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BANKRUPTCY ACT 1966 - SECT 116

Property divisible among creditors

             (1)  Subject to this Act:

                     (a)  all property that belonged to, or was vested in, a bankrupt at the commencement of the bankruptcy, or has been acquired or is acquired by him or her, or has devolved or devolves on him or her, after the commencement of the bankruptcy and before his or her discharge; and

                     (b)  the capacity to exercise, and to take proceedings for exercising all such powers in, over or in respect of property as might have been exercised by the bankrupt for his or her own benefit at the commencement of the bankruptcy or at any time after the commencement of the bankruptcy and before his or her discharge; and

                     (c)  property that is vested in the trustee of the bankrupt's estate by or under an order under section 139D or 139DA; and

                     (d)  money that is paid to the trustee of the bankrupt's estate under an order under section 139E or 139EA; and

                     (e)  money that is paid to the trustee of the bankrupt's estate under an order under paragraph 128K(1)(b); and

                      (f)  money that is paid to the trustee of the bankrupt's estate under a section 139ZQ notice that relates to a transaction that is void against the trustee under section 128C; and

                     (g)  money that is paid to the trustee of the bankrupt's estate under an order under section 139ZU;

is property divisible amongst the creditors of the bankrupt.

             (2)  Subsection (1) does not extend to the following property:

                     (a)  property held by the bankrupt in trust for another person;

                     (b)  the bankrupt's household property that is:

                              (i)  of a kind prescribed by the regulations; or

                             (ii)  identified by a resolution passed by the creditors before the trustee realises the property;

                   (ba)  personal property of the bankrupt that:

                              (i)  has sentimental value for the bankrupt; and

                             (ii)  is of a kind prescribed by the regulations; and

                            (iii)  is identified by a special resolution passed by the creditors before the trustee realises the property;

                     (c)  the bankrupt's property that is for use by the bankrupt in earning income by personal exertion and:

                              (i)  does not have a total value greater than the limit prescribed by the regulations; or

                             (ii)  is identified by a resolution passed by the creditors; or

                            (iii)  is identified by an order made by the Court on an application by the bankrupt;

                    (ca)  property used by the bankrupt primarily as a means of transport, being property whose aggregate value does not exceed the amount prescribed by the regulations or, if before the trustee realises the last-mentioned property the creditors determine by resolution a greater amount in relation to that property, that greater amount;

                     (d)  subject to sections 128B, 128C and 139ZU:

                              (i)  policies of life assurance or endowment assurance in respect of the life of the bankrupt or the spouse or de facto partner of the bankrupt;

                             (ii)  the proceeds of such policies received on or after the date of the bankruptcy;

                            (iii)  the interest of the bankrupt in:

                                        (A)  a regulated superannuation fund (within the meaning of the Superannuation Industry (Supervision) Act 1993 ); or

                                        (B)  an approved deposit fund (within the meaning of that Act); or

                                        (C)  an exempt public sector superannuation scheme (within the meaning of that Act);

                            (iv)  a payment to the bankrupt from such a fund received on or after the date of the bankruptcy, if the payment is not a pension within the meaning of the Superannuation Industry (Supervision) Act 1993 ;

                          (iva)  a payment to the bankrupt under a payment split under Part VIIIB of the Family Law Act 1975 where:

                                        (A)  the eligible superannuation plan involved is a fund or scheme covered by subparagraph (iii); and

                                        (B)  the splittable payment involved is not a pension within the meaning of the Superannuation Industry (Supervision) Act 1993 ;

                             (v)  the amount of money a bankrupt holds in an RSA;

                            (vi)  a payment to a bankrupt from an RSA received on or after the date of the bankruptcy, if the payment is not a pension or annuity within the meaning of the Retirement Savings Accounts Act 1997 ;

                           (vii)  a payment to the bankrupt under a payment split under Part VIIIB of the Family Law Act 1975 where:

                                        (A)  the eligible superannuation plan involved is an RSA; and

                                        (B)  the splittable payment involved is not a pension or annuity within the meaning of the Retirement Savings Accounts Act 1997 ;

                     (g)  any right of the bankrupt to recover damages or compensation:

                              (i)  for personal injury or wrong done to the bankrupt, the spouse or de facto partner of the bankrupt or a member of the family of the bankrupt; or

                             (ii)  in respect of the death of the spouse or de facto partner of the bankrupt or a member of the family of the bankrupt;

                            and any damages or compensation recovered by the bankrupt (whether before or after he or she became a bankrupt) in respect of such an injury or wrong or the death of such a person;

Note:       See also subsection 5(6).

