Never ignore an Administrative Notice from a Trustee28-May-2017 Commercial Disputes Fraud and Insolvency By Mark Streeter
Business owners who have been involved in transactions, commercial deals or transfers with a person who may have recently become bankrupt need to know where they stand and how to respond to an Administrative Notice.
What is the importance of an Administrative Notice?
A Section 139ZQ Administrative Notice is a demand by the official receiver (Trustee) in relation to a money or property transaction which is void. The Administrative Notice sets out the facts and circumstances of the transaction and provides an amount of time for that to be paid. If it is not paid, and the recipient of the notice does not apply to the Court to have the notice set aside in time, criminal sanctions can be sought by the receiver, as it is a criminal offence to fail to respond to an Administrative Notice.
The Trustee’s powers of investigation
A Trustee is appointed to administer the estate of a bankrupt debtor and has an important investigative role, which involves examining the bankruptcy books, records, cash receipts, transfer of assets, bank accounts, disposal of assets, dealings with others and may also interview the bankrupt. This can extend to verbal requests, search warrants or the power of examination using Court processes.
One cost effective mechanism often used by Trustees (the official receiver) is the use of administrative processes.
Generally speaking, a Trustee, may “claw-back” transactions prior to the Sequestration (bankruptcy) Order for certain periods of time. For example, a person who finds out that they are about to be made bankrupt may dispose of their assets just before the bankruptcy occurs and the Trustee is permitted to recover those pre-bankruptcy assets.
The claw-back provision prevents those who are aware of bankruptcy proceedings from defrauding creditors and from creditors being paid more than their entitlement as an “unfair preference”.
Lessons for business owners:
- If you receive a notice, respond quickly, provide your solicitor with detailed instructions regarding the nature of the transaction, facts and circumstances in the notice (particularly those you dispute);
- If you receive a Statement of Claim or Originating Process relying upon the default of an Administrative Notice, please contact our office urgently.
- If the time period in which to set aside the notice has elapsed, but you have compelling reasons for not submitting an application on time, please contact our office as there may be an opportunity to obtain relief or at least to have your application heard.
- The above, if you have not been provided notice, will occur at the point Sequestration Orders are made and a Trustee is appointed over the estate in the event that the default has resulted in the issuing of a Bankruptcy Notice, Creditor’s Petition or the making of Sequestration Orders.
- If Sequestration Orders have been made, you have only 21 days to file an application for review. Your failure to act quickly may limit your ability to recover your money.
Please contact Streeterlaw on 8197 0105 or firstname.lastname@example.org to receive confidential advice.
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