Important decision on compositions under the Bankruptcy Act

On Monday 30th May, the Federal Court in Whitton v Perovich [2016] FCA 595 granted directions to a trustee in bankruptcy to lodge notices pursuant to s.224A of the Bankruptcy Act regarding the termination of s.73 compositions. The court also made ancillary orders under s.30 of Act to place the creditors, the trustee and the former bankrupts back into the same position as if the annulment under Pt IV Div 6 had not occurred. The principal issue in the proceeding was whether the compositions remained in force or whether they had terminated. The determination of this issue involved the proper construction of the terms of the compositions, the approach to such construction, the proper interpretation of 222D of the Act and whether the default under the terms of the compositions was a circumstance or event within the meaning of that provision.