AFSA takes former Mackay Goodwin trustee to Federal Court

According to AFSA, Leroy was deregistered as a registered trustee last year and was now seeking court action to declare he had breached his duties, was not a fit and proper person to act as a bankruptcy trustee and must repay misappropriated funds and improper remuneration.

This event marked the first application of its kind by the Inspector-General, Tim Beresford, highlighting AFSA’s strengthened regulatory posture and its commitment to holding insolvency professionals and firms to account.

Within the court order, Beresford said AFSA’s application would look to achieve:

·       Declarations that Leroy breached his statutory and fiduciary duties.

·        A declaration that Leroy is not a fit and proper person to be a bankruptcy trustee.

·        An order prohibiting Leroy from applying for registration as a bankruptcy trustee for a period of 15 years.

·       Orders that Leroy repay the amounts of the alleged misappropriated funds to the affected bankrupt estates now administered by the official trustee and to an individual whose bankruptcy was annulled.

·       An order directing Mackay Goodwin, the firm that employed Leroy, to account for all remuneration approved and/or received by Leroy, Mackay Goodwin, or its agents in connection with the relevant bankrupt estates or property.

·       An order requiring Leroy and/or Mackay Goodwin to repay such remuneration to the affected bankrupt estates and the individual whose bankruptcy was annulled.

“Our regulatory actions are focused on protecting the integrity of Australia’s personal insolvency system. These actions send a clear message, if you misuse trust funds or breach your obligations as a trustee, we will hold you to account.”

AFSA noted among the affected estates administered by Leroy was the second bankrupt estate of former Health Services Union secretary, Kathy Jackson.

Heard in the Federal Court before Justice O’Callaghan on Wednesday (12 November), ASFA’s proceedings complemented existing court actions brought by the current registered trustees of the Jackson estate, who were also seeking recovery of allegedly misappropriated funds.

“Investigations by those registered trustees into the administration of the second Bankrupt Estate of Kathy Jackson were funded by AFSA on behalf of the Commonwealth under section 305 of the Bankruptcy Act 1966,” AFSA said.

“That funding was approved on the basis that it furthered AFSA’s regulatory aims in the AFSA Regulatory Action Statement 2025-26, including to ensure the proper administration of bankruptcies and prevent unauthorised access to trust funds for personal gain.”

Beresford said this action reflected ASFA’s broader harms-based regulatory reset, which focused on manipulation of personal insolvency proposals and creditor meetings to protect wealth, unauthorised access to trust funds for personal gain, harmful insolvency advice and debt agreements, as well as not removing registrations on the personal property securities register.

“Our regulatory actions are focused on protecting the integrity of Australia’s personal insolvency system. I am sending a clear message – if you seek to exploit the system or vulnerable Australians, you will be held to account,” he said.

“Trust in the foundation of a fair and functioning insolvency system. AFSA’s actions are not just about recovering funds, they are about protecting the public well, delivering public value and ensuring that Australians can rely on the system to be fair, transparent and accountable.”