The debtor’s petition must also be accompanied by a Statement of Affairs which sets out the assets and liabilities and income and outgoings of the debtor.
It should be noted that most bankruptcies in Australia are initiated by a debtor’s petition.
For a creditor to make an application to the court, the creditor must first establish that the debtor has committed an 'act of bankruptcy'. These are set out in section 40 of the Bankruptcy Act 1996 (Cth).
The most common act of bankruptcy relied upon is that a debtor has failed to comply with a Bankruptcy Notice, requiring the creditor's debt to be paid within 21 days.
If the debtor does not comply with the Bankruptcy Notice within 21 days of service, the creditor can proceed to make application to the Court for a Creditor's Petition to be issued.The Act requires the debtor to be served with certain documents in the course of the proceedings, and the creditor may have to file various affidavits with the court to establish service and other matters relevant to the petition. There may be several hearings of the petition in the court. If the court is satisfied that the correct procedure has been followed and that the debtor should become a bankrupt, it will make a Sequestration Order against the debtor. A Sequestration Order is an order making a person bankrupt.
Under the doctrine of relation back, a bankruptcy is deemed to have commenced at the date of the earliest act of bankruptcy, committed within a six month period, prior to the date of the presentation of the petition.
Go to your textbook and read the chapter on bankruptcy. You might want to try looking in the index looking up terms such as ‘acts of bankruptcy’, ‘creditor’s petition’, ‘debtor’s petition’ and ‘sequestration order’.