Federal Court of Australia

Mollaian v Girdhani (Trustees), in the matter of Bankrupt Estate of Mollaian [2026] FCA 179

ORDERS

THE COURT ORDERS THAT:

1.    The bankruptcy of Cyrus Mollaian consequent upon the sequestration order made in Federal Circuit and Family Court of Australia (Division 2) proceedings SYG3661/2025 on 2 December 2025 (the Former Bankruptcy) be annulled pursuant to s 153B of the Bankruptcy Act 1966 (Cth).

2.    The Respondents’ remuneration in relation to the Former Bankruptcy is approved in the amount of $38,500 inclusive of GST pursuant to Division 90 of the Insolvency Practice Schedule (Bankruptcy).

3.    The Respondents’ costs of this proceeding be costs in the administration of the Former Bankruptcy.

THE COURT NOTES THAT:

The Applicant has caused the sum of $95,000 to be paid into the trust account of the Respondents, on account of the remuneration and costs the subject of these orders, as well as any realisation charge and other proper expenses of the Former Bankruptcy, and on the basis that the Respondents are entitled to draw upon those funds in the same manner as if they were property vested in the Respondents pursuant to subsection 154(1)(b) of the Bankruptcy Act 1966 (Cth).

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

WHEATLEY J:

INTRODUCTION

1    On 20 January 2026, the Applicant, Mr Mollaian, filed an urgent application seeking annulment of his bankruptcy pursuant to s 153B of the Bankruptcy Act 1966 (Cth) (Act) (Annulment Application).

2    On 2 December 2025, the Applicant was made bankrupt pursuant to a sequestration order made in his absence. The Annulment Application came before the duty judge, his Honour Justice Stellios, on 21 January 2026, whereby orders were made requiring service of the Annulment Application and supporting materials on the Respondents, being the trustees in bankruptcy (Trustees) and each creditor known to be a creditor of the bankrupt. The proceedings were again before Stellios J for case management on 23 January 2026. Timetabling orders were made, and it was set for hearing by the duty judge not before 2 pm on 29 January 2026.

3    Given the serious consequences of bankruptcy, as duty judge, I set the matter for hearing on 29 January 2026, at 2.15 pm. The matter remained urgent, and I accept the submission of the Applicant that delay in the circumstances of this case would have caused him prejudice. The Applicant in particular, cannot participate in the management of the companies for which he is a director. The Applicant is a director of some 10 entities, although some of those entities have been relatively recently registered and some do not trade. Nonetheless, there are at least two of those entities with significant assets and trading history. That supports the proposition that the Applicant advanced, that the hearing of the Annulment Application was urgent.

4    The Annulment Application is not opposed by the original petitioning creditor or the other known creditors who were served. The Trustees take a formal position, observing that it is not appropriate for the Trustees to take a position in relation to the annulment. However, the Trustees also observe that although it is a matter for the Court to be satisfied whether in the circumstances it is appropriate to annul the bankruptcy, if the Court was so minded, then the Trustees agree to the form of order which has been provided to the Court.

5    For the following reasons, the Annulment Application will be allowed. In summary, this is for two reasons.

(a)    First, Mr Mollaian has established that the debt which was the subject of the bankruptcy proceedings has been paid in full and, more importantly, he is clearly solvent, such that the sequestration order ought not to have been made.

(b)    Second, as an exercise of discretion, I would annul the bankruptcy. Mr Mollaian has provided extensive evidence as to his financial position. This is, in many respects, supported by the evidence of the Trustees. There is sufficient evidence to establish his solvency now and, importantly, at the time of the sequestration order. Mr Mollaian has completed his statement of affairs and cooperated with the Trustees. He has also made provision for and consented to orders for the payment of the remuneration, costs and disbursements of the Trustees. There are also no other creditors which oppose the annulment application.

