Creditor’s petition

A creditor’s petition is an application that is made to the Federal Court or the Federal Circuit Court to make someone bankrupt. This application is made by a creditor of an individual debtor and can be contrasted with a “debtor’s petition”, which is made by a debtor themselves.

If the court is minded to make a sequestration order a creditor must, along with the petition, present an affidavit verifying certain facts. The content of this affidavit must prove that, pursuant to section 43(1) of the Bankruptcy Act 1966 (Cth):

  1. The debtor has committed an act of bankruptcy;
  2. At the time of the act of bankruptcy the debtor:
    1. was personally present or ordinarily resident in Australia;
    2. had a dwelling house or place of business in Australia;
  • was carrying on a business in Australia, either personally or by means of an agent or manager; or
  1. was a member of a firm or partnership carrying on business in Australia by means of a partner or partners or of an agent or manager.

Pursuant to section 44 of the Bankruptcy Act there are several conditions that limit a creditor presenting a petition to make someone bankrupt. These include:

  1. The debt owed by a debtor must be more than $5,000 (or two debts cumulatively);
  2. The debt must be:
    1. A liquidated sum due at law or in equity; and
    2. Payable immediately or at a certain future time;
  3. An act of bankruptcy must have been committed within 6 months of the application;

These matters must also be addressed in the affidavit verifying the petition. Further, the manner of service of the petition and the fact that the debt or debts on which the petition is based is still owing must also be verified in order for the Court to make a sequestration order.