Bankruptcy

AuthorInternational Law Group

Langley George Hancock died on March 27, 1992, owning several valuable properties in Australia and one in Orlando, Florida. In May 1995, the Western Australia Supreme Court granted probate as to the Hancock estate to executors named in his will. Questions later arose as to whether Hancock had been solvent at the time of his death. Pursuant to a creditor's petition filed by Hancock Prospecting Pty. Ltd. in December 1997, a federal bankruptcy proceeding began. The Federal Court of Australia ordered the estate to be administered under Part XI of the Bankruptcy Act 1966 (Cth) and appointed a Mr. Donnelly as Trustee.

The Trustee alleged that, despite his insolvency, Mr. Hancock had given Mrs. Rosemarie Porteous (the former Mrs. Rose Hancock) $254,129.71 on October 23, 1991 and that this gift amounted to an act of bankruptcy under the statute. If true, bankruptcy administration would relate back to that date. As the Court notes: "[t]his commencement date is significant for the reason, among others, that under s120 of the Act, gifts made within a period of 5 years prior to the commencement date are, subject to one exception, void as against the Trustee. The exception is that a gift made more than two years prior to the commencement date will not be void as against the Trustee if the transferee proves that the transferor was solvent at the time of the transfer." [Slip op. 2-3]

In essence, the Trustee was trying to recover under s120 of the Act many gifts of money Mr. Hancock had allegedly made to Mrs. Porteous during the five years prior to October 23, 1991 plus interest on these amounts. He alleged also that Mrs. Porteous used some of these funds to invest in various properties in Australia as well as one property in Orlando, Florida. On March 15, 2001, the Trustee moved the Court to issue several injunctive orders to make sure that these properties or the proceeds from their sales are available to satisfy any orders issued in favor of the Trustee.

As to the United States property, the Trustee sought an order restraining respondents or their representatives from selling, charging, mortgaging, encumbering or otherwise disposing of the property located in Seminole County, Florida (the Orlando property) during the pendency of the bankruptcy proceedings without giving 21-days written notice to the Trustee.

Moreover, in the event the Orlando property is sold, the Trustee asked the Court to order that respondents give not less than 21 days' written...

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