trustee or a creditor, order the person to pay to the trustee, at or by such time and in such manner as the Court, the Registrar or the magistrate, as the case may be, thinks fit, the whole or a part of the amount in which the person admits he or she is indebted to the relevant person.
The second section deals with physical assets belonging to the bankrupt, but held by the witness. The Court has the right to order that the witness deliver the asset to the trustee within a specific period. The witness would be in contempt of court if they do not comply with the order.
(13) Where a person admits on examination under this section that there is in the possession of the person property of the relevant person that is divisible among creditors, the Court, the Registrar or the magistrate, as the case requires, may, on the application of the trustee or a creditor, order the first-mentioned person to deliver the property to the trustee within a specified period, in a specified manner and on specified terms.
Disclaimer
The enclosed information is of necessity a brief
overview and it is not intended that readers should rely
wholly on the information contained herein. No warranty
express or implied is given in respect of the information
provided and accordingly no responsibility is taken by
Worrells or any member of the firm for any loss resulting
from any error or omission contained within this
fact sheet.
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Last Updated: 1.6.2010