Federal Court of Australia

Chang v Loebenstein (Trustee), in the matter of the bankrupt estate of Chang [2026] FCA 814

ORDERS

THE COURT ORDERS THAT:

1.    The application of Holly Chang dated 15 April 2026 is dismissed.

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

REASONS FOR JUDGMENT

MCELWAINE:

1    This is another application by Holly Chang arising from her failure to comply with a bankruptcy notice that she pay a relatively modest amount to her brother Victor Chang. That debt is now insignificant in the context of the number of failed applications that Holly has brought in this Court and the Supreme Court of Victoria to avoid payment.

2    On 22 January 2026, Holly was made bankrupt pursuant to a sequestration order made by Registrar Ellis. The order was made upon a creditor’s petition presented by Victor. The creditor’s petition was presented on 20 November 2025 and relied on Holly’s failure to comply on or before 6 November 2025 with a bankruptcy notice served on 3 June 2025. The bankruptcy notice claimed a total debt of $31,137.07, based on costs orders made in the Supreme Court of Victoria on 12 November 2024. On 27 February 2026, the administration of her estate was transferred to the respondent, Mr Joseph Loebenstein (Trustee). 

3    On 15 April 2026, Holly filed an application seeking annulment of her bankruptcy pursuant to s 153B of the Bankruptcy Act 1966 (Cth) (the Annulment Application). In these reasons, each reference to a statutory provision is to the Bankruptcy Act unless otherwise stated.

4    Victor, who is not a party to this proceeding, filed an interlocutory application on 5 May 2026 seeking leave to intervene, as petitioning creditor in the proceeding sequestrating the estate of Holly and as a creditor of the bankrupt estate. In Victor’s supporting affidavit affirmed 5 May 2026, he attaches a letter from the Trustee dated 29 April 2026 which states he does not intend to file an appearance in this matter.

5    Holly and Victor are both self-represented litigants and have been engaged in litigation for several years: see Chang v Chang [2026] FCA 707 at [4] (Chang No 1). On 5 June 2026, I conducted a joint hearing and case management hearing in three matters which relate to Holly’s bankruptcy, including the present matter. Holly was assisted by an interpreter.

6    In VID 1527 of 2025, I heard an application by Holly for an extension of time for de novo review of the sequestration order made by Registrar Ellis. On the same day, I delivered written reasons to the parties dismissing Holly’s application on the ground that there was no adequate explanation for the delay, and in any event, the proposed grounds to oppose the making of a sequestration order were devoid of merit: Chang No 1.

7    The next matter is VID 1534 of 2025 which concerned a notice of appeal filed by Holly to appeal from orders made by Hill J on 21 November 2025. Justice Hill dismissed Holly’s application for review of a Registrar’s orders to dismiss Holly’s application to set aside the bankruptcy notice: Chang v Chang (No 2) [2025] FCA 1441 (Chang No 2). I dismissed the appeal and delivered my reasons ex tempore. The proceeding was stayed upon Holly becoming a bankrupt by reason of the operation of s 60 of the Bankruptcy Act. The Trustee then advised the Court that no election had been made to continue the proceedings, and accordingly the proceeding was deemed to be abandoned pursuant to s 60(3). A further reason for the dismissal is that the appeal is no longer of any utility.

8    I did not deal with matter VID 1647 of 2025, which is an application by Holly to set aside a separate bankruptcy notice dated 9 December 2025 concerning a further alleged debt. On 27 March 2026, Moshinsky J stayed that proceeding.

9    In the present matter, VID 358 of 2026, I granted Victor leave to intervene in this proceeding pursuant to r 9.12 of the Federal Court Rules 2011 (Cth), which was not opposed by Holly. I then heard an application by Holly for interim relief restraining the Trustee from taking possession of or interfering with a vehicle currently in her possession, which I dismissed. Orders were then made which set a timetable for any further evidence and submissions of Holly, and any responding evidence and submissions from Victor, including submissions from each party as to whether this matter requires an oral hearing or whether it can be dealt with on the papers. Each party submitted that the Annulment Application is one suitable for determination on the papers. I agree.

10    The Trustee was provided with the orders of 5 June 2026, including an order granting liberty to apply to file evidence and or submissions if it thought fit. No such application has been received.

Legal Principles

11    Holly references ss 153A and 153B in her written submissions. Her reliance on s 153A is misconceived as it only applies where the Trustee is satisfied that all the bankrupt’s debts have been paid in full. The Trustee has not formed that view.

12    Section 153B confers a discretionary power to the Court to annul a bankruptcy:

(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.

13    The principles concerning s 153B are well established. An applicant who seeks an annulment of bankruptcy carries a heavy burden and must put before the Court all relevant material with respect to their financial affairs so that the Court is properly informed and can make a judgment based on their actual circumstances: Thompson v Lane [2023] FCAFC 32; (2023) 410 ALR 439 at [99] (Downes J); Sayer-Jones v Official Trustee in Bankruptcy [2022] FCA 1199 at [8] – [16], Raper J.

