The Bankruptcy Act 1966 (Cth) creates criminal offences that are capable of arising both before and during bankruptcy.
Prosecutions may result in prison sentences or hefty fines. The range of offences capable of arising under the Bankruptcy Act 1966 (Cth) generally result from acts of fraud or recklessness committed in the lead up to bankruptcy or during the bankruptcy. Generally, the number of bankrupts that are prosecuted is small.
Offences that are capable of arising include:
- Obtaining, after bankruptcy, credit of or above the indexedamount or more without disclosure of the bankruptcy (Sections 269(1)(a); 304A(1)(j), Bankruptcy Act 1966 (Cth));
- Materially contributing to, or increasing the extent of, insolvency by gambling or hazardous speculation (s271, Bankruptcy Act1966 (Cth));
- Obtaining credit or property by fraud after bankruptcy;
- Leaving Australia with intent to defeat creditors, or without obtaining a court order where required;
- Incurring, within two years before the date of bankruptcy, a debt without any reasonable expectation of repayment (sections 265(8); 304A(3) & (5), Bankruptcy Act1966 (Cth); and
- Concealing property with intent to defraud creditors.
Whether a bankrupt is prosecuted for an offence will in large part depend on a range of factors including the seriousness of the offence and the extent of the bankrupt’s indebtedness. The government approved changes to the Bankruptcy Act, in 2010, which came into effect on 1 October 2010. These changes included:
- Increasing the penalties for some bankruptcy offences to bring them into line with other penalties in the Act, and with penalties for similar offences contained in state and territory crimes legislation;
- Introducing an infringement notice regime for the majority of strict liability offences contained in the Act, as well as introducing limited new offences of strict liability;
- Technical amendments designed to harmonise the offences in the Act with the general principles of criminal responsibility set out in Chapter 2of the Criminal Code Act 1995 (Cth).
Offences to which penalties apply include:
- You sign a declaration which is false/ misleading, or you provide your Trustee with false/misleading information regarding your examinable affairs;
- You fail to immediately notify your Trustee in writing of any change of name, residential address or contact details;
- You are in business and trade under a business name different to your own name, and you fail to tell everyone you deal with that you are bankrupt.
Other penalties include if you, either alone or with another person:
- Apply for credit or a loan above a set limitand you fail to tell the credit or loan provider that you are bankrupt;
- Buy something by cheque, enter into a hire purchase, lease or hire agreement that is worth more than a set limit*, and you fail to tell the seller or lease provider that you are bankrupt;
- Obtain goods or services over the set limit*, and you fail to tell the provider that you are bankrupt
- You obtain an amount or amounts over the set limit by promising to supply goods or services, and you fail to notify the payee that you are bankrupt;
- Travel overseas without the written permission of your Trustee. If you attempt to travel overseas without your Trustee’s permission you may be arrested. You must also surrender your passport to your Trustee if requested to do so;
- Conceal, remove or dispose of any property – either prior to becoming bankrupt or after you have become bankrupt (whether in or outside of Australia) that could be used to pay your creditors; or
- Refuse or fail to comply with a direction from your Trustee to deliver to the Trustee property in your possession that is all or part of your property.
If you have been charged with one of the offences above you should seek legal advice.