Home | Services | Personal insolvency | Personal insolvency agreement

Personal insolvency agreement

BRI Ferrier has extensive experience in personal insolvency agreements (PIAs), an alternative to bankruptcy. A PIA is a flexible but legally binding arrangement between a debtor and creditors that identifies the debtor’s property and income available to pay creditors’ claims. It also specifies how any realisations are dealt with.

A personal insolvency agreement is intended to provide creditors with a better return than bankruptcy. It is administered by a registered trustee in bankruptcy, who will ultimately pay a dividend to creditors, at which point the arrangement terminates, discharging the debtor from their liability.

PAST EXPERIENCE

Two company directors

BRI Ferrier was appointed as controlling trustee to two directors, one of whom was involved with 53 different companies and a number of family trusts. Owing over $4 million to their bank and over $2 million to around 20 trade creditors under guarantees, the directors entered into PIAs. We assessed the returns as fair and equitable and administered the dividend to the bank and creditors, thereby discharging the directors from further liability.

Construction company director

BRI Ferrier was appointed as controlling trustee to a director of Adelaide’s best-known construction company. Owing creditors $23 million, the director entered into a PIA. After one revision, the creditors accepted the agreement. The trustee subsequently distributed the dividend to creditors.

Public company director

BRI Ferrier was appointed as controlling trustee to a director of several public companies in the wine and automotive sectors. Owing $32 million to creditors, the director entered into a PIA that, after three adjournments, was accepted by creditors.

Finance broker

BRI Ferrier was appointed as controlling trustee to a finance broker who owed $18 million in guarantees to his creditors. The broker entered into a PIA that proposed a distribution to creditors in excess of that available had he declared bankruptcy. The proposal was accepted and a dividend paid.

Three property developers

BRI Ferrier was appointed as controlling trustee to three Sydney property developers who owed $34.3 million to creditors. The three entered into a joint PIA that proposed each pay creditors $100,000. The PIA was referred to court for direction after one of the property developers had completed his obligation, one had defaulted and one had declared bankruptcy. The order of the court released the compliant party from the PIA, overturned the second’s PIA and declared the third bankrupt.