14    The discretion of the Court is not enlivened unless satisfied that the sequestration order ought not to have been made. In considering that issue the question is whether, on the facts at the time, the Court was bound not to make an order: Yang v L & H Group [2015] FCA 932 at [29] (Beach J). The Court must consider facts existing at the time even if those facts were not then placed before the Court. Facts that have occurred subsequently to the sequestration order should not be considered, although they are relevant to the exercise of discretion to annul if the discretion is invoked: Yang at [29].

15    Solvency is fundamental to the jurisdiction of bankruptcy: Culleton v Balwyn Nominees Pty Ltd [2017] FCAFC 8; (2017) 343 ALR 632 at [40] – [43] (Allsop CJ, Dowsett and Besanko JJ). A sequestration order should not be made against the estate of a solvent person: Alam v QBE Insurance (Australia) Ltd [2018] FCA 1560 at [2], Lee J.

16    In Zaghloul v Jewellery & Gift Buying Service Pty Ltd [2020] FCA 1045 at [12], Banks-Smith J very helpfully summarised the matters usually considered:

(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 (Bulic v Commonwealth Bank of Australia Ltd [2007] FCA 307 at [12]; and Re Papps; Ex parte Tapp (1987) 78 FCR 524 at 531);

(c)     unexplained delay in any application;

(d)     a failure by the bankrupt to oppose the creditor's 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 the 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.

The Annulment Application

17    Holly has filed multiple written submissions and relies on her affidavits made on 17 and 22 April, 22 May and 9 June 2026. I will take each as read without objection. Victor has filed written submissions in his capacity as an intervener.

18    Holly submits that this is not a “conventional case of insolvency” and that the bankruptcy was not founded on a final debt because the costs orders are subject to ongoing disputes and are therefore not final. As stated in Chang No 1 at [20], that contention was held to be meritless by Hill J in Chang No 2, and further, Hannon J in Chang v Chang [2025] VSC 715 at [57] – [60] dismissed an application to extend time for leave to appeal from the costs orders, as there was “no real prospect” of establishing that the costs orders were affected by error. Further, Holly submits that in this case the bankruptcy jurisdiction is being used for collateral purposes, including as a means of pressure, to take control of long running litigation and to stifle the determination of a genuine and substantial dispute.

19    Holly also submits that, without admission of liability, she is now in a position to satisfy the debt which founded the sequestration order, and the remuneration and expenses of the Trustee. She discloses that she has access to financial assistance through family members who are willing to provide funds sufficient to discharge that debt. She submits that she is not insolvent and the availability of these funds supports the conclusion that the sequestration order ought not to have been made and that the interest of creditors can be adequately protected without the continued administration of the bankruptcy. She submits that the continuation of the bankruptcy no longer serves any practical purpose and that the continuation of the bankruptcy would be unjust and disproportionate. Her affidavit of 9 June 2026 attaches a bank cheque in the amount of $31,137.07, being the amount of the petition debt and she states that she is willing to provide the cheque to the Court, the Trustee, or otherwise comply with directions concerning payment of the debt.

20    In summary, Victor submits that the Annulment Application should be dismissed for the following reasons. The copy of the bank cheque attached to Holly’s affidavit is not payment of the bankruptcy debts as it has not been paid to the Trustee or the Court, it has not been accepted by any creditor or applied in the administration of the estate. Holly’s evidence does not address her bankruptcy as a whole, including all proved debts, interest, costs, charges, expenses and Trustee remuneration. Holly has provided no evidence that engages with why the sequestration order ought not to have been made. Her submissions are repetitive of claims which were found to have no merit in Chang No 1. Holly’s Statement of Affairs dated 2 February 2026 admits insolvency from May 2025 and records unsecured debts totalling $1,547,329 and discloses no significant assets. Finally, Holly’s application is an attempt to re-agitate matters that have been rejected multiple times in various matters, as set out in Chang (No 1) at [4] and [20] – [25].

Consideration

21    The Annulment Application fails at the first hurdle. I am not satisfied on the evidence and having regard to the protracted history of Holly’s applications that the sequestration order ought not to have been made. Holly has not provided any evidence of facts that existed at the time of the order which were not previously before the Court, nor is there any evidence that she was solvent at the time the sequestration order was made. While Holly may now be able to satisfy the petition debt, this fact arose after the sequestration order was made and must not be taken into account: Yang at [29]. Further, Holly in her affidavit of 22 April 2026 acknowledges the Statement of Affairs she signed on 2 February 2026 which admits insolvency from May 2025, and records unsecured debts of $1,547,329 with no significant assets. She does not now provide any evidence to prove otherwise.

22    Holly’s affidavits and submissions repeat her multiple claims to the effect that the debt is not owed to Victor, that he has engaged the bankruptcy process for an improper purpose (the collateral purpose contention), that there is a broader unresolved dispute concerning her interest in family properties and that Victor’s proceedings amount to an abuse of process. None of these arguments have achieved traction in any of Holly’s prior applications to this Court or the Supreme Court of Victoria. All of her contentions have failed. Now is not an opportunity to re-agitate any of them.

23    The Annulment Application is accordingly dismissed.

Associate:

Dated:    26 June 2026