Background
Peta Freeman became bankrupt following a sequestration order made on 24 April 2025. Michael Carrafa and Fabian Kane Michaelletto were appointed joint and several trustees of her bankrupt estate. At that time, Freeman was the sole registered proprietor of a unit in Traralgon, Victoria, and the trustees lodged a caveat over its title.
The trustees unsuccessfully tried to contact Freeman, including at the property. Their solicitors later wrote to her explaining that the unit had vested in them and that they intended to sell it for the estate. Freeman neither engaged with the trustees nor participated in the proceeding, despite substituted service and notice of the hearing.
The Court’s Holding
Justice Hespe declared that Freeman’s interest in the Traralgon unit had vested in the trustees under s 58(1)(a) of the Bankruptcy Act 1966 (Cth). The Court authorised the trustees to exercise their statutory power of sale and gave them sole conduct of the sale, including authority to select the sale process, reserve or accepted price, settlement period, and selling agents.
The Court ordered Freeman to vacate within 45 days, remove personal property not vested in the trustees, and deliver the keys. If she did not provide vacant possession, a writ of possession was to issue. She was also required to reasonably assist the sale, including permitting inspections on reasonable notice and signing necessary sale documents. The Court declined, at this stage, to authorise disposal of her personal effects because such property did not vest in the trustees; costs were costs in the bankruptcy.
Key Takeaways
- A bankrupt’s real property vested in the trustees, allowing them to sell it for the estate.
- The Court may order a non-cooperating bankrupt to vacate, provide keys, and facilitate a trustee-led sale.
- Personal property not vested in the trustees cannot simply be disposed of under the possession and sale orders.
Why It Matters
The decision illustrates the Federal Court’s use of its bankruptcy powers to enable trustees to realise estate property where the bankrupt does not engage. It also shows that practical relief can be tailored: Freeman received 45 days to secure alternative accommodation, while the trustees obtained a direct path to possession and sale.
For insolvency practitioners, the case confirms that a declaration of vesting may have utility where a bankrupt’s conduct indicates denial of the bankruptcy, even if vesting follows by statute.