Part X
PART X - PERSONAL INSOLVENCY AGREEMENTS
Part X is an alternative to bankruptcy that provides a process by which a debtor may make a proposal to their creditors which they consider and vote upon at a formal meeting.
Once accepted, the proposal is binding on the debtor and all creditors in respect of their unsecured provable debts. It enables the debtor and creditors to come to a mutually agreed compromise in a relatively simple way without reference to the court.
There are 4 basic steps in setting up an agreement. These are:
- appointing a controlling trustee;
- calling a meeting of creditors;
- the controlling trustee's report; and
- the meeting
Debtors who sign an authority are disqualified under the Corporations Act from managing a corporation if they enter into a Personal Insolvency Agreement under Part X and the terms of the agreement have not been fully complied with.