There are several alternatives to Bankruptcy which are achieved prior to a debtor or creditor petition being presented or post a debtor being made bankrupt.
These alternatives include:
S73 Compositions / Scheme of Arrangement
During bankruptcy, a Bankrupt can put a proposal to the creditors under Section 73 of the Bankruptcy Act which forms an agreement with the creditors to make a payment that is in full and final satisfaction of all debts.
The proposal is considered at a meeting of creditors called by the Trustee. The Trustee is obliged to form an opinion on the proposal to assist the creditors with their decision.
The Bankruptcy is annulled if the proposal is accepted by creditors.
A Bankruptcy can be annulled prior to finalisation of the three year minimum period through payment of all debts of 100 cents per dollar. The debts include the costs of administering the Bankrupt Estate.
The funds necessary to achieve the annulment can be provided by the Bankrupt, a third party on behalf of the Bankrupt or through sale of the Bankrupt's assets.
For further information regarding the alternative to Bankruptcy, please see the fact sheets under "Publications" or visit the Australian Financial Security Authority (AFSA) web page, click here