Div 65Funds handling

Division 65—Funds handling 65‑1  Simplified outline of this Division The trustee of a regulated debtor’s estate has duties to:  (a) promptly pay all money of the estate into an account (called an administration account); and  (b) promptly deposit instruments such as securities with a bank; and  (c) not pay any money into the account unless it is money of a regulated debtor’s estate for which the account is held; and  (d) only pay money out of the account if it is for a legitimate purpose. The trustee may keep a single account for more than one estate. People with a financial interest in the administration of a regulated debtor’s estate (such as creditors) may ask the Court to give directions to the trustee about the way money and other property of the estate is to be handled. If the trustee of a regulated debtor’s estate does not comply with this Division, the trustee may have to pay penalties, be paid less remuneration or be removed as trustee. 65‑5  Trustee must pay all money into the administration account Trustee must pay money into the administration account  (1) The trustee of a regulated debtor’s estate must pay all money received by the trustee on behalf of, or in relation to, the estate into an administration account for the estate within 5 business days after receipt.  (2) If the Court gives a direction that is inconsistent with subsection (1), that subsection does not apply to the extent of the inconsistency. Note: A defendant bears an evidential burden in relation to the matter in subsection (2) (see subsection 13.3(3) of the Criminal Code). 65‑10  Administration accounts   A bank account is an administration account in relation to a regulated debtor’s estate if:  (a) the account is maintained in relation to the regulated debtor’s estate; and  (b) if any requirements are prescribed in relation to administration accounts of regulated debtors’ estates, it complies with those requirements. 65‑15  Trustee must not pay other money into the administration account Trustee must not pay other money into the administration account  (1) The trustee of a regulated debtor’s estate must not pay any money into the administration account for the estate if it is not received by the trustee on behalf of, or in relation to:  (a) the estate; or  (b) where the trustee maintains the account in relation to more than one estate of a regulated debtor or regulated debtors—one of those estates.  (2) If the Court gives a direction that is inconsistent with subsection (1), that subsection does not apply to the extent of the inconsistency.  (a) the person is subject to the requirement under subsection (1); and Note: A defendant bears an evidential burden in relation to the matter in subsection (2) (see subsection 13.3(3) of the Criminal Code). 65‑20  Consequences for failure to pay money into administration account  (a) the trustee of a regulated debtor’s estate:  (i) is subject to a requirement under subsection 65‑5(1) (paying money into administration account); and  (ii) fails to comply with the requirement in relation to an amount of money; and  (b) the amount exceeds:  (i) $50; or  (ii) if another amount is prescribed—that other amount.  (2) Subsection (1) does not apply if, on the application of the trustee of the regulated debtor’s estate, the Court is satisfied that the trustee had sufficient reason for failing to comply with the requirement in relation to the amount. Trustee must pay penalty on excess  (3) The trustee must, as a penalty, pay interest to the Commonwealth on the excess, worked out:  (a) at the rate of 20% per year; or  (b) if another rate is prescribed—at that other rate; for the period during which the trustee fails to comply with the requirement.  (4) The trustee is personally liable for, and is not entitled to be reimbursed by the estate in relation to, the payment of that interest. 65‑25  Paying money out of administration account Money only to be paid out of administration account in accordance with this Act etc.  (1) The trustee of a regulated debtor’s estate must not pay any money out of the administration account for the estate otherwise than:   (a) for purposes related to the administration of the estate; or  (b) in accordance with this Act; or  (c) in accordance with a direction of the Court. 65‑31  Interest on administration account  (1) The trustee of a regulated debtor’s estate is entitled, in his or her personal capacity, to each payment of interest on the administration account for the estate, less an amount equal to the bank fees or charges (if any) paid or payable on the account during the period to which the interest relates.  (2) If, under subsection (1), the trustee is only entitled to part of a payment of interest, the rest of that payment:  (a) if the administration account contains money from only one estate of a regulated debtor—forms part of that estate; or  (b) if the administration account contains money from more than one estate of a regulated debtor or regulated debtors—forms part of those estates in proportion to the respective amounts of money held in the administration account on account of each of those estates.  (3) Interest on money in the administration account for a regulated debtor’s estate is not subject to taxation under a law of the Commonwealth, a State or a Territory except as provided in Part 2 of the Bankruptcy (Estate Charges) Act 1997. 65‑32  Reconciliation of administration account  (1) This section applies if the trustee maintains a single bank account for more than one estate of a regulated debtor or regulated debtors. Trustee must maintain separate records  (2) The trustee must:  (a) maintain a separate record for each of those estates of:  (i) money received by the trustee from the regulated debtor in relation to the estate; and  (ii) payments made by the trustee in relation to the estate; and  (iii) the balance of money held by the trustee in relation to the estate; and  (b) at least once every 25 business days, reconcile the balance relating to each estate held in the account with the corresponding record maintained under paragraph (a). 65‑40  Handling securities Securities must be deposited with administration account bank  (1) The trustee of a regulated debtor’s estate must deposit in a bank:  (a) the bills of exchange; and  (b) the promissory notes; and  (c) any other negotiable instrument or security; payable to the regulated debtor or the trustee as soon as practicable after they are received by the trustee.  (2) If the Court gives a direction that is inconsistent with subsection (1), that subsection does not apply to the extent of the inconsistency. Note 1: A defendant bears an evidential burden in relation to the matter in subsection (2) (see subsection 13.3(3) of the Criminal Code). Delivery of securities  (4) The bills, notes or other instrument or security must be delivered out on the signed request of the trustee. 65‑45  Handling of money and securities—Court directions  (1) The Court may, on application, give directions regarding the payment, deposit or custody of:  (a) money; and  (b) bills of exchange, promissory notes and other negotiable instruments and securities; that are payable to, or held by, the trustee of a regulated debtor’s estate.  (2) The Court may, on application, give directions authorising the trustee of a regulated debtor’s estate to make payments into and out of a special bank account.  (3) Without limiting subsection (2), the Court may:  (a) authorise the payments for the time and on the terms it thinks fit; and  (b) if the Court thinks the account is no longer required—at any time order it to be closed.  (4) A copy of an order under paragraph (3)(b) must be served by the trustee on the bank with which the special bank account was opened.  (5) An application under this section may be made by a person with a financial interest in the administration of the regulated debtor’s estate. 65‑46  Review of payments to third parties  (1) The Insolvency Practice Rules may provide for and in relation to the review by the Inspector‑General of a bill of costs for services provided by a person in relation to the administration of a regulated debtor’s estate.  (a) the application for the review (including who may apply); and  (b) the powers available to the Inspector‑General in relation to the review; and  (c) the provision of information or documents to the Inspector‑General for the purposes of the review; and  (d) the decisions that may be made by the Inspector‑General in relation to the review; and  (e) the notification of decisions made by the Inspector‑General; and  (f) the consideration of the decisions made by the Inspector‑General in relation to the review by the Court. 65‑50  Rules in relation to consequences for failure to comply with this Division  (a) the payment by the trustee of a regulated debtor’s estate of interest at such rate, on such amount and in respect of such period as is prescribed; and  (b) disallowance of all or of such part as is prescribed of the remuneration of the trustee of a regulated debtor’s estate; and  (c) the removal from office of the trustee of a regulated debtor’s estate by the Court; and  (d) the payment by the trustee of a regulated debtor’s estate of any expenses occasioned by reason of his or her default; in cases where the trustee of a regulated debtor’s estate contravenes or fails to comply with this Division (including Insolvency Practice Rules made under this Division).