Kathy Jackson may face second bankruptcy

Legal experts say Kathy Jackson could be forced into bankruptcy a second time, because some of the costs orders which form part of her $2.4 million debt to the Health Services Union will remain­ enforceable for 12 years.

The disgraced union leader declared bankruptcy in June, on the opening day of HSU Federal Court proceedings which resulted in her being ordered to pay $1.4m to the union as compensa­tion for up to $2.5m misappropriated from members while she was its national secretary between 2008 and February this year.

But her discharge from bankruptcy will only remain in place for three years, meaning the HSU may be able to continue to recoup some of the money she owes after that time.

On Tuesday, Ms Jackson’s bill increased by $997,349, when judge Richard Tracey ordered she pay $554,215.67 in interest, $356,500 in legal costs and $86,633.81 in appeal costs.

Brisbane-based commercial barrister Gavin Handran, listed in the most recent Doyles Guide as one of Australia’s leading insolvency and reconstruction junior counsels, said Ms Jackson solicited bankruptcy too early.

“The order for costs, circa $350,000, made by Justice Tracey on 21 December is not a debt provable in her bankruptcy even though it relates to a damages award made before bankruptcy,” Mr Handran said. “The HSU may accordingly enforce that order against her, perhaps resulting in her again becoming bankrupt or surrendering any assets she acquires in the interim, after her current bankruptcy ends.”

Mr Handran said the law applied­ differently to interest and costs. “She might be safe with the interest,” he said.

“I suspect what Kathy Jackson did, like so many in her troubled circumstances, was that she ran off on first day and filed for bankruptcy. That was premature.

“It’s particularly important for the HSU workers to understand that she’s not out of the woods. The sword still hangs over her head.”

“Not only does she face the real prospect of re-entering bankruptcy after she emerges from this period, but there’s also the possibility that the HSU, depending on a cost-benefit analysis, may examine her under oath in the Federal Court, with the assistance of the bankruptcy trustee, to ascertain whether she’s transferred any assets to a third party or (her partner, Michael) Lawler.”

HSU national secretary Chris Brown said the union was “alive to the possibility” of Ms Jackson facing a second round of bankruptcy, or interrogation over the transfer of assets. The union was still determining how it would approach­ the matter.

Ms Jackson may still face criminal charges, with Victoria Police Taskforce Heracles conducting an independent criminal investigation into more than $900,000 spent during her time at the union. She did not return calls yesterday.

Her case is expected to feature prominently in the findings of the Royal Commission into Trade Union Governance and Corruption, with a repor­t due in days.

Article from:- http://www.theaustralian.com.au




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