Bankruptcy Trustee can sell property

Section 134 of the Bankruptcy Act provides power to a trustee in bankruptcy to sell property of the bankrupt unless the property is protected under the Bankruptcy Act.
The common type of property which a trustee in bankruptcy will sell includes (but is not limited to):

• real estate
• motor vehicle exceeding the value of $9,400
• tools of trade exceeding the value of $4,350
• fine art work or antiques
• shares in companies

Real Estate in Bankruptcy

A trustee in bankruptcy must sell any interest a bankrupt holds in real estate. A trustee in bankruptcy will determine whether a bankrupt has any interest in real estate by conducting a valuation of the property by a registered valuer. If the value of the property exceeds the amount owing under any registered mortgage or any other registered security on the property the trustee in bankruptcy must realise that interest. If the property is owned singly by the bankrupt, then the trustee will most likely sell the property by auction. If the property is owned jointly with the bankrupt’s spouse, then the trustee in bankruptcy will most likely attempt to sell the bankrupt’s interest in the property to the non-bankrupt spouse. If agreement cannot be reached with the non-bankrupt spouse then the trustee in bankruptcy may apply to court for an order to sell the property.

Motor Vehicle in Bankruptcy

If the bankrupt owns a motor vehicle and its value exceeds the statutory threshold (currently $9,400) then the trustee in bankruptcy must sell the vehicle, however, the trustee in bankruptcy must return the protected value to the bankrupt. For example if the motor vehicle is worth $10,000 (same) and the trustee in bankruptcy sells the vehicle then the trustee must return $900 ($10,000 – $9,400).

Tools of Trade in Bankruptcy

If the bankrupt owns tools of trade and the collective value of the tools exceed the statutory threshold (currently $4,350) then the trustee in bankruptcy must sell the tools, however, the trustee in bankruptcy must return the protected value to the bankrupt. For example if the tools are worth $5,000 (SAME) and the trustee in bankruptcy sells the tools then the trustee must return $800 ($5,000-$4,350).