Concurrent Bankruptcy in Australia: What It Means | Boss Lawyers

Last reviewed and updated: April 2026

It is a creditor’s worst nightmare, supplying goods or services to a person and not having them pay you in return. Bankruptcy is one such tool creditors use in order to recover the debt against them.

A problem arises for the creditor when upon inspection of the National Personal Insolvency Index they discover the person they are trying to bankrupt is already an undischarged bankrupt.

It is a little known fact that although a person is an undischarged bankrupt, a creditor may apply to the Federal Court to have a fresh bankruptcy brought over that person. That is to say have two bankruptcies at the same time.

Federal Magistrate Rimmer in Scottish Pacific Business Finance Pty Ltd v Matheson clearly explains that there is no hindrance on a creditor bankrupting someone who is already bankrupt in order to secure a debt owed to them. His honour remarked:

“Clearly under the provisions of the Bankruptcy Act itself it is contemplated and anticipated that the Court can made a sequestration order in appropriate circumstances against a debtor who is at the time an undischarged bankrupt. It is clearly one of those appropriate matters as the debtor [in that case] incurred further debt while an undischarged bankrupt and has committed an act of bankruptcy such as to found this creditors petition.”

The facts of this Queensland case involve a creditor company who leased equipment to the debtor for an amount of $87,000.00. The debtor failed to pay that amount and proceedings were brought before the District Court. The creditor successfully obtained judgment and issued a bankruptcy notice. Rimmer FM held that although there was no doubt that the debtor was an undischarged bankrupt there were no reasons brought before him which compelled him to set aside the bankruptcy notice. That is to say the fact that the debtor was also and undischarged bankrupt did not stop him from ordering that he be bankrupt second time.

While there is no specific provision which a creditor may rely on to bring bankruptcy proceedings against an undischarged bankrupt, the Court has determined that it is a combination of the provisions of the Bankruptcy Act which allow it.

The cases explain that a creditor need simply treat the concurrent bankruptcy proceedings as if it were the only one on foot. That is to say the normal process for bankrupting a person applies to bankrupting an undischarged bankrupt. The Federal Court case of Camm v Linke Nominees provides a useful summary of the process a creditor must follow.

Firstly, pursuant to section 58 of the Bankruptcy Act any property acquired after the date a person is made bankrupt immediately vests in the trustee in bankruptcy.

Secondly, pursuant to section 59 of the Bankruptcy Act all property acquired by the bankrupt after the date of their bankruptcy which has not been distributed amongst the creditors, vests in the trustee in bankruptcy to the subsequent bankruptcy. In addition section 59 also provides that the trustee in the earlier bankruptcy shall be deemed to be a creditor in the later bankruptcy for all debts proved in that earlier bankruptcy.

In the light of these cases which interpret the provisions of the Bankruptcy Act creditors can rest assured that, even though the person from whom they are seeking the recovery of a debt is a bankrupt bankruptcy proceedings may still be brought against them.

Why Would a Creditor Pursue Concurrent Bankruptcy?

The obvious question is: why would a creditor incur the cost and complexity of a second bankruptcy proceeding against someone who is already bankrupt?

The answer is timing and property. When a person is made bankrupt, property they own at the date of bankruptcy vests in the trustee under section 58 of the Bankruptcy Act 1966 (Cth). But property they acquire after that date — including income earned during the bankruptcy, inheritances received, or assets acquired through new dealings — also vests in the trustee, and is potentially available to creditors in a subsequent bankruptcy.

If a creditor incurred their debt after the date of the first bankruptcy, they may not be entitled to participate in the first bankruptcy estate. By commencing a second bankruptcy proceeding based on that post-bankruptcy debt, they establish a separate estate that can capture after-acquired property. This is the primary commercial rationale for concurrent bankruptcy.

How Does the Concurrent Bankruptcy Process Work?

