Sequestration order

An order made by the Federal Court or Federal Circuit Court determining that an individual is bankrupt. Once a sequestration order has been received, the assets of the bankrupt will be handed over to be managed by a trustee in bankruptcy as appointed.

The jurisdiction to make sequestration orders is governed by section 43 of the Bankruptcy Act 1966.

Sequestration orders are most commonly served in the Federal Circuit Court. Section 104(2) of the Federal Circuit Court of Australia Act 1999 allows for a bankrupt to apply for review of a sequestration order. Some common grounds for review include:

  • you did not commit an act of bankruptcy (i.e. you may not have been served with the bankruptcy notice)
  • you do not owe the money claimed by the creditor;
  • you have your own claim against the creditor for money the creditor owes you;
  • you are able to pay your debts when they fall due (that is, you are not “insolvent”); or
  • another ‘sufficient’ cause