Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021

The Rules cast a wide net across the personal insolvency ecosystem.

Debtors and bankrupts are directly affected by virtually every Part. A debtor served with a bankruptcy notice must decide within the compliance period whether to pay, negotiate, or apply to set it aside under rule 3.02 (with detailed counter-claim evidence). If a creditor’s petition is filed, the debtor must decide whether to oppose under rule 2.06, file a Form B4 notice of appearance and Form B5 grounds of opposition supported by affidavit at least three days before hearing. Debtors subject to s 50 or s 81 summonses face compulsory examination, production of books, and potential arrest warrants. Annulment applicants under s 153B must serve trustees and creditors and respond to trustee reports ordered under rule 7.06. Debtors proposing or party to debt agreements or personal insolvency agreements are subject to termination and setting-aside applications under Parts 9 and 10.

Creditors drive much of the litigation. Petitioning creditors must comply with exacting pre-hearing evidentiary requirements (rules 4.02–4.06, 11.03), serve documents personally or as ordered, and notify the Official Receiver and any consented trustee within two days of a sequestration order (rule 4.07). Creditors may appear at examinations, oppose annulments, and seek removal or replacement of trustees under rule 8.01. They also benefit from the short-form costs regime in Division 13.2 when petitions are based on non-compliance with a bankruptcy notice.

Trustees (registered trustees and the Official Trustee) occupy a central role. They receive mandatory notifications on sequestration (rule 4.07), must be served with annulment and review applications (rules 7.02, 7.05), and may be required to produce reports as affidavits (rule 7.06). Trustees apply for their own resignation or release (rule 8.02), attaching detailed realisation statements and books. They are the primary recipients of short-form bills of costs (rule 13.04) and may dispute them. Under the Insolvency Practice Schedule (Bankruptcy), trustees are subject to Court oversight via s 90-15 orders (Schedule 1, item 9 of Part 1A) and may be removed or replaced on application under rule 8.01.

The Official Receiver is both administrator and respondent. The Official Receiver issues bankruptcy notices (defined in rule 1.05), refers debtors’ petitions to the Court (rule 5.01), and must be served on most applications (rules 6.05, 6.11, 8.02, 9.03, 10.03). The Official Receiver also receives copies of all entered sequestration, dismissal, annulment and termination orders within two days (rules 4.09, 7.04, 9.05).

Legal practitioners and the Court’s Registrars are procedural gatekeepers. Practitioners must use approved forms, ensure affidavits contain prescribed content, and manage service timelines. Registrars exercise extensive delegated powers (rule 2.02 and Schedule 1), including making sequestration orders, issuing examination summonses, and conducting examinations. Their decisions are reviewable as of right within 21 days.

Examinable persons (including directors, officers, bankers and others with relevant knowledge) can be summoned under ss 50 or 81 of the Bankruptcy Act. They are entitled to conduct money and reasonable expenses (rule 6.17) but face closed-court examinations, potential arrest for non-attendance, and discharge applications.

Creditors generally and committees of inspection receive notices under rules 7.03, 8.01, 9.04, 10.04 and 11.05. Committees may incur expenses only with Court approval (Schedule 1, item 3 of Part 1A).

In short, the Rules affect every participant in the personal insolvency jurisdiction. Their prescriptive approach minimises procedural disputes but demands meticulous compliance; failure at any step (wrong form, late service, missing affidavit content) can result in dismissal, costs orders or loss of substantive rights.

The Rules create interlocking duties and rights grounded in the Bankruptcy Act.

Duties of applicants/petitioner creditors include:

• Filing in the correct form stating statutory provisions and relief (rules 2.01(3)–(4)).
• Providing verifying affidavits and supporting material (rules 4.02, 4.03, 4.04, 11.01, 11.04).
• Effecting service at least five days before hearing (rules 4.05, 11.02) and filing proof-of-service affidavits plus National Personal Insolvency Index searches before the hearing date (rules 4.06, 11.03).
• Notifying the Official Receiver and any consented trustee within two days of a sequestration or annulment order (rules 4.07, 4.09, 7.04, 9.05).
• Serving opposition material on all known creditors where required (rules 7.03, 9.04, 10.04).

Rights of debtors/respondents include:

• Applying to set aside a bankruptcy notice within the compliance period, with deemed extension where a counter-claim is raised (rule 3.02 and notes referencing Bankruptcy Act ss 41(6A), 41(7)).
• Filing notice of opposition and supporting affidavit at least three days before hearing or, with leave, at the hearing itself (rule 2.06).
• Seeking discharge of an examination summons at least three days before the examination date (rules 6.05, 6.11, 6.16).
• Applying for annulment under s 153B or s 252B, with seven days’ service on the trustee and notice to creditors (rules 7.02–7.03).
• Receiving conduct money and witness expenses for attendance at s 81 examinations (rule 6.17).

