How does Bankruptcy and Managerial Involvement with Insolvent Companies affect Australia Visa Applications?

This article examines the effect of bankruptcy and a record of involvement with insolvent companies on Australia visa applications, including which visas are affected by criteria requiring a visa applicant to have had an ‘overall successful business career’ or an ‘overall successful record of eligible investment or qualifying business activity’.

1. The Character Test

When applying for an Australian visa, all visa applicants must be of ‘good character’ to pass what is termed the ‘Character Test’.  A visa applicant will not pass the Character Test if:

• the applicant has a substantial criminal record;
• the applicant has been convicted of escaping from immigration detention, or convicted for an offence that he or she committed:
• while you were in immigration detention;
• during an escape from immigration detention; or
• after an escape, but before you were taken into immigration detention again;
• the applicant is or has been a member of a group or organisation, or had or have an association with a person, group or organisation that the Minister reasonably suspects of being involved in criminal conduct;
• the Minister reasonably suspects that the applicant has been involved in people smuggling, people trafficking, genocide, a war crime, a crime against humanity, a crime involving torture or slavery, or a crime that is of serious international concern, whether or not he or she have been convicted of such an offence;
• the applicant’s past and present criminal or general conduct shows that he or she is not of good character;
• there is a risk that while the applicant is in Australia he or she would:
• engage in criminal conduct;
• harass, molest, intimidate or stalk another person;
• vilify a segment of the Australian community;
• incite discord in the Australian community or in a part of it; or
• be a danger to the Australian community or a part of it;
• the applicant has been convicted, found guilty or had a charge proven for, one or more sexually based offences involving a child;
• the applicant is subject to an adverse security assessment by the Australian Security Intelligence Organisation; or
• the applicant is subject to an Interpol notice, from which it is reasonable to infer that he or she is a direct or indirect risk to the Australian community, or a segment of the Australian community.

The Character Test does not involve an assessment of a visa applicant’s financial or business history nor does it take into account any history of bankruptcy or involvement as a director of an insolvent company that has been wound up.

Because the Character Test does not involve such an assessment, most visas including all skilled, partner and employer sponsored visa applications can be successfully applied for notwithstanding a history of bankruptcy or involvement in a company that has been liquidated.

2. Visas that require the applicant to demonstrate an ‘overall successful business career’ or an ‘overall successful record of eligible investment or qualifying business activity’

Bankruptcy or involvement in a company that has been liquidated however may preclude applicants for certain business and investment visas from being granted a visa where a criterion for the grant of the visa is that the applicant has had an ‘overall successful business career’ or an ‘overall successful record of eligible investment or qualifying business activity’.

Two streams of the Business Innovation and Investment Program under subclass 188 of the Migration Regulations 1994 (Cth) (‘Regulations’) require applicants to have had an ‘overall successful business career’ or an ‘overall successful record of eligible investment or qualifying business activity’, as follows:

• Business Innovation stream: for people with business skills who want to establish, develop and manage a new or existing business in Australia; and
• Investor stream: for people who want to make a designated investment of at least AUD1.5million in an Australian state or territory and maintain business and investment activity in Australia.

Another visa where applicants need to have had an ‘overall successful business career’ is the Significant Business History Stream of the Business Talent Visa under subclass 132 of the Regulations. This is a visa for high-calibre business owners or part-owners who want to do business in Australia who have assets of AUD 1.5 million and business turnover of AUD 3 million.

3. Departmental Policy

For these business and investment visas, the Department of Home Affairs’ policy states that in any assessment of the applicant’s business career/eligible investment activities, the performance of businesses or investments in which the applicant has had a management role is a relevant factor.

Pursuant to Departmental policy[1], this criterion generally should not be considered satisfied if:

• the applicant has experienced bankruptcy;
• the applicant is (or has been) actively involved in a business that is (or has been) subject to insolvency, receivership or liquidation; or
• the business has suffered recent trading losses and the business is considered unlikely to be successful in the longer term.

Case officers are instructed to take into account:

• the degree (if any) to which factors were outside the control of the applicant;
• how many times the applicant has experienced bankruptcy or been involved in a failed business;
• the applicant’s history in business since any bankruptcy or failed business or investment;
• the impact of external economic trends (for example, recession/inflation);
• a fall in stock market price;
• a fall in property values; and/or
• a change in taxation/tariff regime (or similar) adversely affecting the trading position of the business.

An applicant may claim that a loss was the result of assets being legitimately transferred from the qualifying business or eligible investment to the applicant and/or the applicant’s spouse or de facto partner (in other words, that if the transfer had not occurred the business or investment would have shown a profit).

The policy intention is to assess the applicant’s performance in qualifying businesses or eligible investments for the totality of their business and investment career and as such, even if you are or have been bankrupt or have been a director of a company that has entered external administration, submissions can be prepared to highlight the relevant factors (as detailed above) that may have externally impacted the success of an investment or business career.

4. How we can help

If you are considering applying for a business or an investment visa and have a history of bankruptcy, involvement with a company that has entered external administration or failed business/investment ventures, we strongly recommend that you get in touch with one of our highly qualified immigration and commercial lawyers for advice as to whether your financial history will adversely affect your prospects of successfully applying for a visa and if so, how Marino Law can assist you to overcome any such issue.

In many cases, Marino Law can prepare submissions to support the satisfaction of the overall successful business career criterion/the overall successful record of eligible investment or qualifying business activity criterion by emphasising the successful elements of a visa applicant’s career along with highlighting any external factors that may have adversely impacted the success of a business or investment career.

[1] Department of Home Affairs, Policy Advice Manual, PAM3-Regulations; Sch2 Visa 188 – Business Innovation and Investment (Provisional);Management Skills.