BACKGROUND

6    On 9 October 2025, the Owners-Strata Plan Number 102798 (Petitioning Creditor), presented a creditor’s petition against Mr Mollaian. The creditor’s petition first came before the Federal Circuit and Family Court of Australia (Division 2) on 2 December 2025. The claimed act of bankruptcy was the failure to comply with a bankruptcy notice on or before 10 September 2025. On that first return date, the court was satisfied of the requirements of s 52 of the Act, and made the following orders:

THE COURT ORDERS THAT:

1.    The estate of Cyrus Mollaian be sequestrated under the Bankruptcy Act 1966.

1.     The Applicant Creditor’s costs, to be agreed, or taxed on the footing that the Applicant is entitled to all costs of and incidental to the proceeding that have been reasonably incurred, of a reasonable amount, be paid from the estate of the Respondent Debtor in accordance with the Bankruptcy Act 1966. (sic)

2.    A copy of this order is to be provided by the Applicant Creditor to the Official Receiver in Sydney within 2 days.

THE COURT NOTES THAT:

3.    The date of the act of bankruptcy is 10 September 2025.

4.     A consent to act as trustees signed by Vinod Girdhani and Gavin David King has been filed under section 156A of the Bankruptcy Act 1966.

7    On 20 January 2026, Mr Mollaian filed the Annulment Application. This was supported by detailed affidavit evidence.

8    The matter has been case managed and set as an urgent hearing today.

LEGAL PRINCIPLES – ANNULMENT BY THE COURT

9    Section 153B(1) of the Act provides as follows:

153B    Annulment by Court

(1)    If the Court is satisfied that a sequestration order ought not to have been made or, in the case of a debtor’s petition, that the petition ought not to have been presented or ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy.

10    The effect of an annulment is set out in s 154 of the Act.

11    The power of the Court to annul a bankruptcy involves two elements (Rigg v Baker (2006) 155 FCR 531; [2006] FCAFC 179 at [59], French J, with whom Spender J agreed at [2]), which can be described as:

(1)    the Court’s satisfaction that the sequestration order ought not to have been made; and

(2)    the Court’s exercise of a discretion to make an order annulling the bankruptcy.

12    It is clear from the relevant settled principles that these two elements are cumulative, and the second, being the exercise of the discretion, only arises if the first element is satisfied.

13    In Rigg at [61], the first element was described by French J as follows:

61    In determining whether a sequestration order ought to have been made the Court may consider “not only the case as disclosed at the time that the order was made, but as it would have been disclosed had all the true facts been before the court on the making of the order”: Re Cook (1946) 13 ABC 245 at 259 (Clyne J); Re Williams (1968) 13 FLR 10 at 23 (Gibbs J). But facts which have come into existence since the making of the order are not relevant to the question whether it ought to have been made: Re Scott [1975] Qd R 125 at 126-127 (Lucas J); Re Frank; Ex parte Piliszky (1987) 16 FCR 396 at 400 (Fisher J); Re Ditford; Ex parte Deputy Commissioner of Taxation (1988) 19 FCR 347 at 350 (Gummow J).

14    The word “ought” is significant in s 153B of the Act. A sequestration order ought not to be annulled unless the Court was in the circumstances bound not to make the sequestration order: Rigg at [62]. The onus for establishing that the sequestration order ought not to have been made rests on the applicant for such an order: Rigg at [11] and [63].

15    In determining whether a sequestration order ought not to have been made, the Court must consider other facts existing at the earlier time, being the time when the sequestration order was made, even if those facts were not placed before the Court making the sequestration order. However, facts which have occurred since the sequestration order should be excluded: see Yang v L & H Group (a limited Partnership) [2015] FCA 932 at [29(b)] of Beach J. Such facts, occurring subsequently are, however, relevant to the exercise of the discretion.