A creditor seeking to bankrupt an undischarged bankrupt follows the same general process as any other creditor — there is no separate or modified procedure for concurrent bankruptcy. As the Federal Court confirmed in Camm v Linke Nominees, the normal bankruptcy process applies:

1. Issue a bankruptcy notice based on an unsatisfied court judgment or order against the debtor.
2. The debtor commits an act of bankruptcy by failing to comply with the notice within 21 days.
3. Present a creditor’s petition to the Federal Court or Federal Circuit and Family Court of Australia.
4. The Court makes a sequestration order — that is, the second bankruptcy order — if satisfied the procedural requirements are met and no grounds exist to set aside the notice.

The fact that the debtor is already an undischarged bankrupt does not, of itself, provide grounds to set aside the bankruptcy notice or resist the petition. The Court held in Scottish Pacific v Matheson that no such basis was put before it and the sequestration order was made.

What Happens to the Two Bankruptcy Estates?

Once two bankruptcy orders exist, the following consequences flow under the Bankruptcy Act:

• Section 58: All property owned by the bankrupt at the date of the first bankruptcy vests in the first trustee. All property acquired after the date of the first bankruptcy vests immediately in the first trustee upon acquisition.
• Section 59: The trustee of the later bankruptcy is entitled to any property acquired after the date of the first bankruptcy that has not yet been distributed. The first trustee is also deemed a creditor in the later bankruptcy for all debts proved in the first estate.
• Dual creditor claims: Creditors of the first estate can prove in both estates if they hold provable debts in both. The second trustee’s role is to collect and distribute the property vesting under the second sequestration order.

Is Concurrent Bankruptcy Worth Pursuing?

Concurrent bankruptcy is a legal tool, but its commercial utility depends entirely on the facts. A second bankruptcy proceeding is expensive and time-consuming. Before commencing one, creditors should consider:

• Has the debtor acquired any property after the first bankruptcy? If not, there may be nothing to capture in a second estate.
• What is the size of the debt? The cost of concurrent bankruptcy proceedings may outweigh the likely recovery.
• Is the debt provable in the existing bankruptcy? If so, proving in the existing estate may be a simpler path than commencing a second proceeding.
• Are there other enforcement options? Examination orders, garnishee orders, and other enforcement mechanisms may be more cost-effective.

Frequently Asked Questions

Can you bankrupt someone who is already bankrupt in Australia?

Yes. A creditor can apply to the Federal Court to make a second or concurrent bankruptcy order against an existing undischarged bankrupt. The Federal Court confirmed this is available in Scottish Pacific Business Finance Pty Ltd v Matheson.

What is concurrent bankruptcy?

Concurrent bankruptcy occurs when a person who is already an undischarged bankrupt becomes the subject of a second sequestration order made under the Bankruptcy Act 1966 (Cth). Both bankruptcy estates exist simultaneously, each with their own trustee.

What happens to property in a concurrent bankruptcy?

Property owned at the date of the first bankruptcy vests in the first trustee under section 58. Property acquired after the first bankruptcy vests in both trustees. Section 59 of the Bankruptcy Act governs the priority and distribution rules between the two estates.

Is concurrent bankruptcy worth pursuing as a creditor?

It depends on the circumstances. The key question is whether the debtor has acquired property after the first bankruptcy that a second estate could capture. A creditor should seek legal advice on the costs, likely recovery, and alternative enforcement options before commencing concurrent bankruptcy proceedings.

If you are considering bankruptcy proceedings against a debtor in Queensland, Boss Lawyers can help. Contact our insolvency lawyers Brisbane for strategic advice on your recovery options.

Need Legal Advice?

If you need assistance, contact Boss Lawyers on 1300 267 711 or visit bosslawyers.com.au for a confidential discussion about your matter.

Disclaimer: This article provides general information only and does not constitute legal advice. You should obtain professional advice specific to your circumstances.

This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances. For expert advice, contact Boss Lawyers on 1300 267 711.

For expert legal advice on commercial disputes in Brisbane and Queensland, speak with our commercial litigation lawyers Brisbane. Call 1300 267 711 or contact us online.