Honi was a famous artist. He became bankrupt on 1st February 2009 when a sequestration order

was made. The bankruptcy petition was based on Honi's failure to comply with a bankruptcy notice

on 27th November 2008.

Honi had the following debts:

Trade creditors $1.5 million.

Money owing to Samantha, a former employee, being $5,000 for wages and $2,000 for long

service leave.

Unpaid taxation deduction for Samantha's wages and superannuation $2,000.

Unpaid Child support for his son Heke $150,000.

The costs of the petitioning creditor and the trustee total $10,000 each

Honi died on 28th February 2009. His funeral and cremation expenses totalled $8,000

The trustee has located the following assets.

Cash in Honi's bank account $20,000 (proceeds of auction)

Paintbrushes and art material $3,800

Paintings $85,000 (not the ones sold at auction)

Life insurance policy of $50,000 taken out in 1998.

The trustee discovers the following facts:

On 10th August 2007 Honi had settled $10,000 on Pania in anticipation of their marriage. The

marriage took place on 11th August 2007. Pania died on January 21st, 2008. $10,000 was spent on

funeral expenses. On 15th March 2008 Honi gave Goldi a painting worth $50,000. On June 1st,

2008, Honi failed to comply with a bankruptcy notice. On 25th June 2006 Honi sold his Jaguar car

worth $25,000 to Goldi for $100. On 30th January 2009 Honi sold paintings he thought to be worth

$200,000 at public auction. The paintings realised only $20,000 and were bought by Honi's mother.

Required

Stating legislative provisions in the Bankruptcy Act 1966 (Cth) and appropriate case law, where

possible, advise the trustee what debts have priority and how much each will receive.