16    A useful summary of the applicable principles was provided by the Full Court in Heinrich v Commonwealth Bank of Australia [2003] FCAFC 315. Their Honours Justices Carr, Finn and Sundberg at [20]:

20    The Court must first consider whether the sequestration order ought not to have been made. If it so finds, then the Court must consider whether, in the exercise of its discretion, the bankruptcy should be annulled: Re Deriu (1970) 16 FLR 420. Later evidence of previously unknown facts may disclose matters which show that the sequestration order ought not to have been made. That is, the Court is entitled to consider not only the case as disclosed at the time when the sequestration order was made, but also those facts now known then to have existed. The Court excludes those facts which have occurred since the order was made. Later evidence of previously unknown facts may disclose matters which show that the sequestration order ought not to have been made: Re Frank; Ex parte Piliszky (1987) 16 FCR 396; Stankiewicz v Plata [2000] FCA 1185 at [19]; Re Williams (1968) 13 FLR 10 at 23; Re Ditfort; Ex parte Deputy Commissioner of Taxation (1988) 19 FCR 347. These authorities, all of which were cited by the learned primary judge in his judgment, were accepted at first instance as reflecting the relevant law.

17    Solvency is central to the jurisdiction of bankruptcy, as the Full Court stated in Culleton v Balwyn Nominees Pty Ltd (2017) 343 ALR 632; [2017] FCAFC 8 (Allsop CJ, Dowsett and Besanko JJ at [45]). Further, that Full Court stated the following at [43] to [44]:

[43]    Re Sarina demonstrates the centrality of the question of solvency to the jurisdiction of bankruptcy. Whilst one must recognise the permissive “may” in s 52(2), the circumstances where a sequestration order would be made if the debtor satisfied the Court of his or her solvency are difficult to imagine. Proof of solvency may not necessitate dismissal of the petition; an adjournment may be the appropriate course.

[44]    Whilst it is legitimate for a creditor to proceed in bankruptcy for the purpose of recovering a debt, that does not mean that bankruptcy should be viewed in its essential character as part of the process of execution of judgment debts. It is the changing of the status of an insolvent person: O’Mara Constructions Pty Ltd v Avery (2006) 151 FCR 196; 230 ALR 581; [2006] FCAFC 55 at [53] (and the cases there discussed) and see also O’Farrell v Palicave Pty Ltd (2009) 176 FCR 134; [2009] FCAFC 64 at [24]. A sequestration order, as demonstrated by Re Sarina, will not be made against the estate of someone who refuses to pay a debt if that person can prove (the onus being on him or her) that he or she is solvent.

[emphasis added]

18    The Full Court in Shaw v Yarranova Pty Ltd (2017) 252 FCR 267; [2017] FCAFC 88 (North, Perry and Charlesworth JJ) considered an appeal from a refusal to make an annulment of a bankruptcy under s 153B of the Act. In Shaw at [109], after referring to Culleton at [43] to [44], the Full Court at [110] stated the following:

110    The policy considerations to which the Full Court referred in Sarina and Culleton apply equally in an annulment context. As the Court in Culleton observed, it is “difficult to imagine” a circumstance where a bankrupt who could demonstrate his or her solvency at the time of sequestration should nonetheless be denied relief on a subsequent annulment application. The respondents submit that this is such a case.

19    Although Culleton was in the circumstances of considering an appeal against making the sequestration order under s 52 of the Act, the Full Court in Shaw applied those principles to whether s 153B was engaged and whether the sequestration order ought not to have been made.

20    The fundamental issue in bankruptcy is solvency. Section 52(2) of the Act provides that if the Court is not satisfied with the proof of any of the matters set out in s 52(1), or that the debtor is able to pay his or her debts, or that for other sufficient cause a sequestration order ought not to be made, then it may dismiss the petition. As her Honour Justice Cheeseman stated in Thomas v Ejueyitsi [2025] FCA 1167 at [36], fundamental to the law of bankruptcy is that a sequestration order should not be made against the estate of a person who is solvent.

