Roberts [2025] FCA 957 Court allows SMSF management despite bankruptcy
In the matter of an application by Roberts [2025] FCA 957, the Federal Court (Court) has granted Mr Roberts leave to manage the corporate trustee of a self-managed superfund (SMSF), despite his status of being bankrupt. The case provides an understanding of how the Court may exercise its discretion and the relevant factors it may consider in granting leave to a bankrupt person to manage a SMSF.
Background
Mr Roberts and his wife were the sole members of an SMSF known as the Roberts Family Superannuation Fund (Fund).
Mr and Mrs Roberts were the sole shareholders of the trustee of the Fund, Streborac Superannuation Pty Ltd (Streborac). At the time of his bankruptcy, Mr Roberts was a director of Streborac.
Streborac was incorporated solely to act as corporate trustee of the Fund.
Mr Roberts filed for bankruptcy after his building and construction company experienced significant financial difficulties in the wake of the COVID-19 pandemic, and the company was placed into voluntary liquidation.
The bankruptcy disqualified him from managing corporations and as a consequence meant that he was prohibited from acting as a director of Streborac as trustee for the Fund.
Legislation
Under section 206B(3) of the Corporations Act 2001 (Cth) (Corporations Act), upon becoming bankrupt, a person is disqualified from managing a corporation. Pursuant to section 206A of the Corporations Act, acting in management roles after being disqualified is an offence. However, under section 206G(1)(c) of the Corporations Act, the Court may grant leave to a bankrupt to manage a corporation.
Similarly, under section 120(1)(b) of the Superannuation Industry (Supervision) Act 1993 (SIS Act), a person becomes a “disqualified person” if they are insolvent under administration, and it is an offence under section 126K(4) of the SIS Act for a disqualified person to act as a responsible officer. As mirrored in the Corporations Act, section 126J of the SIS Act provides that the Court may order that a bankrupt person is not a disqualified person.
Principles Applied
The Court has determined that similar principles apply to the exercise of discretion under both the Corporations Act and SIS Act.
The Court considered a wide range of factors, including but not limited to:
Mr Roberts’ bankruptcy was a result of economic and wider events beyond Mr Roberts control rather than mismanagement or incompetence. There was no reason to suggest that he was not of good character;
evidence suggests that Mr Roberts behaved responsibly in response to the financial difficulties including seeking professional advice;
Mr Roberts cooperated with the trustees in bankruptcy;
Streborac acts solely as trustee of the Fund. There are no employees or creditors;
the only people with any financial interest in the Fund are Mr and Mrs Roberts;
the protection of the public did not persuade against granting leave; and
no third parties opposed the application for leave, despite relevant persons and authorities having been given notice of the application.
Outcome
The Court determined to grant Mr Roberts leave to manage Streborac under both the Corporations Act and the SIS Act on the condition that Streborac confine itself to acting only in the capacity of trustee for the Fund and to do things that are reasonably incidental to acting in that capacity .
Key Takeaways
In limited circumstances, the Court may be willing to exercise its discretion and depart from the general disqualifications imposed as a result of bankruptcy by the Corporations Act and SIS Act in circumstances where the factors surrounding the bankruptcy do not disqualify the individual and where risk to third parties and the wider public is nominal.
For more information, please contact:
Alasdair Woodford
Principal
T: 03 5225 5217 | M: 0436 456 144
E: awoodford@ha.legal
Joseph Flanagan
Senior Associate
T: 03 5226 8504 | M: 0491 307 550
E: jflanagan@ha.legal
Ella Handreck
Lawyer
T: 03 5225 5206
E: ehandreck@ha.legal
Jess Loftus
Lawyer
T: 03 5225 5207
E: jloftus@ha.legal