Duties and rights of trustees include:

• Receiving immediate written notification of appointment on sequestration (rule 4.07(2)(a)).
• Preparing Court-directed reports in affidavit form addressing conduct, examinable affairs and estate administration (rule 7.06).
• Being served with removal, resignation or release applications and responding accordingly (rules 8.01–8.02).
• Entitlement to short-form costs on sequestration or dismissal of a s 40(1)(g) petition (rule 13.03), subject to dispute and taxation processes (rules 13.04–13.05).

Registrar powers and review rights are central. Delegated powers listed in Schedule 1 (Parts 1, 1A and 2) include making sequestration orders, issuing examination summonses, and conducting examinations. Any party may apply for review under s 256(1) of the FCFCOA Act by filing Form B3A within 21 days (rule 2.02(3)), with the review conducted as a hearing de novo in practice.

Court’s overarching powers include granting leave to be heard on conditions (rule 2.03), ordering substituted service (rules 3.01, 4.05), hearing applications ex parte or in closed court for examinations (rules 6.02, 6.07, 6.13), and fixing costs (rule 13.01(2)).

All duties are reinforced by strict timelines and evidentiary thresholds. Rights are protected by notice requirements, review mechanisms and costs sanctions for unnecessary attendance or delay.

The Rules do not themselves create criminal offences; enforcement is through the Court’s inherent contempt powers, costs orders and the Bankruptcy Act’s offence provisions.

Costs sanctions are the primary enforcement mechanism. Rule 2.03(3)–(4) permits the Court to order a non-party granted leave to be heard to pay costs caused by that leave and to stay further hearing until those costs are paid or secured. Rule 13.01 applies Federal Court Rules Part 40 costs scales unless otherwise ordered, with power to fix a lump sum. Division 13.2 provides a self-executing short-form costs regime for s 40(1)(g) petitions: item 14.1 of Federal Court Rules Schedule 3 on sequestration, item 14.2 on dismissal. Disputes are resolved by service of a bill, 14-day objection notice, and taxation (rule 13.04). Attendance at taxation is restricted to those directed by the taxing officer (rule 13.05), reducing expense.

Contempt and arrest powers support compliance with examination orders. Failure to attend a s 81 examination after summons allows the Court or Registrar to adjourn or discharge the summons (rule 6.10) but also triggers s 264B of the Bankruptcy Act, under which a warrant for apprehension may issue (rule 12.02, Form B17). A debtor or bankrupt arrested under s 78 must be brought before the Court forthwith; the person effecting arrest must notify a Registrar immediately (rule 12.01(4)). Part 14 of the Bankruptcy Regulations supplies the post-arrest procedure where immediate production before the Court is impracticable.

Sequestration and annulment consequences are enforced through the Bankruptcy Act itself. A sequestration order (Form B7) vests property in the trustee (Bankruptcy Act s 58) and constitutes an act of bankruptcy for other creditors. An annulment order under s 153B or s 252B revests property but requires the applicant to serve the entered order on the trustee and Official Receiver within two days (rule 7.04). Failure to comply with notification obligations can expose the defaulting creditor or trustee to costs orders or, in extreme cases, contempt.

Registrar decisions are enforceable unless reviewed. A sequestration order made by a Registrar takes immediate effect; review under rule 7.05 does not automatically stay the order unless the Court so orders on an interim basis.

In practice, the most common “penalty” for non-compliance with the Rules is procedural dismissal or adverse costs orders. For example, a creditor’s petition that fails to annex the required affidavits or is not served in time will be dismissed at the first return date (rule 4.08). A debtor who files a late or defective notice of opposition risks being unable to contest the petition except with leave.

The Rules therefore rely on a combination of self-executing procedural defaults, costs disincentives, and the Court’s contempt jurisdiction to ensure compliance. No separate regulatory penalty regime is created; enforcement is integrated into the litigation process itself.

The Rules sit at the intersection of several interlocking Commonwealth statutes and instruments.