21    Therefore, on the first element in relation to the power to annul, it will include where a person can satisfy the Court on the true facts at the time when the sequestration order was made that he or she was solvent and therefore the sequestration order ought not to have been made. An applicant bears the onus of establishing solvency.

22    In relation to the second element, the Full Court endorsed the following summary of the relevant principles in relation to the exercise of the discretion from his Honour Justice Tracey in Francis v Eggleston Mitchell Lawyers Pty Ltd [2014] FCAFC 18 at [16] (Rares, Flick and Bromberg JJ) as follows:

16    Tracey J helpfully summarised a number of principles relevant to the exercise of the discretionary power conferred by s 153B in Bulic v Commonwealth Bank of Australia Limited [2007] FCA 307 at [12] including the following:

Section 153B(1) and its predecessors have been considered in many decisions of this and other Courts. These authorities establish a number of relevant propositions. They are:

…

(2)    An applicant who seeks an annulment of his or her bankruptcy “carries a heavy burden”. It is incumbent on an applicant “to place before the Court all relevant material with respect to his or her financial affairs so that the Court may be properly informed and may make a judgment that is based on the actual circumstances of the applicant”: Re Papps; Ex parte Tapp (1997) 78 FCR 524 at 531.

(3)    In determining whether or not a sequestration order “ought not to have been made” the Court is not confined to a consideration of whether the order should have been made on the facts known to the Court at the time at which it was made. The Court must take account of facts, known at the time at which the sequestration order was made and at which it determines an annulment application, even if those facts were not before the Court at the time at which the sequestration order was made: Boles v Official Trustee in Bankruptcy (2001) 183 ALR 239 at 243; Re Raymond; ex parte Raymond (1992) 36 FCR 424 at 426.

(4)    A sequestration order “ought not to have been made” if, on the facts known at the time of the annulment application, the Court would have been bound not to make the sequestration order: Re Frank; ex parte Piliszky (1987) 16 FCR 396.

…

(6)    If the Court is so satisfied, it is not precluded from annulling the bankruptcy because the bankrupt had not sought to have the default judgment set aside or failed to oppose the creditor’s petition or failed to seek a review of the sequestration order: Re Raymond; ex parte Raymond (1992) 36 FCR 424 at 426.

(7)    The power conferred on the Court by s 153B(1) is discretionary in nature. Even if persuaded that the sequestration order ought not to have been made, the Court can, in appropriate circumstances, decline to annul the bankruptcy: Boles v Official Trustee in Bankruptcy (2001) 183 ALR 239 at 243.

(8)    Considerations which may have a bearing on the exercise of discretion include unexplained delay in the making of the application, whether or not the applicant is solvent, whether or not the applicant has made full disclosure of his or her financial affairs and a failure by the bankrupt to oppose the creditor’s petition and attend the hearing at which the sequestration order was made: Re Williams (1968) 13 FLR 10 at 24–5; Boles at 247; Re Papps; ex parte Tapp (1997) 78 FCR 524 at 531; Rigg v Baker (2006) 155 FCR 531 at 548 [79] (per French J); Cottrell v Wilcox [2002] FCA 1115 at [7]. Additional considerations are collected in D. A. Hassall, “Annulment of Bankruptcy and Review of Sequestration Orders” (1993) 67 ALJ 761 at 766.

23    Finally, in relation to the exercise of the Court’s discretion, her Honour Justice Banks-Smith, in Zaghloul v Jewellery & Gift Buying Service Pty Ltd trading as Nationwide Jewellers [2020] FCA 1045, helpfully summarised at [12] the guiding factors to include the following. I gratefully adopt those guiding factors as follows:

(a)     whether the applicant debtor is solvent;

(b)    whether the applicant has made full disclosure of his financial affairs, a matter as to which the applicant carries a heavy burden (see Bullock at 12; Re Papps; Ex parte Tapp (1987) 78 FCR 528 at 531);

(c)    any unexplained delay in the application;

(d)    a failure by the bankrupt to oppose the creditors’ petition and attend the hearing at which the sequestration order was made;

(e)    whether the applicant debtor has made any proposal for the payment of fees and disbursements of his or her trustee in bankruptcy; and

(f)    the basis for any finding that a sequestration order ought not to have been made.

