Div 80Committees of inspection

Division 80—Committees of inspection 80‑1  Simplified outline of this Division Creditors of a regulated debtor’s estate may decide that there is to be a committee of inspection to monitor the administration of the estate and to give assistance to the trustee. Appointing the committee Each of the following have rights to appoint members to the committee (and to remove those members and fill the vacancy):  (a) the creditors by resolution;  (b) a single creditor who is owed, or a group of creditors who together are owed, a large amount;  (c) a single employee who is owed, or a group of employees who together are owed, a large amount. Once a person exercises a right in one capacity to appoint a member, the person cannot exercise a right in another capacity to do so. A person can exercise the right in a particular capacity to appoint only one person (unless the person is filling a vacancy in that appointment). Procedures and powers This Division also deals with the procedures and powers of committees of inspection (including directing that information, documents and reports be provided by the trustee and obtaining specialist advice). The trustee of a regulated debtor’s estate must have regard to directions of the committee but is not obliged to comply. Review The Court may inquire into and make orders about the conduct of committees of inspection. 80‑2  Division applies to the Official Trustee   This Division applies to the Official Trustee in the same way as it applies to the trustee of a regulated debtor’s estate. 80‑5  Application of sections 80‑10 to 80‑25   The rules in sections 80‑10 to 80‑25 apply if the trustee of a regulated debtor’s estate convenes a meeting of creditors for the purpose of determining either or both of the following:  (a) whether there is to be a committee of inspection for the regulated debtor’s estate;  (b) if there is, or is to be, a committee of inspection—who are to be appointed members of the committee. 80‑10  Committee of inspection   The creditors of a regulated debtor’s estate may, by resolution, determine that there is to be a committee of inspection in relation to the administration of the estate. 80‑15  Appointment and removal of members of committee of inspection by creditors generally  (1) The creditors of a regulated debtor’s estate may, by resolution, appoint members of a committee of inspection in relation to the administration of the estate.  (2) The creditors of a regulated debtor’s estate may by resolution:  (a) remove a person appointed as a member of the committee under this section; and  (b) appoint another person to fill a vacancy in the office of a member of the committee appointed under this section.  (3) A person is not entitled to vote on a resolution to appoint or remove a member of a committee of inspection under this section if:  (a) the person, acting either alone or with others, appoints a person as a member of the committee under section 80‑20; or  (b) the person, acting either alone or with others, appoints a person as a member of the committee under section 80‑25. 80‑20  Appointment of committee member by large creditor  (1) A creditor representing at least 10% in value of the creditors, or a group of creditors who together represent at least 10% in value of the creditors, of a regulated debtor’s estate may appoint a person as a member of a committee of inspection in relation to the administration of the estate.  (2) If a creditor or a group of creditors appoints a person as a member of a committee of inspection under this section, the creditor or group of creditors may:  (3) A creditor, acting either alone or with others, is not entitled to appoint a person as a member of a committee of inspection under subsection (1) if:  (a) the creditor votes on a resolution to appoint or remove a member of the committee under section 80‑15; or  (b) the creditor, acting either alone or with others, appoints a member of the committee under subsection 80‑25(1); or  (c) the creditor, acting either alone or with others, has already appointed a member of the committee under subsection (1) of this section. 80‑25  Appointment of committee member by employees  (1) Either:  (a) an employee of the regulated debtor; or  (b) the employees of the regulated debtor; representing at least 50% in value of amounts owed to or in respect of employees by the regulated debtor, in respect of services rendered to or for the regulated debtor, may appoint a person as a member of a committee of inspection to represent the employees.  (2) If an employee or a group of employees appoints a person under this section, the employee or group of employees may:  (3) An employee, acting either alone or with others, is not entitled to appoint a person as a member of a committee of inspection under subsection (1) if:  (a) the employee votes on a resolution to appoint or remove a member of the committee under section 80‑15; or  (b) the employee, acting either alone or with others, appoints a member of the committee under subsection 80‑20(1); or  (c) the employee, acting either alone or with others, has already appointed a member of the committee under subsection (1) of this section. 80‑30  Committees of inspection—procedures etc.  (1) Subject to subsection (2), a committee of inspection is to determine its own procedures.  (2) The Insolvency Practice Rules may provide for and in relation to committees of inspection.  (3) Without limiting subsection (2), the Insolvency Practice Rules may provide for and in relation to:  (a) eligibility to be appointed as a member of a committee of inspection; and  (b) the convening of, conduct of, and procedure and voting at, meetings; and  (c) resignation and removal of members; and  (d) vacancies in membership. 80‑35  Functions of committee of inspection  (1) A committee of inspection has the following functions:  (a) to advise and assist the trustee of the regulated debtor’s estate;  (b) to give directions to the trustee of the regulated debtor’s estate;  (c) to monitor the conduct of the administration of the estate;  (d) such other functions as are conferred on the committee by this Act;  (e) to do anything incidental or conducive to the performance of any of the above functions.  (2) The trustee of a regulated debtor’s estate must have regard to any directions given to the trustee by the committee of inspection, but the trustee is not required to comply with such directions.  (3) If the trustee of a regulated debtor’s estate does not comply with a direction, the trustee must make a written record of that fact, along with the trustee’s reasons for not complying with the direction. 80‑40  Committee of inspection may request information etc.  (1) A committee of inspection may request the trustee of a regulated debtor’s estate to: to the committee.  (b) the trustee would breach his or her duties in relation to the administration of the regulated debtor’s estate if the trustee complied with the request; or  (3) The Insolvency Practice Rules may prescribe circumstances in which it is, or is not, reasonable for a trustee to comply with a request of a kind mentioned in subsection (1). 80‑45  Reporting to committee of inspection  (1) The Insolvency Practice Rules may provide for and in relation to the obligations of trustees of regulated debtors’ estates: to committees of inspection.  (a) other circumstances in which the trustee must give information, provide a report or produce a document to a committee of inspection; and  (a) make different provision in relation to different classes of regulated debtor, or regulated debtor’s estates; and  (b) provide that specified requirements imposed under the Insolvency Practice Rules may be replaced or modified, by resolution, by:  (ii) the committee of inspection. 80‑50  Committee of inspection may obtain specialist advice or assistance  (1) A committee of inspection may resolve that a member of the committee obtain, on behalf of the committee, such advice or assistance as the committee considers desirable in relation to the conduct of the administration of the regulated debtor’s estate.  (2) The committee of inspection must obtain the approval of the trustee of the regulated debtor’s estate or the Court before expenses are incurred in obtaining the advice or assistance.  (3) To avoid doubt, an expense incurred under subsection (2) is to be taken to be an expense of the administration of the estate, unless the Court orders otherwise. 80‑55  Obligations of members of committee of inspection Deriving profit or advantage from the estate  (1) A member of a committee of inspection must not directly or indirectly derive any profit or advantage from the administration of the regulated debtor’s estate.  (2) To avoid doubt, a member of a committee of inspection is taken to derive a profit or advantage from the administration of the regulated debtor’s estate if:  (a) the member directly or indirectly derives a profit or advantage from a transaction (including a sale or purchase) entered into for or on account of the estate; or  (b) the member directly or indirectly derives a profit or advantage from a creditor of the estate; or  (c) a related entity of the member directly or indirectly derives a profit or advantage from the administration of the estate.  (3) Subsection (1) does not apply if the creditors resolve otherwise.  (4) The member of the committee is not entitled to vote on the resolution referred to in subsection (3).  (5) Subsection (1) does not apply to the extent that:  (a) another provision of this Act, or of another law, requires or permits the member of the committee of inspection to derive the profit or advantage; or  (b) the Court gives leave to the member of the committee to derive the profit or advantage. Note: Subsection (1) would not, for example, prevent a creditor from recovering debts proved in the bankruptcy, as this is permitted under Division 2 of Part VI.  (6) Despite paragraph (2)(c), subsection (1) does not apply to the extent that:  (a) the profit or advantage arises because the trustee employs or engages a person to provide services in connection with the administration of the regulated debtor’s estate; and  (b) the person is a related entity of a member of the committee of inspection; and  (c) one of the following applies:  (i) the member does not know, and could not reasonably be expected to know, that the trustee has employed or engaged a related entity of the member;  (ii) the creditors, by resolution, agree to the related entity being employed or engaged.  (7) A person commits an offence of strict liability if: Note: A defendant bears an evidential burden in relation to the matters in subsections (3), (5) and (6) (see subsection 13.3(3) of the Criminal Code).  (8) A transaction or any other arrangement entered into in contravention of this section may be set aside by the Court. 80‑60  Obligations of creditor appointing a member of committee of inspection  (1) This section applies if a creditor representing at least 10% in value of the creditors of a regulated debtor’s estate appoints a person under section 80‑20 as a member of a committee of inspection in relation to the administration of the estate.  (2) The creditor must not directly or indirectly become the purchaser of any part of the regulated debtor’s estate.  (3) Subsection (2) does not apply if the creditors resolve otherwise.  (4) The creditor is not entitled to vote on the resolution referred to in subsection (3).  (5) Subsection (2) does not apply to the extent that:  (a) another provision of this Act, or of another law, requires or permits the creditor to purchase the property; or  (b) the Court gives leave to the creditor to purchase the property. Note: A defendant bears an evidential burden in relation to the matters in subsections (3) and (5) (see subsection 13.3(3) of the Criminal Code). 80‑65  The Inspector‑General may attend committee meetings   The Inspector‑General is entitled to attend any meeting of a committee of inspection. 80‑70  The Court may inquire into conduct of the committee   The Court may inquire into the conduct of a committee of inspection and make such orders as it thinks fit to ensure the proper conduct of the committee.