The Debtor filed a debtors petition upon losing an appeal that he was jointly and severally liable under a guarantee given for borrowings of a related entity in the sum of circ. $600K.
In the years leading up to the adverse decision the debtor transferred his interests in property owned alone and jointly with his spouse such that his spouse became the sole owner of all properties.
The transfers were purportedly made pursuant to family law agreements with no or nominal consideration paid. Final property orders were not made as at the date of bankruptcy.
Our preliminary investigations found:
- The former spouse was unable to service the loans secured by the properties from income earned by her as a child care worker;
- The former spouse claimed that her adult children and relatives provided funds to her from time to time which enabled her to meet her mortgage payments and living expenses;
- There was insufficient evidence provided which showed the source of funds used to enable payment of living expenses including repayments of the mortgage;
- Social media posts indicated that the bankrupt and his former spouse continued to have significant social interaction in Australia and overseas post separation.
- The bankrupt was, prior to his bankruptcy a licensed real estate agent who claimed he was earning nominal wages in the years leading up to and post his bankruptcy.
Public Examinations of the bankrupt, his former spouse and two adult children were conducted by the Trustee pursuant to section 81 of the Bankruptcy Act. These examinations found that:
- The earnings of the bankrupt were being channeled by the bankrupt through the bank accounts of entities and parties controlled by the former spouse and the bankrupt;
- Many of the assertions made by the bankrupt and his former spouse regarding the transfers of the properties, sources of funds used to service loans, and circumstances surrounding their personal relationship were found not to be supported by evidence.
- There was sufficient evidence to support the Trustees view that the property transfers were voidable pursuant to section 120 or 121 of the Bankruptcy Act, and that there was a proper basis for pursuing claims against the former spouse of circ. $1.4M.
Section 139ZQ Notices were issued by the Official Receiver charging the properties in favour of the Trustee in Bankruptcy which prompted the former spouse to commence Family Law proceedings seeking final property Orders in addition to Orders seeking to set aside the 139 ZQ Notices.
As the hearing initiated by the Trustee seeking declarations that the transactions were void neared, I was approached with settlement offers w