24    In relation to those discretionary factors, also see Yang at [29(d)] to a similar effect.

CONSIDERATION

Ought the sequestration order not have been made?

25    Mr Mollaian submits that the bankruptcy order ought not to have been made because he was solvent at the time the sequestration order was made. Mr Mollaian has provided evidence that he owns, together with his wife, four items of real property. His share of that property has an approximate net equity value of $6 million, using the midpoint of valuations he has obtained online.

26    Mr Mollaian has also given evidence of his associated entities. In his statement of affairs, he estimates his shareholdings in at least two of those entities to be valued at approximately $4.4 million.

27    In the report to creditors, the Trustees estimate Mr Mollaian’s net asset position, based on his estimates, to be approximately $17.8 million, and approximately $10.7 million based on the Trustees’ estimated recoverable values. The difference is largely because the Trustees values of his associated entities and other assets are yet to be determined (and hence recorded at nil). The report to creditors also states that Mr Mollaian’s secured creditors, by way of mortgage over some of the real properties, are up-to-date.

28    On being made aware of the Petitioning Creditors’ claims, a topic to which I will return, Mr Mollaian has paid the amount in full, being the amount by which the creditors’ petition was advanced, including all costs and a subsequent amount which was found to be owing.

29    The Trustees have identified, in their report to creditors, unsecured creditors in a total amount of just under $400,000. That includes for the most part, a tax debt, a further debt to the Petitioning Creditor and amounts owed to Westpac (which appear to be credit card debts). The tax debt and further amount to the Petitioning Creditor have been paid in full.

30    The other amounts (credit card amounts) appeared to be owed to Westpac. The submission was made by the Applicant that these creditors were not actually creditors of Mr Mollaian personally, but those of his associated entities, being credit cards of those entities, which may potentially have also identified his name. In any event, the amounts said to be owed to Westpac were for the sum of approximately $65,000 (not including the amount said to be owed by guarantee).

31    In the circumstances of this case, and noting the significant assets of Mr Mollaian, and the independent evidence of the Trustee as to his position, it is clear that Mr Mollaian is solvent. Even if the Westpac amount is owed by Mr Mollaian, and still outstanding, that would not mean that he is insolvent. In those circumstances and based on the authorities that have been outlined above, particularly Culleton and Shaw, the sequestration order ought not to have been made against Mr Mollaian, given his solvency. As such, I am satisfied that the first element in relation to s 153B is satisfied.

Should the discretion to annul be exercised?

32    It is clear from the terms of s 153B itself that, even if the Court was bound not to make the sequestration order at that time, a discretion must be exercised as to whether to annul the bankruptcy: see Rigg at [79], Heinrich at [20], Eggleston at [16(7)], Yang at [28] and [29(d)], and Zaghloul at [10] and [12] to [13]. Further, as was observed by Emmett J, with whom Katz and Conti JJ agreed in Boles v Official Trustee (2001) 183 ALR 239; [2001] FCA 639 at [16]:

16    On the other hand, at the hearing of an application for annulment, even if the court is satisfied that the sequestration order ought not to have been made, the court nonetheless has a discretion to decline to order that the bankruptcy be annulled, at least in some circumstances.

33    As is clear from the authorities, an applicant for annulment bears a “heavy burden”. In considering the discretion, I will consider the guiding factors from Zaghloul.

Solvency

34    As addressed in more detail above in relation to the first element, I am satisfied on the evidence before the court that Mr Mollaian is solvent. It is unnecessary to repeat the matters which have been addressed above, but insofar as this is a factor in relation to the exercise of the discretion, it weighs in favour of exercising the discretion to annul.

