The purpose of a bankruptcy notice is to create a presumption that the subject is bankrupt, and as such, the court focuses on the procedure and not the legitimacy of the alleged debt. Therefore, the process for setting aside a bankruptcy notice occurs at the procedural level, e.g. if it was not adequately served.
The court will look at some variation of these considerations when determining whether to set aside a bankruptcy notice:
- Was the notice defective or irregular?
- If so, is the defect or irregularity substantive or formal?
- If the defect is formal only, is it substantial and not able to be remedied by the court?
A debtor has 21 days from the date of being served with a Bankruptcy Notice to apply to the Court for it to be set aside. A Court can “set aside” a Bankruptcy Notice when a debtor has filed an application to set aside a Bankruptcy Notice on one or more grounds.
A debtor may apply to the Court to set aside the Bankruptcy Notice on multiple grounds as set out in the Bankruptcy Act 1966 (Cth), such as sections 41(6A)(a), 41(6A)(b), 41(6C), 40(1)(g) and 41(7).