A Part X - PIA could be to your and your creditors’ benefit
Macks Advisory’s recent handling of a Barrister’s insolvency benefited both him and the people to whom he owed money.
Under Part X of the Bankruptcy Act 1966 a Personal Insolvency Agreement (PIA) was negotiated by Peter Macks as Trustee between the Barrister and his creditors. It was mutually accepted that although he owed in excess of $1.2M, all debts would be considered as discharged when the Trustee distributed approximately $200,000 among them.
If the creditors had voted to bankrupt the Barrister he would have been unable to continue practicing law or to use money owed to him by clients to repay anything to his creditors.
Furthermore by bankrupting their debtor, creditors may have received a dividend of somewhere between 6 and 13 cents in the dollar, compared with an estimated 16 cents in the $ dividend under the PIA – and furthermore they’d have had nine times longer to wait for payment.
Peter Macks advised all concerned that in his opinion the PIA, “better served everyone” rather than bankruptcy. This opinion was accepted, the PIA ratified, and in fulfilling the agreement the barrister would be considered debt free.
The Barrister’s troubles
He was an example of how anyone might be overtaken by life’s unforeseen difficulties, and a Part X administration could be seen as a valuable life changer for anyone with comparable difficulties. Domestic discord had resulted in a costly separation and he’d over capitalised on the marital home that he had to sell at a loss. In addition, a tax bill over $500,000 compounded the issue.
The lesson to be learned from this case by insolvent individuals and their creditors, is that bankruptcy may well be in nobody’s best interests, whereas a Part X administration may well be to everyone’s advantage.
Whether you’re a potential bankrupt or a creditor, it could pay you well to ask the question: could a Part X PIA be the best option?
For more information, contact Macks Advisory on 08 8231 3323 or visit our office at Level 11, 99 Gawler Place, Adelaide SA 5000.