Disclosure of financial affairs

35    In addition to the matters of real property that Mr Mollaian has provided evidence of, he has also provided a copy of the year ending 30 June 2024 notice of assessment from the Australian Taxation Office (ATO), which shows a taxable income of more than $650,000. He has also provided his draft income tax return for the year ending 30 June 2025, which shows a taxable income of approximately $190,000.

36    The Applicant has also provided significant financial information regarding four discretionary trusts of which he is a beneficiary. Given the nature of a discretionary trust, it is unnecessary to describe the financial position of those discretionary trusts further, however it does demonstrate the full and frank disclosure that the Applicant in this matter has undertaken by providing financial information in relation to those trusts.

37    Further, Mr Mollaian has provided company searches and information in relation to the 10 associated companies, of which he is either a director, secretary or shareholder. Financial reports or statements were also provided insofar as they were available in relation to those entities. Mr Mollaian also provided his statement of affairs to the Trustees on 23 December 2025. That statement of affairs has been accepted by the Trustees and by the Australian Financial Security Authority.

38    The Applicant’s first affidavit in support of the application stated that at that time, he was unaware of any other creditors. More recently, the Applicant has provided an additional affidavit regarding a tax debt in his personal name. The Applicant has provided a statement from the ATO’s systems, which establishes that payments have been recently made. Those payments show an amount paid to the ATO in approximately the same amount as was recorded in the report to creditors of the ATO’s debt.

39    Further, there is also an entry recording a charge by way of general interest charge on 28 January 2026, which was applied to the account. The Applicant takes no issue with the ATO charging such amount but has properly brought this to the Court’s attention, together with a document showing payment of that same amount to the ATO today on 29 January 2026. This is also relevant to the Applicant providing disclosure of his financial affairs, as it shows the Applicant actively seeking out amounts which should be paid, paying them, and then, compliant with his obligation for full and frank disclosure, bringing them to the Court's attention.

40    Consideration should be given to the amounts owed to Westpac, being potentially by way of corporate credit cards, in an amount of approximately $65,000. Such an amount, if owed personally by Mr Mollaian, would not result in him being insolvent. However, as he is required to provide full and frank disclosure of his financial affairs, it is relevant to consider it, in this context. There are three relevant credit cards, which are recorded by the Trustees with some of the relevant account numbers for those cards. Two of those account numbers are recorded in the financial statements of associated entities. The inference to be drawn is that those outstanding amounts are more properly liabilities of those associated entities rather than amounts for which Mr Mollaian is personally liable. However, that is subject to the overarching guarantee provided to Westpac, by Mr Mollaian.

41    In relation to the third account number there is a similar account number recorded in the financial statements of an associated entity however, it is not the same. On the face of it, it does appear that there might be a typographical error in the financial statements as it is simply a reordering of two numbers.

42    A letter was tendered from the Applicant's accountants and auditors which confirmed an account with the same number was held by an associated entity of the Applicant. That identified the trustee of the relevant trust, as opposed to the trust's recording of those details in its financial statements, but of course, the credit card account would be held in the name of that trustee.

43    The Applicant has also given evidence that he has a personal guarantee to Westpac not only for these amounts but for a greater sum. Westpac has been served with a copy of the Annulment Application and the supporting material filed in the proceedings on or about 21 January 2026.

44    On 22 January 2026, a telephone call was received from a senior relationship manager at Westpac to the Applicant’s solicitors. The solicitor deposes that, during that telephone conversation, Westpac advised that it did not have any objection to the Annulment Application and it did not wish to participate in it. Westpac did however, seek an update in relation to the Annulment Application when it was determined.

45    In the circumstances of this case, Mr Mollaian has provided full and frank disclosure of his financial affairs, and this is a factor which weighs in favour of annulling the bankruptcy.

