By Paul Shaw*

A complaint AFSA sometimes receives from creditors is a lack of information or communication from practitioners during the personal insolvency process.

While we take these complaints seriously, creditors might be surprised to learn that they have a number of legal rights they can (and should) exercise to get the most from bankruptcy and other personal insolvency arrangements (including debt agreements).

Creditors are a key stakeholder in the personal insolvency system and their role is specifically recognised under bankruptcy legislation by giving them clear rights. These include the right to:

information and reports during the personal insolvency
dividends in the administration (if assets are available)
vote at any meeting of creditors during the insolvency
complain or request a review of certain trustee actions

One effective way creditors can be actively involved is to participate at meetings where they have the power to vote on resolutions influencing the direction of a personal insolvency administration.

For instance, creditors can vote in bankruptcy to:

replace the existing practitioner with another
form a committee to oversee the practitioner; and/or
accept/reject the practitioner's remuneration

AFSA has developed a useful resource jointly with ARITA (Australian Restructuring Insolvency and Turnaround Association) on practitioner remuneration available on our website: (

Creditors who are not satisfied with how a personal insolvency is administered should exercise these rights to ensure their views are properly taken into account as ultimate beneficiaries in the insolvency process.

In addition, creditors can raise concerns with AFSA about a personal insolvency administration or individual practitioner. This may involve lodging a complaint about or seeking a review of certain decisions taken by a practitioner during the administration.

Usually this involves delays in selling property or paying dividends or the levels of fees charged to perform work and/or costs incurred. In either case, creditors are entitled to question how a personal insolvency is handled and expect to receive timely answers from the practitioner whose remuneration they approve.

Recently introduced legislation titled Insolvency Law Reform Act 2016 (ILRA) will further enhance creditors' rights when Part 2 of the reforms dealing with insolvency administration processes (including fund handling, creditors' meetings and remuneration of practitioners) commence on 1 September 2017.

We encourage creditors to visit AFSA's website ( to learn how to exercise their rights to get the most from the personal insolvency process and find out more about the ILRA (

Further details on the ILRA and changes to creditors' rights will be available on AFSA's website including our quarterly Personal Insolvency Regulator (PIR) newsletter in the lead up to 1 September 2017.

Creditors who have feedback/complaint or seek to review a decision by a practitioner can lodge a request with AFSA online at:

Feedback/Complaints (
Reviews (

Where a creditor is aware of wrongdoing, criminal misconduct (including widespread misconduct), dishonesty or fraud relating to a bankruptcy and wish to remain anonymous, then it is possible for you to report your concerns to AFSA as a tip-off:

Tip-offs (

The outcome of complaints, reviews and tip-offs are published annually in AFSA's Personal Insolvency Practitioners Compliance Report ( and inform focus areas for its annual Compliance Programme (

*Paul Shaw is National Manager, Regulation and Enforcement at Australian Financial Security Authority