Insolvency in Queensland
What is a Debt Agreement ? A debt agreement (also called a Part IX agreement) is a binding agreement under Part IX of the Bankruptcy Act 1966 between a debtor and their creditors whereby creditors agree to accept a sum of money (which is usually less than the outstanding amount) but which the debtor can afford to pay.
Debt agreements in Queensland reached an all time high in the June quarter 2014, however the level of bankruptcies and personal insolvency agreements decreased over the quarter.
The Australian Financial Security Authority (AFSA) released their annual statistics for the 2013/14 year as well as personal insolvency statistics for the June quarter 2014 earlier this month.
According to an AFSA July 9 statement, during the June quarter 2014, Queensland, New South Wales, Australian Capital Territory and Western Australia recorded the highest number of debt agreements (2,979) in a quarter, beating the previous record set in the March quarter 2014. It is also the highest level of debt agreement activity recorded in a financial year.
In Queensland, there was a 33.7 per cent increase in the number of debt agreements year-on-year to the June 2014 quarter.
The high level of debt agreements did not however counteract the total personal insolvency agreements and bankruptcies over the quarter. Total personal insolvency activity fell by 5.45 per cent in Queensland in the June quarter 2014, compared to June quarter 2013. One of the main causes of personal insolvency across Australia was "economic conditions where the personal insolvency was business related", according to the AFSA.
There was also a decrease in the rate of bankruptcies filed in Queensland, with 22.27 per cent fewer recorded year-over-year to the June quarter 2014. This is a smaller decrease than the Australian average of 25.14 per cent decrease in bankruptcies in the June quarter 2014, the lowest level for the quarter since 1995. During the June quarter 2014, 21.9 per cent of bankrupts were attributed to a business related bankruptcy.
If you are a small-to-medium sized business that needs advice on debtor and creditor management or commercial agreements or debt agreements, contact one of our commercial lawyers or our insolvency team.