Bankruptcy disqualified him, removed him as director and started a six month clock on the fund. The Federal Court granted relief before it ran out.
Your client goes bankrupt. They are the sole director of their SMSF’s corporate trustee. Six months later, absent relief, the fund loses its status as a self-managed super fund. Not because of fraud. Because of an automatic legislative cascade.
Hunt, in the matter of Hunt (Bankrupt) [2026] FCA 389 (7 April 2026).
The cascade
Bankruptcy triggers three things at once.
First, disqualified from managing corporations under s 206B(3) of the Corporations Act. Automatic.
Second, ceases to be a director of the corporate trustee under s 206A(2)(a). The corporate trustee now has no director.
Third, becomes a disqualified person under s 120(1)(b) of the SIS Act. It is an offence under s 126K to act as trustee knowing you are a disqualified person.
Section 17A(2) requires the member to be a director of the corporate trustee. That condition fails. Section 17A(4)(b) gives six months. After that, the fund ceases to be an SMSF. If the Commissioner issues a s 40 notice that the fund is not complying, it becomes non-complying. The tax consequences are severe.
In Hunt, the fund held approximately 3.66 million shares in a listed company Mr Hunt co-founded [8, 38]. No small APRA fund would accept the shares [38]. Selling them on a market trading around 80,000 shares per day would have damaged the price [38]. There was no practical alternative.
The relief
Two applications. Leave to manage the corporate trustee under s 206G(1)(c) of the Corporations Act. An order under s 126J(1)(b) of the SIS Act that Mr Hunt not be a disqualified person.
McDonald J applied the Re Macalister [2021] FCA 1455 factors [34]. The corporation’s only function was acting as trustee of the fund [35]. No employees, no external creditors, no subsidiaries [35]. The bankruptcy arose from a tax liability after an ATO audit of 2008 to 2016 income years [9, 36]. It was not incurred through dishonesty, fraud or intentional misconduct [36]. Mr Hunt submitted, without contradiction, that he co-operated with his trustee in bankruptcy [37]. He was the only person with a financial interest in the fund [37].
Both orders granted. Conditions: the corporate trustee can only act as trustee of the fund [42] and Mr Hunt cannot be or act as trustee, investment manager or custodian of any other superannuation entity until discharged [43]. Neither ASIC nor the Commissioner opposed [17].
The practitioner takeaway
The pathway exists but requires a Federal Court application, affidavits and service on ASIC, the Commissioner, the trustee in bankruptcy and known creditors [14]-[16]. Written notice must be lodged with the Commissioner at least 21 days before filing [29]. Obtain the orders within the six-month window under s 17A(4)(b) [27].
Where the bankruptcy did not involve dishonesty, the fund structure is simple and no third parties are at risk, the Court may grant relief. Hunt follows Re Frigger [2019] FCA 1730 and Re Wake [2025] FCA 1481.
If your client faces bankruptcy and holds an SMSF through a corporate trustee, act before the cascade completes.
General information only. This note was accurate when written. The law may have changed since and the note is not updated. It is not legal or tax advice, does not take account of your circumstances and must not be relied upon as a substitute for advice on your own matter. If the issue is live for you or your client, email arda@nortonquaytaxlaw.com.au for advice on the current position.