PIA (Part X) Agreements

Part X of the Bankruptcy Act provides a process by which a debtor may make a proposal to their creditors which they consider and vote upon at a formal meeting. It is an alternative to bankruptcy.


Once accepted, the proposal is binding on the debtor and all creditors in respect of their unsecured provable debts. It enables the debtor and creditors to come to a mutually agreed compromise in a relatively simple way without reference to the court.

On 1 December 2004 a new Part X, called a Personal Insolvency Agreement (PIA) was introduced to replace the existing regime of three types of agreements:

  • a deed of assignment
  • a deed of arrangement and
  • a composition.

Traditionally PIA administrations are administered by Registered Trustees. They may also be administered by the Official Trustee in Bankruptcy (through the Insolvency and Trustee Service Australia, `ITSA’). The costs of setting up and administering a PIA arrangement are such that there needs to be a significant level of property or income available to creditors for a Part X to be cost effective.

Debtors who are considering a Personal Insolvency Agreement as the best way of coming to a formalised agreement with their creditors need to know the consequences. These can be located on the ITSA website.

Debtors who sign an authority on or after 1 December 2004, need to know that they are disqualified under the Corporations Act from managing a corporation if they enter into a Personal Insolvency Agreement under Part X and the terms of the agreement have not been fully complied with. This is a change from the former regime whereby debtors who entered into a Deed of Assignment were not disqualified. Further information about what you need to do if you are presently managing a corporation is available from Australian Securities & Investment Commission.

PIA (Part X)