Bankruptcy and overseas debtors
You might think that a debtor moving overseas or relocating prevents you from serving the debtor with a bankruptcy notice. Not so.
Pursuant to section 40(g) of the Bankruptcy Act 1966, with leave of the Court, an act of bankruptcy still occurs when a debtor fails to comply with a bankruptcy notice even if the bankruptcy notice has been served on a debtor overseas.
Unfortunately however, these methods of service only apply to service of a bankruptcy notice. A creditor’s petition must be personally served (although in certain circumstances an order for substituted service can be obtained from the Court).
Section 40(g)(ii) of the Bankruptcy Act 1966 provides that the time for compliance with a bankruptcy notice will be the time fixed by the Court that is considered ‘reasonable’ for the debtor to comply. This section allows to Court to extend the usual time a debtor has to comply with a bankruptcy notice (21 days) to ensure the debtor, depending on his or her location, has sufficient opportunity to receive the notice and take steps to satisfy the underlying debt or prepare and make any application to the Court before the expiry of the bankruptcy notice.
If a creditor serves a debtor, say by email and subsequently discovers the debtor was overseas at the time of service, the creditor can apply to the Court for orders validating that service.
For more information, please contact ERA Legal.
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