Change bankruptcy trustee

When someone goes bankrupt, they appoint a bankruptcy trustee. Their bankruptcy trustee must be a qualified and registered Trustee and they have duties to various parties including creditors.

But sometimes a creditor may want to change a bankruptcy trustee, perhaps due to disputes, differences of agreement or to have someone else appointed to investigate a bankrupt’s affairs.

Whatever the reason, a creditor has the right to remove and appoint a trustee of their choice, provided that certain steps are taken.


The Bankruptcy Act provides that a bankruptcy trustee may be removed by way of a resolution at a meeting of creditors. It follows therefore, that a meeting must first be called before any resolution can be passed. A bankruptcy trustee must convene a meeting (even if it is to replace themselves) if any of the following occurs:

  • At least 25% in value of total creditors’ debts direct the trustee to do so in writing; or
  • Where there is between 10% and 25% in value of creditors directing the trustees to do so in writing, provided that security for costs for holding the meeting is provided to the trustee prior to the meeting; or
  • A committee of inspection, if there is one, directs the trustee to do so; or
  • The creditors direct the trustee to do so by way of a resolution.

Of the above, it is most common that a large creditor owed more than 25% in value of total creditors’ debts directs the trustee to convene a meeting.

How does voting at the meeting work

Voting on the resolution to replace a bankruptcy trustee is initially on the voices, meaning if a majority of the creditors at the meeting want the trustee replaced the resolution will pass. However, if a Poll is called for (which it often is and which can be requested by the current trustee), then for the resolution to pass there must be a majority in number of creditors at the meeting voting for it and those creditors must be owed a majority of the debts.

In calculating majorities only debts of creditors who are at the meeting and voting are counted.

If there is a deadlock (e.g. a majority in value voting for removal and a majority in number voting against) then the trustee has the deciding vote and he or she can either vote to replace himself or herself or not exercise the deciding vote in which case the resolution fails and the current trustee remains.

Contact Us For Assistance

It is worth noting that replacing a trustee may not always be the solution, especially when there is no problem to begin with. Certain steps should be taken to determine whether a trustee should be replaced in the first place.

We are registered bankruptcy trustees ourselves for more than 25 years. We have the experience and skills necessary to provide you with advice on this highly technical area. So, get in touch with us on 1300 906 966 or send us an email at to arrange a free confidential initial discussion. Our experienced team will be able to provide you with viable options in dealing with your predicament.


Posted on 07-05-21 in Bankruptcy Assistance, Personal finance insights and updates.