What is a public examination?
A public examination is a court ordered investigation into a bankrupt’s conduct and affairs which investigates all financial transactions and property dealings associated with the bankrupt. The relevant court is either the Federal Court or the Federal Circuit Court. At an examination a bankrupt is required to answer all (even self-incriminating) questions. Notes and transcripts of the examination may be used as evidence in any subsequent civil or criminal proceedings [Bankruptcy Act 1966 (Cth) s 81].
Who can be called to participate in a public examination?
The bankrupt themselves and anyone associated with them who has, or could be presumed to have, a knowledge of their financial affairs. This includes:
- the bankrupt’s spouse
- anyone known to owe, or suspected of owing, money or goods to the bankrupt
- persons known to have, or suspected of having, possession of the bankrupt’s property
- persons with knowledge of the bankrupt’s trade dealings, property or affairs
Who can apply for a public examination to occur?
A public examination may be instigated on the application of a creditor, the Official Receiver or the bankrupt’s trustee [s 81].
Under what circumstances is a public examination likely to be ordered?
In circumstances where there has been, or there is suspected to have been, some conduct on the part of the bankrupt designed to defeat the bankrupt’s creditors. For example, where a bankrupt, just prior to entering bankruptcy, lost a large sum of money, gave away assets to friends or lost money at the casino.
What happens as a consequence of a public examination?
The Registrar of the court may order the payment of any debts owing to the bankrupt or the handing over of property belonging to the bankrupt. Any person who has possession or control of books or records relating to the bankrupt’s financial situation can be ordered to produce these.
How common are public examinations?
Public examinations are more common for bankrupts with complex business and financial dealings. It is unusual for a ‘consumer’ debtor to have a public examination.
What alternatives are there to a public examination?
The Official Receiver also has the option to examine (under oath) a bankrupt or person who has knowledge of the bankrupt’s affairs. These examinations are not conducted in public and are an alternative way of obtaining information for a trustee to administer a bankruptcy [s 77C].
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