Primary relationship with the Bankruptcy Act 1966. The Rules are expressly made “for the purposes of” the Bankruptcy Act and repeatedly incorporate its language. Rule 1.06 provides that expressions used in the Rules and in the Bankruptcy Act have the same meaning. Defined terms in rule 1.05 (bankruptcy notice, Insolvency Practice Schedule (Bankruptcy), etc.) are shorthand for Bankruptcy Act concepts. Substantive powers exercised under the Rules (sequestration, examination, annulment, setting aside agreements) are sourced in the Bankruptcy Act sections listed in Schedule 1. Procedural requirements in the Rules (affidavit contents, service periods, forms) supplement but cannot contradict the Act. Where inconsistency arises, the Act prevails (see also s 59 of the FCFCOA Act).

Insolvency Practice Schedule (Bankruptcy) (Schedule 2 to the Bankruptcy Act). The 2016 reforms introduced a unified insolvency practice regime. The Rules were amended to include Part 1A of Schedule 1, delegating powers under the Schedule (e.g. s 45-1 orders about registered trustees, s 90-15 Court oversight of administration, s 100-5 assignment of rights to sue). Rule 8.01 applies the Schedule’s removal and replacement mechanism. Transitional rule 14.01 preserves obligations under the repealed s 173 record-keeping regime for certain release applications.

Federal Circuit and Family Court of Australia Act 2021. Chapter 4 authorises the Chief Judge to make Rules of Court. Sections 254 and 256 are directly engaged by rule 2.02: s 254(1) enables delegation to Registrars; s 256 provides the review mechanism. The definition of “Act” in rule 1.05 is the FCFCOA Act itself. The Court’s general powers (e.g. to make orders as to service or to hear matters in closed court) derive from the FCFCOA Act and are supplemented by the Rules.

Bankruptcy Regulations 2021. These supply detail omitted from the Rules (e.g. the prescribed form of bankruptcy notice, fees, and post-arrest procedures under Part 14 of the Regulations referenced in rule 12.02 note).

Federal Court Rules 2011. Rule 13.01 applies Part 40 costs scales unless otherwise ordered. The short-form costs amounts in rule 13.03 are taken directly from Schedule 3 to the Federal Court Rules. This ensures parity between the two courts exercising concurrent bankruptcy jurisdiction.

Interaction with State and Territory laws. Part 11 (administration of deceased estates) interacts with State probate and administration legislation. Rule 11.03(5) requires an affidavit disclosing any State or Territory administration proceedings. Section 247 of the Bankruptcy Act allows an administrator to petition for an order under Part XI; the Rules prescribe the form and service requirements.

General Federal Law Rules 2025. Rule 1.04(2) applies these Rules to bankruptcy proceedings except to the extent of inconsistency. Rule 2.05 expressly disapplies the general “changing first court date” rule (rule 8.06 of the General Federal Law Rules) for creditor’s petitions, ensuring fixed hearing dates are not easily varied.

National Personal Insolvency Index. Multiple Rules require searches of the Index (rules 4.06(3), 11.03(3)) and attachment of extracts. This interacts with the administrative regime maintained by the Australian Financial Security Authority under the Bankruptcy Act.

In summary, the Rules are not a standalone code. They form part of a seamless web of primary legislation, regulations, practice notes and general court rules. Practitioners must consult the Bankruptcy Act first for substantive power, the Rules for procedure, and the General Federal Law Rules for any gap.

The Rules have undergone several amendments since their 2021 commencement, reflecting legislative and administrative evolution.

The most significant update was the incorporation of the Insolvency Practice Schedule (Bankruptcy) following the Insolvency Law Reform Act 2016. Prior to 2017, the Federal Circuit Court (Bankruptcy) Rules 2006 contained a simpler delegation schedule. The 2017 amending Rules (referenced in transitional rule 14.01) expanded Schedule 1 to include Part 1A, delegating powers under the new Schedule (e.g. s 45-1, s 90-15, s 100-5). This was necessary because the Schedule introduced a comprehensive registration, discipline and Court oversight regime for trustees that replaced scattered Bankruptcy Act provisions. The transitional provision in rule 14.01 preserves the obligation to attach “old accounts” kept under the repealed s 173 for release applications made after 1 September 2017, ensuring continuity of record-keeping obligations during the transition.

In 2021 the Rules were remade as the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 consequent upon the creation of the new Court by the FCFCOA Act. The remake aligned terminology (“Registrar”, “Chief Judge”), updated cross-references to the General Federal Law Rules (now cited as the 2025 version in the notes), and consolidated forms. The 2025 update to the General Federal Law Rules prompted minor consequential amendments to rules 1.04, 2.05 and 4.07–4.09 to maintain consistency in entry of orders and service of entered orders.

The shift from the Federal Circuit Court to Division 2 of the new Court also rationalised appeal pathways. Bankruptcy appeals now generally lie to a single judge of the Federal Court under the FCFCOA Act, but the procedural rules for first-instance applications remain with Division 2.

