Are some estates too complex for Part X?

In Kambouris v Paule, in the matter of Paule [2025] FCA 1590 (15 December 2025), the Court released the debtor’s property from control by his controlling trustee. Contrary to undertakings given to Court that the debtor had at least $20m of unencumbered property and 2 creditors totalling $26m, his statement of affairs declared no unencumbered property and 10 creditors totalling $371m. The Part X was commenced after 4 years of intense litigation and multiple adjournments of a creditors' petition.

While this abuse of Part X should rightly have been set aside, one aspect of the decision is troubling. In dealing with the proposition that the proceedings were “ill-suited for the application of the Part X regime having regard to the complexity of the inquiries that the controlling trustee must make” His Honour described Part X from first principals as a “simple and flexible process for debtors and creditors to come to an agreement” and found “When these factors are considered in light of the time constraints imposed upon the controlling trustee… … I consider that the circumstances of the present case are special or unusual. In this regard they certainly do not have the character of events that one might normally expect in an application of Part X of the Bankruptcy Act.”

However, there is nothing in Part X which limits the size or complexity of matter that can be dealt with under the Part and debt agreements (Part IX) already exist for smaller and simple estates. The fact that a debtor exaggerated his wealth before the appointment and stacked his statement of affairs with dodgy creditors is not particularly special or unusual in this trustee’s experience.