A bankrupt’s bid to force an annulment has demonstrated the pointless circularity accompanying disputes where a debtor’s debts have been discharged but the trustee refuses to facilitate annulment without a deed of release and indemnity being agreed, which the debtor agrees to provide once their bankruptcy is annulled.
“I have recovered sufficient funds to likely annul this bankruptcy and pay in full all of the bankrupt’s debts which include the costs of the administration of the bankruptcy, subject to resolving allegations and potential claims by the bankrupt, his wife and their associated entities against me as Trustee of the bankrupt estate.” Louisa Sijabat, November 27, 2024.
On Monday the outcome of just such a dispute was a win for the trustee who, despite holding sufficient funds to pay all creditors and all costs had declined to file the certificate of annulment with AFSA because the bankrupt, his wife and their associated entities wouldn’t agree to abandon potential claims they alleged against the trustee until the annulment was made real.
The decision in Warren v Sijabat, in the matter of Warren (Bankrupt) [2025] FCA 1410 is good news for Merchants Advisory founder and trustee in bankruptcy Louisa Sijabat, who managed to antagonise bankrupt Piers Warren by failing to act when he first told her to appoint new directors to his companies in the wake of orders sequestering his estate in April 2023.
According to Warren, Sijabat’s failure to appoint new directors saw his companies deregistered, leading to the loss of profitable business opportunities.
Those asserted losses were the foundation for the claims Warren, his wife and their associated entities threatened to litigate against Sijabat unless she took the steps necessary to annul and which she referred to in her report sent to creditors on November 27, 2024.
“I have recovered sufficient funds to likely annul this bankruptcy and pay in full all of the bankrupt’s debts which include the costs of the administration of the bankruptcy, subject to resolving allegations and potential claims by the bankrupt, his wife and their associated entities against me as Trustee of the bankrupt estate,” Sijabat said and sufficient those funds were, comprising more than $600,000 bequeathed to Warren by his deceased father.
Even the appetite of Sijabat’s lawyers from ERA Legal was sated by the windfall but the acrimony between Warren and his trustee confounded a sensible resolution, as Justice Melissa Perry explained.
” … during the course of the bankruptcy Mr Warren and entities associated with him (family entities) made numerous claims or demands for compensation against the trustee for alleged breaches of her obligations in the administration of the bankrupt estate. The family entities included Solar Projects Australia Pty Ltd and Green Box Energy Pty Ltd.
“An example is contained in the letter dated 31 July 2023 from Mr Warren to the trustee, purportedly on behalf of Solar Projects, demanding compensation of $2,800,845.44.
“The compensation was said to have been calculated by reference to alleged lost rent over 10 years which Solar Projects would have obtained from Green Box Energy, and is said to have lost because Solar Projects was unable to purchase land due to the alleged inaction of the trustee in changing the directorship of Solar Projects,” the judge said.
Setting aside the fact that Warren could not have acted on behalf off Solar Projects in July 2023 because he was a bankrupt, the threatened claims were never going to work as leverage because they were simultaneously the brake preventing Sijabat from lodging the certificate of annulment.
As Warren’s lawyer Philip Beazley suggested to her honour during the hearing, if the parties had found their way to an agreement “we’d be here having an argument about costs”.
Not that such an argument can’t still happen, with Justice Perry ordering Warren to pay Sijabat’s costs and the parties having until December 1 to lodge their submissions.
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