Legal Tip 98: Investing While Bankrupt

Bankruptcy and “after acquired property”

What happens if a person becomes bankrupt and while they are still bankrupt acquires property. An example is an inheritance. This property will vest in the trustee and will go to creditors. But what happens if they invest while still bankrupt and make a gain?

One recent case involved a bankrupt person who bought some shares with money from savings from his earnings (that was under the threshold for being seized). The shares did well and he wanted to sell the shares and use the funds to buy a car. The Bankrupt’s trustee in bankruptcy wanted to take the shares under their powers under s58(1)(b) http://www.austlii.edu.au/au/legis/cth/consol_act/ba1966142/s58.html

The matter went to court and it was determined that the shares were ‘after acquired property’ and therefore able to be taken by the trustee in bankruptcy.

Di Cioccio v Official Trustee in Bankruptcy (as Trustee of the Bankrupt Estate of Di Cioccio)[2015] FCAFC 30,

 

thanks Terry
I really enjoy these