Any unexplained delay

46    The sequestration order was made on 2 December 2025. It was made in the absence of Mr Mollaian. Mr Mollaian deposes to receiving correspondence from the Trustees on 12 December 2025. Shortly after that, he engaged his current lawyers. Those legal representatives assisted him in completing his statement of affairs, which was completed by 23 December 2025. Those lawyers continue and are on the record of these proceedings, which was filed on 20 January 2026.

47    On this basis, there is approximately four to five weeks between being advised by the Trustees of the bankruptcy and making the Annulment Application. In that time, Mr Mollaian has completed his statement of affairs, and he has done that first, which is a requirement on him under the Act.

48    This period, as was submitted by Mr Mollaian’s counsel, includes the Christmas and New Year period, and some consideration for the time of year should be given, in considering whether or not there is any unexplained delay.

49    Further, the heavy burden which must be discharged on an application for annulment means that it does take time to properly put the evidence together to satisfy the Court that it is appropriate in the circumstances to grant the annulment. That material comprised approximately 400 pages of affidavit and annexures. It is clear that the Applicant understood the heavy burden which lay upon him and sought to appropriately discharge his onus with that material.

50    In this regard, there is correspondence with the Trustee on 12 January 2026 that consideration, at an earlier time, was being given to an annulment under s 153A of the Act. The Trustees advised that such an annulment may take place on or about 20 March 2026. An inference can be drawn by that date, together with the suggested annulment under s 153A, that with the benefit of advice, the Applicant then chose to advance this Annulment Application. The Applicant was seeking a more expedited process and potentially an earlier annulment, should he be able to satisfy the Court of the necessary elements.

51    In all of these circumstances, I do not consider that there has been any unexplained delay. It does appear that the Applicant has reasonably diligently attended to the steps which were required to be undertaken to advance the Annulment Application.

A failure to attend on the making of the sequestration order

52    The Applicant has deposed to the particular time period when the bankruptcy notice and the creditors’ petition would have been served. He states that, he thinks he would remember being served with such documents, but he cannot remember being served with documents about bankruptcy. The Applicant explains that during that period of time he was experiencing significant personal and family-related difficulties involving his daughter and her subsequent passing from cancer.

53    The explanation provided by the Applicant for his failure to attend is understandable in the circumstances.

54    I accept the Applicant’s evidence that if he had of been aware of the debt at the time, he would have immediately made payment of it. On being notified, he has paid creditors, he has completed his statement of affairs, and he has cooperated with the Trustees. The Applicant’s evidence is consistent with his actions which have taken place since he has been notified and taken appropriate advice.

55    In the circumstances then, his explanation of his failure to attend is accepted and weighs in favour of granting the annulment.

Trustees’ fees

56    The Trustees have provided some evidence of what their anticipated or estimated costs of the annulment are to be. Those costs include not only remuneration but their legal costs and expenses and other disbursements, including realisation charges. The Applicant has agreed an amount and has agreed to pay the Trustee’s remuneration, and costs the subject of any order, as well as any realisation charge and other proper expense from what is described as the former bankruptcy. The amounts identified are also acceptable to the Trustee. This also weighs in favour of granting the annulment.

The basis for finding that the sequestration order ought not to have been made

57    The satisfaction of the first element in the context of this case has been one regarding the satisfaction of the Applicant’s solvency. As the authorities described, the fundamental issue in bankruptcy is solvency. It is “difficult to imagine” a circumstance where a bankrupt who could demonstrate his or her solvency at the time of the sequestration should nonetheless be denied relief on a subsequent annulment application. That the Applicant is solvent not only satisfies the first element in relation to s 153B, but it also weighs in favour of exercising the Court’s discretion to grant the annulment.

CONCLUSION

58    For these reasons, I am satisfied that the sequestration order ought not to have been made, and it is appropriate in the circumstances of this case to exercise the Court’s discretion and annul the bankruptcy.

Associate:    

Dated:    27 February 2026