Cancellation of a bankruptcy trustee’s registration and freezing orders obtained

The registration of Australian bankruptcy trustee Mr Paul Leroy was cancelled by the Inspector-General in Bankruptcy (IGB) on 2 February 2024, effective from 5 February. Federal Court proceedings have been commenced and freezing orders obtained on 2 February appointing Micheletto and Carrafa as joint and several trustees of the bankrupt estate of Katherine Jackson, until 6 February 2024.  Other estates have passed to the Official Trustee under s 160 Bankruptcy Act. 

The Inspector-General appeared at the hearing as amicus curiae only.

The freezing orders were varied on 6 February such that if Leroy is “abroad”, the orders do not prohibit him from paying up to A$4,000 for the purposes of travel back to Australia.

Various other orders were made for service of the orders and affidavits on Leroy by SMS and WhatsApp and email with a further hearing date to be advised.  

According to AFSA,[1] the Inspector-General found that Mr Leroy “did not meet the standards of the Bankruptcy Act” in failing to maintain mandatory professional indemnity and fidelity insurance cover.  Mandatory insurance cover is a fundamental requirement for registered trustees to operate in Australia.

AFSA says that concurrent with the deregistration, the Inspector-General is investigating the management of Leroy’s bankrupt estates and “further details will be provided at an appropriate time”.

AFSA says it has already begun directly contacting individuals whose estates were being administered by Mr Leroy prior to his deregistration, as well as their creditors.

Mr Leroy was a member of ARITA.  ARITA has announced that in accord with clause 7.1(b)(ii) of the ARITA Constitution, Mr Leroy’s ARITA membership was automatically terminated effective from 5 February 2024.  This followed the cancellation of his registration as a trustee by the Inspector-General in Bankruptcy. 


Australian trustees, and liquidators, are directly regulated by AFSA, and ASIC, respectively; this compares with the co-regulatory approach shared with insolvency professional bodies in the UK and NZ.  Nevertheless, ARITA and the 3 accounting bodies do regulate their members according to codes of conduct, and they, and others, have certain co-regulatory roles under the Bankruptcy Act and the Corporations Act.    

To what extent file reviews of Leroy’s estates were conducted may need to be examined.  AFSA has a program of inspection of trustee files Monitoring and inspection of bankruptcy trustees and debt agreement administrators | Australian Financial Security Authority (;   Regulatory and compliance activities | Australian Financial Security Authority (

The professional bodies also have file review processes:  Preparing for a CPA Australia Review – Quality Assurance for Accountants and Preparing for a CA ANZ Review – Quality Assurance for Accountants

This is in the context that in 2022-2023, Australian registered trustees administered more than $290 million in receipts in their bankrupt estates and made over $287 million in payments. [2]

Trustees have strict responsibilities in handling those funds and in maintaining files and records, under Div 65 and 70.  The IGB has powers to audit, investigate and demand records of a trustee: s 12 and to bring court proceedings as may be necessary.

Also, a trustee must maintain appropriate insurance under Insolvency Practice Schedule Bankruptcy s 25-1 and the IGB has power under s 40-30 to cancel a trustee’s registration for failure to maintain that insurance.  A trustee can apply to the AAT to review that decision: s 96-1; or to the court. 

[Revised 7.2.24].


[1] Trustee deregistered for failure to meet bankruptcy act standards | Australian Financial Security Authority (

[2] Monies administered by trustees | Australian Financial Security Authority (

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2 Responses

  1. Seems odd to appear as ‘Amicus Curiae’, especially as part of the regulatory structure.

  2. Is there any detail as to the lack of insurance cover as it is hard to believe that Paul Leroy would do such a thing unless it was inadvertent?

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