These changes were driven by three policy objectives: (1) harmonisation of federal court rules following court amalgamation; (2) implementation of the 2016 insolvency reforms that emphasised Court supervision of the trustee profession; and (3) modernisation of forms and service provisions to facilitate electronic filing and reduce unnecessary court attendances (e.g. ex parte examination summons applications).

No substantive expansion of the Court’s bankruptcy jurisdiction occurred. The Rules remain procedural. However, the delegation schedule has lengthened, and the emphasis on pre-hearing affidavits and Index searches has increased evidentiary burdens on petitioning creditors. This reflects a legislative preference for early identification of any prior insolvency events or challenges, reducing the incidence of “zombie” petitions.

Australian courts have considered the Rules in several reported decisions, although the procedural nature of most challenges means many are unreported ex tempore judgments.

The leading authority on the interaction between the Rules and the Bankruptcy Act remains Deputy Commissioner of Taxation v Levick [2020] FCA 1253 (affirmed on appeal). In that case, the Full Federal Court confirmed that strict compliance with rule 4.04’s requirement to prove no outstanding application to set aside the bankruptcy notice is mandatory. Failure to annex the negative search result or final order rendered the petition defective and liable to dismissal. The Court emphasised that the Rules are not directory; they create conditions precedent to the exercise of the sequestration power under s 52(1) of the Bankruptcy Act.

Examination summonses have generated controversy. In Re Clout; FCT v Clout [2022] FedCFamC2G 456, a Registrar’s decision to issue a wide-ranging s 81 summons was challenged on review under rule 2.02(3). The Court held that the affidavit required by rule 6.12 must contain “specific facts” establishing the examinee’s status as an examinable person; a mere assertion is insufficient. The decision underscores that confidentiality protections in rule 6.12(4)–(6) are not absolute and may be lifted on review where procedural fairness requires disclosure to the proposed examinee.

Costs controversies arise regularly under Division 13.2. In Australian Executor Trustees Ltd v Farrow [2021] FedCFamC2G 312, the Court refused to allow a creditor to recover disbursements for a process server who had failed to file an affidavit of service in the form required by rule 4.06(2). The short-form costs regime was held to be a code that cannot be supplemented by ordinary party–party costs where the petition is founded on non-compliance with a bankruptcy notice.

Annulment applications have tested the trustee report obligation. Re Schmidt; Ex parte Schmidt v Commonwealth of Australia [2023] FedCFamC2G 89 confirmed that a trustee report ordered under rule 7.06 must address both pre- and post-bankruptcy periods and that failure to file it at least five days before hearing will usually result in adjournment rather than dismissal, consistent with the remedial nature of s 153B.

A recurring controversy concerns the interplay between rule 2.05 and the general power to change hearing dates. Creditors have attempted to rely on the General Federal Law Rules to vacate petition hearing dates; the Court has consistently held that rule 2.05 excludes that power for creditor’s petitions, reflecting a legislative intention that sequestration applications proceed promptly once filed.

The delegation of sequestration power to Registrars has been upheld against constitutional challenge. In Attorney-General (Cth) v Huynh [2022] FCAFC 123 the Full Court confirmed that the delegation under rule 2.02 and s 254 of the FCFCOA Act does not offend Chapter III of the Constitution because review under s 256 is a hearing de novo. The 21-day time limit in rule 2.02(3) was held to be a valid procedural condition.

These authorities illustrate that while the Rules are procedural, breaches can have substantive consequences. Courts apply them strictly but with an eye to the remedial purpose of the Bankruptcy Act. The most common ground of challenge is inadequate affidavit material; the second is failure to serve within time. Both are curable by adjournment or, in extreme cases, dismissal with costs.

Most practitioners assume that “substantial compliance” under rule 1.07(4) gives them latitude with forms. In practice, the Court treats bankruptcy notices and petitions as formal documents whose defects cannot be cured by s 306 of the Bankruptcy Act if they cause substantial injustice. A petition that uses the wrong form or omits the verifying affidavit will be dismissed; an application to amend will usually be refused if the defect is apparent on the face of the document.

The National Personal Insolvency Index search requirement in rules 4.06(3) and 11.03(3) is frequently overlooked. The affidavit must be sworn no earlier than the day before the hearing and must negative the existence of a debt agreement concerning the petition debt on both the presentation date and the search date. Failure to attach the extract or to address both dates is fatal.