                     (k)  amounts paid to the bankrupt under a rural support scheme prescribed for the purposes of this paragraph;

                      (l)  amounts paid to the bankrupt under a rural support scheme prescribed for the purposes of this paragraph, where the amounts are paid in circumstances prescribed for the purposes of this paragraph;

                    (m)  prescribed amounts paid to the bankrupt under a rural support scheme prescribed for the purposes of this paragraph;

                  (ma)  prescribed amounts paid to the bankrupt under a rural support scheme prescribed for the purposes of this paragraph, where the amounts are paid in circumstances prescribed for the purposes of this paragraph;

                  (mb)  amounts paid to the bankrupt by the Commonwealth as compensation in relation to the loss of:

                              (i)  an amount covered by paragraph (k), (l), (m) or (ma); or

                             (ii)  property purchased or acquired wholly or partly with such an amount;

                     (n)  property to which, by virtue of subsection (3), this paragraph applies;

                     (p)  amounts paid to the bankrupt under subsection (2C) or (4);

                     (q)  any property that, under an order under Part VIII of the Family Law Act 1975 , the trustee is required to transfer to the spouse, or a former spouse, of the bankrupt;

                      (r)  any property that, under an order under Part VIIIAB of the Family Law Act 1975 , the trustee is required to transfer to a former de facto partner of the bankrupt;

                      (s)  the bankrupt's property that is:

                              (i)  a support for the bankrupt that was funded under the National Disability Insurance Scheme (as defined in the National Disability Insurance Scheme Act 2013 ); or

                             (ii)  an NDIS amount (as defined in that Act).

          (2B)  Where, because of a resolution passed by the creditors, or an order made by the Court, under paragraph (2)(b), (c) or (ca), property that is vested in the trustee ceases at a particular time to be property divisible among the creditors, then, immediately after that time:

                     (a)  the property revests in the bankrupt;

                     (b)  the trustee is discharged from the trustee's liabilities in respect of the property; and

                     (c)  the bankrupt becomes subject to those liabilities.

          (2C)  Where:

                     (a)  property used by the bankrupt primarily as a means of transport is vested in the trustee; and

                     (b)  as at the time when the trustee realises that property:

                              (i)  no other property has remained vested in the bankrupt by virtue of paragraph (2)(ca); and

                             (ii)  no other property has, because of a determination by the creditors under paragraph (2)(ca), revested in the bankrupt by virtue of subsection (2B);

the trustee shall pay to the bankrupt so much of the proceeds of realising that property as, when added to the aggregate of the amounts (if any) that the trustee has previously paid to the bankrupt under this subsection, does not exceed the prescribed amount within the meaning of paragraph (2)(ca).

          (2D)  In subsections (3) and (4):

"exempt loan money " , in relation to a particular time, means so much of the principal sum of a loan to the bankrupt, or to the bankrupt and another person or other persons, as was repaid, before that time, out of exempt money.

"exempt money " means money of any of the following kinds:

                     (a)  an amount to which subsection (1) does not extend because of subparagraph (2)(d)(ii) or (iv);

                     (b)  damages or compensation of a kind referred to in paragraph (2)(g);

                     (c)  amounts covered by paragraph (2)(k), (l), (m), (ma) or (mb).

"outlay " , in relation to property, in relation to a particular time, means all of the following:

                     (a)  the money paid for the purchase, or used in the acquisition, of the property;

                     (b)  the money paid before that time in respect of the extensions, alterations and improvements, if any, of the property constructed or made since that purchase or acquisition.

"protected money " , in relation to a particular time, means:

                     (a)  exempt money; or

                     (b)  exempt loan money in relation to that time.

          (2E)  Nothing in this Act or the Legislation Act 2003 prevents regulations made for the purposes of paragraph (2)(k), (l), (m) or (ma) from applying to amounts paid before the regulations commence.

           (2F)  Regulations made for the purposes of paragraph (2)(k), (l), (m) or (ma) may make provision in relation to a matter by applying, adopting or incorporating any matter contained in an instrument or other writing as in force or existing from time to time.

             (3)  Where, at any time, the whole, or substantially the whole, of the money paid for the purchase, or used in the acquisition, of particular property is protected money, paragraph (2)(n) applies to the property.

             (4)  Where, as at the time when the trustee realises particular property to which paragraph (2)(n) does not apply, the outlay in relation to the property is in part protected money and in part other money, the trustee shall pay to the bankrupt so much of the proceeds of realising the property as can fairly be attributed to that protected money.



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