The Federal Court has ordered that Mr Michael Christodoulou King be bankrupted following ASIC’s presentation of a creditor’s petition regarding his failure to pay a pecuniary penalty order of $300,000.
Justice Kylie Downes found the Court could make orders to declare Mr King bankrupt based on the unpaid pecuniary penalty, even though such debt is not one provable in bankruptcy.
Her Honour decided to bankrupt Mr King on the basis that:
- he owes provable debts exceeding $177 million and there was no evidence to suggest he can pay them (and is therefore insolvent);
- there is a strong public interest in protecting the public and giving fair notice in dealing with an insolvent person; and
- there was nothing inappropriate in ASIC seeking bankruptcy against an insolvent debtor, or about the fact that it had done so without having its costs orders assessed.
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Background
ASIC previously took enforcement action against Mr King, with the Queensland Supreme Court finding in May 2016 that he, together with four other individuals, committed 217 breaches of the Corporations Act regarding the misappropriation of funds from the Premium Income Fund (16-158MR and 17-157MR).
In May 2017, the Supreme Court ordered that Mr King be disqualified from managing corporations for 20 years, pay the Premium Income Fund compensation of $177 million; pay a pecuniary penalty of $300,000 and pay a proportion of ASIC’s legal costs.
Although Mr King was partially successful on appeal to the Queensland Court of Appeal, that decision was ultimately overturned by the High Court and the trial Judge’s orders on penalty were reinstated (20-060MR).