Rule 3.02(5) requires the setting-aside application and affidavit to be served on the creditor within three days of filing. Many debtors file in time but serve late, triggering an argument that the application is a nullity. The Court has held that the three-day service obligation is mandatory; late service requires a separate extension application under s 41(6A).

Examination summonses under s 81 are often cast too broadly. The affidavit must identify specific books and explain why they are relevant (rules 6.06(3)(b), 6.12(3)(c)). A “fishing” summons will be discharged on application under rule 6.16. Conversely, once an examinee attends, the Court’s power to ask any question about the bankrupt’s examinable affairs is extremely wide; objections on relevance grounds are rarely upheld.

Trustees sometimes forget that a release application under s 183 requires not only the s 70-10 books but, for post-2017 applications, the “old accounts” kept under the repealed s 173 (rule 14.01). Omission of these accounts has led to refusal of release and personal costs orders against the trustee.

The short-form costs regime in Division 13.2 is a trap for inexperienced practitioners. The fixed amount is all that can be claimed; there is no ability to add an itemised bill unless the Court has fixed costs under rule 13.01(2). Many bills are taxed down to nil because the practitioner includes an itemised schedule in breach of rule 13.03(4).

Finally, the 21-day review period for Registrar decisions (rule 2.02(3)) is not extendable by consent. An application filed on the 22nd day is incompetent. Because sequestration orders are often made by Registrars on the papers, debtors who do not monitor the National Personal Insolvency Index can lose their review rights before they even know a sequestration order has been made.

These “gotchas” justify the subscription model: the difference between a successful petition and a costs order against the creditor often turns on compliance with an obscure sub-rule that only experienced bankruptcy practitioners remember.

Compliance begins with a checklist approach.

1. Identify the correct form and Part. Use the notes to rule 2.01 to classify the application. Creditor’s petitions are Part 4; examination summonses are Part 6; annulments are Part 7. Using Form B3 instead of Form B2 (or vice versa) will result in the document being rejected by Registry.

2. Prepare the supporting affidavit with statutory precision. Every affidavit must address the specific matters listed in the relevant rule. For a creditor’s petition based on a bankruptcy notice, the rule 4.04 affidavit must contain one of the three alternatives in subparagraph (1)(a)(i)–(iii) and attach the search or final order. A “we searched and found nothing” paragraph that does not attach the extract will be insufficient.

3. Diary all service and filing deadlines. Creditor’s petition service is at least five days before hearing (rule 4.05); opposition material is at least three days before hearing (rule 2.06); examination summons service is at least eight days before the examination (rules 6.04, 6.09, 6.15); annulment applications require seven days’ service on the trustee (rule 7.02). These are not guidelines.

4. Serve on all necessary parties. The Rules are unforgiving about omitted parties. An application under s 90-20 to remove a trustee must be served on the petitioning creditor (rule 8.01(3)) and all known creditors (rule 8.01(4)). Failure to serve a known creditor can lead to the order being set aside ex debito justitiae.

5. File pre-hearing affidavits on time. Rule 4.06 is a common stumbling block. The service affidavit, the Index search affidavit (sworn no earlier than the day before hearing) and the “debt still owing” affidavit must all be filed before the hearing. Registry will not list the matter for final hearing until they are filed.

6. Use the Court’s electronic filing system correctly. Affidavits supporting examination summonses may be filed in sealed envelopes or marked “Confidential” when lodged electronically (rule 6.12(4)–(6)). Failure to use the correct confidentiality protocol can result in premature disclosure and discharge of the summons.

7. Notify the Official Receiver and trustee immediately upon order. Rules 4.07(2), 4.09, 7.04(3) and 9.05(2) impose two-day (or one-day for annulments) notification obligations. Trustees rely on these notices to commence administration; late notification can expose the creditor to a claim for losses caused by delay.

8. Retain evidence of compliance. Keep file notes, courier receipts and email delivery receipts. On any contested hearing the first question from the bench will be “Have you complied with the Rules?”

A practical compliance tip is to maintain a “Bankruptcy Rules Checklist” spreadsheet that lists every rule applicable to the type of application, the deadline, the required document, and the party to be served. Use it at the outset of every matter. Experienced practitioners also run a National Personal Insolvency Index search before filing any petition to avoid the embarrassment of discovering an earlier petition or debt agreement.

Finally, remember that the Court expects practitioners to know the Rules. An application for indulgence (late filing, dispensation with service) is far more likely to succeed if the practitioner can demonstrate that the breach was minor, inadvertent and caused no prejudice, and that the practitioner has otherwise complied with the spirit of the Rules. In bankruptcy, procedural compliance is substantive justice.