Back in 2010 the criminal misconduct of a liquidator led to a Senate inquiry and a recommendation for a new regulatory regime and a single regulator. Today, significant defalcations by liquidator Amos and bankruptcy trustee Leroy don’t seem to be having the same law reform impact.
With adjournments finally coming to an end on 12 November 2025, Justice O’Callaghan made orders against former bankruptcy trustee Paul Leroy that “Unauthorised Withdrawals” totalling $886,000 taken from the second bankrupt estate of former Health Services Union secretary Kathy Jackson, be repaid, given that Leroy had breached various duties in ‘stealing’ the money; and that he pay the current trustees $155,917.89 for remuneration taken, plus indemnity costs. Two barristers appeared for the trustees; there was no appearance of or for Mr Leroy.
The Judge said he would issue brief reasons for decision shortly, commenting that the circumstance of the case “beggars belief”.
Whether these orders are to be served on Mr Leroy, and if so how, was not mentioned: VID70/2024.
The day before, on 11 November, the Inspector-General in Bankruptcy announced he had also commenced proceedings in the Federal Court against Leroy, who
“is alleged to have misappropriated more than $4 million, across at least 5 bankrupt estates between 2021 and 2023”.
The claims are also that Leroy breached his duties, is not a fit and proper person, and that he must repay misappropriated funds and improper remuneration, and that he can’t reapply to be a trustee until at least 2040. Orders are also sought directing Mackay Goodwin, the firm that employed Mr Leroy, to account for all remuneration approved and/or received by Mr Leroy, Mackay Goodwin, or its agents in connection with the relevant bankrupt estates or property, and that they repay the remuneration to the affected bankrupt estates and an individual whose bankruptcy was annulled.
As the Inspector-General says, this is the first application of its kind, perhaps understandably. It is said to complement the trustees’ action before Justice O’Callaghan.
It does not have a first hearing date until 13 March 2026 – VID 1535/2025.
Investigations by the trustees were funded by AFSA on behalf of the Commonwealth under section 305 of the Bankruptcy Act, on the basis that they further “AFSA’s regulatory aims in the AFSA Regulatory Action Statement 2025–26, including to ensure the proper administration of bankruptcies and prevent unauthorised access to trust funds for personal gain”.
AFSA says it has also assisted the Official Trustee and the current trustees through the commissioning of a forensic accounting report that identifies the “alleged instances of misappropriated funds”.
Section 305 of the Bankruptcy Act allows the Commonwealth to underwrite the cost of proceedings or enquiries about the estate or the examinable affairs of a bankrupt or personal insolvency agreement debtor. It is not at all comparable with, for example, ASIC’s Assetless Administration Fund, which is needed given there is no official receiver in corporate insolvency. In 2023–24, AFSA reports there were only 5 applications for s 305 Commonwealth funding assistance approved, with $22,545 underwritten.
Comment
These proceedings against the absent Mr Leroy follow the recent NSW District Court proceedings against Peter Amos, who was sentenced for criminal conduct in taking estate funds.
In the absence of more information or explanation from the regulators and the industry bodies, both the Leroy and Amos matters raise issues about Australia’s insolvency practitioner regulation regime, not so much that the defalcations occurred, but that there is nothing to explain what preventive mechanisms were in place to regulate such misconduct. These were necessarily separate, given that Amos was a liquidator and Leroy a trustee.
The 2023 PJC Report considered the idea of a single regulatory system, in chapter 5, and recommended it be part of any comprehensive review. Such ideas have been around a long time. (6) Regulation of insolvency practitioners – some international comparisons | LinkedIn; 1579398_Moffatt.pdf; The alignment of the laws of personal and corporate insolvency (2009) INSLB 82, M Murray; and most recently Catherine Robinson, ‘Efficiency and Certainty in Decision-Making: An Evaluation of the Insolvency Practitioner Disciplinary Committees’ (2025) 47 Sydney Law Review 19975: 1–38.
While it was the case that back in 2010 the criminal misconduct of a liquidator led to a Senate inquiry and a recommendation for a new regulatory regime and a single regulator, Amos and Leroy don’t seem to be having the same law reform impact.
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