Bankruptcy

Bankruptcy is a formal process available to individuals who are unable to pay their debts. It provides a reset—drawing a line in the sand—where debts incurred prior to the bankruptcy become creditors of the estate, giving the individual relief from creditor pressure and space to begin rebuilding financially.

Once declared bankrupt (voluntarily or via a creditor’s petition), a registered trustee is appointed to take control of the bankrupt’s estate. Their role includes:

• Identifying and realising divisible assets (subject to exemptions),

• Investigating the financial conduct of the bankrupt prior to bankruptcy,

• Pursuing voidable transactions such as preferences or transfers of assets for less than market value,

• Determining and collecting any income contributions (if required),

• Ensuring full compliance with all reporting obligations.

Bankruptcy generally lasts for three years from the date the bankrupt files their statement of affairs. However, this period can be extended if the bankrupt fails to comply with their obligations.

During bankruptcy, a debtor or creditor may also propose an annulment of the bankruptcy under section 73 of the Bankruptcy Act. A section 73 proposal is a formal agreement, similar to a PIA, where creditors are offered a better return than would be achieved through the continued bankruptcy. If approved by a special resolution of creditors (a majority in number and at least 75% in value of voting creditors), the bankruptcy is annulled, the trustee is released, and the debtor is no longer considered bankrupt. However, the annulment does not reinstate rights lost during bankruptcy, such as ownership of already sold assets.

Helios Advisory provides practical, non-judgmental support throughout the bankruptcy process—whether acting as trustee from the outset or being appointed part way through to ensure compliance, asset recovery, and creditor engagement are managed with integrity and diligence.