A Trustee in Bankruptcy must be free from any conflict of interest and must at all times act in an impartial manner. Any prior dealings with the debtor (the person to be made bankrupt) must first be disclosed to creditors. Depending on the type of any prior dealings or relationship with the debtor, the Trustee in Bankruptcy may not be eligible to be appointed as the Trustee. If the issue of any conflict of interest or perceived conflict of interest arises during the course of the bankruptcy administration then Trustee may need to resign from office. A Trustee in Bankruptcy must declare that they have not had any previous dealings or relationships with the debtor (person to be made bankrupt) and the debtor is not a related party. In practice this declaration is in the form of a Declaration of Independence, Relevant Relations and Indemnities (DIRRI). The Australian Restructuring Insolvency & Turnaround Association has set out the requirements of a DIRRI and has stipulated that it must comprise three components:

A. Declaration of Independence;
B. Declaration of Relationships, which includes:

i. the circumstances of the appointment;

ii. any relationships with the Insolvent and others within the previous 24 months;

iii. any prior professional services for the Insolvent within the previous 24 months;

iv. that there are no other relationships to declare.
C. Declaration of Indemnities and upfront payments.

Call the Australian Bankruptcy Service today on 1800 462 767 if you would like to learn more about the need for Trustee to be independent and impartial.