Companies Amendment Act 2006

1: Title
This Act is the Companies Amendment Act 2006.
2: Commencement
This Act comes into force on a date to be appointed by the Governor-General by Order in Council; and 1 or more orders may be made bringing different provisions into force on different dates. Section 2 brought into force 1 November 2007 clause 2 Companies Amendment Act 2006 Commencement Order 2007 (SR 2007/297).
3: Principal Act amended
This Act amends the Companies Act 1993
4: Interpretation
1: Section 2(1) property receiver section 2(1) of the Receiverships Act 1993 . OIC SR 2007/297 2007-11-01 Section 2(1) receiver
2: Section 2(1) spouse A . OIC SR 2007/297 2007-11-01 Section 2(1) spouse
5: Interpretation
Section 227 company Part 18 . OIC SR 2007/297 2007-11-01 Section 227 company Voluntary administration
6: New Part 15A inserted
The following Part is inserted after Part 15
15A: Voluntary administration
1: Preliminary
239A: Objects of this Part
The objects of this Part are to provide for the business, property, and affairs of an insolvent company, or a company that may in the future become insolvent, to be administered in a way that—
a: maximises the chances of the company, or as much as possible of its business, continuing in existence; or
b: if it is not possible for the company or its business to continue in existence, results in a better return for the company's creditors and shareholders than would result from an immediate liquidation of the company. Corporations Act 2001 (Australia) s 435A
239B: Interpretation of some key terms
The following are some key terms used in this Part and their meanings: administrator deed administrator deed of company arrangement watershed meeting
239C: Interpretation of other terms
In this Part, unless the context otherwise requires,— company convening period section 239AT(2) creditor
a: a person who, in a liquidation, would be entitled to claim in accordance with section 303
b: a secured creditor enforcement process
a: execution against that property; or
b: any other enforcement process in relation to that property that involves a court or a sheriff insolvent sheriff
239D: When administration begins
The administration of a company begins when an administrator is appointed under this Part. Corporations Act 2001 (Australia) s 435C(1)
239E: When administration ends
1: The administration of a company ends when—
a: a deed of company arrangement is executed by both the company and the deed administrator; or
b: the company's creditors resolve that the administration should end; or
c: the company's creditors appoint a liquidator by a resolution passed at the watershed meeting.
2: However, the administration of a company may also end in the following instances:
a: if the Court orders that the administration end, for example because the Court is satisfied that the company is solvent, the administration ends on the date specified in the order or, if no date is specified, when the order is made; or
b: if the convening period expires without the watershed meeting having been convened or without an application having been made to extend the convening period, the administration ends at the end of that period; or
c: if an application has been made to extend the convening period, which has expired after the application was made, the administration ends when the application is refused or otherwise disposed of without the convening period being extended; or
d: if the watershed meeting ends without a resolution that the company execute a deed of company arrangement, the administration ends at the end of that meeting; or
e: if the company fails to execute a proposed deed of company arrangement within the time allowed by section 239ACO or 239ACP
f: if the Court appoints a liquidator or an interim liquidator, the administration ends at the time when the order is made. Corporations Act 2001 (Australia) s 435C(2), (3)
2: Appointment of administrator
239F: Who may be appointed administrator
1: A natural person who is not disqualified under subsection (2)
2: Unless the Court orders otherwise, a person is disqualified from appointment as an administrator if that person—
a: is disqualified under section 280(1)
b: is prohibited from being an administrator by an order made under section 239ADV
239G: Administrator must consent in writing
A person must not be appointed the administrator of a company unless that person has consented in writing and has not withdrawn the consent at the time of appointment. Corporations Act 2001 (Australia) s 448A
239H: Who may appoint administrator
1: An administrator may be appointed to a company by—
a: the company ( see
b: if the company is in liquidation, the liquidator ( see section 239J
c: if an interim liquidator has been appointed, the interim liquidator ( see section 239J
d: a secured creditor holding a charge over the whole, or substantially the whole, of the company's property ( see section 239K
e: the Court ( see section 239L
2: If the company is already in administration, an administrator may be appointed only by—
a: the Court; or
b: the creditors, as a replacement administrator for an administrator that the creditors have removed; or
c: the appointor of the first administrator, if that administrator has died, resigned, or become disqualified. Corporations Act 2001 (Australia) s 436D
239I: Appointment by company
1: A company may appoint an administrator if the board of the company has resolved that,—
a: in the opinion of the directors voting for the resolution, the company is insolvent or may become insolvent; and
b: an administrator of the company should be appointed.
2: The appointment must be in writing and must state the date of the appointment.
3: The company must not appoint an administrator if the company is already in liquidation.
4: If an application has been filed for the appointment of a liquidator of the company by the Court under section 241(2)(c)
5: Subsection (4) Corporations Act 2001 (Australia) s 436A
239J: Appointment by liquidator or interim liquidator
1: The liquidator or interim liquidator of a company may appoint an administrator if he or she thinks that the company is insolvent or is likely to become insolvent.
2: The appointment must be in writing and must state the date of the appointment.
3: The liquidator or interim liquidator may appoint himself or herself administrator if he or she first obtains—
a: the permission of the Court; or
b: in the case of a liquidator but not an interim liquidator, the approval of the company's creditors in the form of a resolution passed at a meeting of the creditors.
4: A liquidator or interim liquidator must not appoint as administrator a person who is the liquidator's or interim liquidator's business or professional partner, employer, or employee, unless the appointment has been approved by the company's creditors in the form of a resolution passed at a creditors' meeting.
5: An administrator who is appointed to a company already in liquidation may apply to the Court for an order under section 250 Corporations Act 2001 (Australia) s 436B
239K: Appointment by secured creditor
1: A person who holds a charge over the whole, or substantially the whole, of a company's property may appoint an administrator if the charge has become, and is still, enforceable.
2: The appointment must be in writing and must state the date of the appointment.
3: A secured creditor must not appoint an administrator if the company is already in liquidation. Corporations Act 2001 (Australia) s 436C
239L: Appointment by Court
1: The Court may appoint an administrator on the application of a creditor, the liquidator (if the company is in liquidation), or the Registrar.
2: The Court may appoint an administrator if—
a: the Court is satisfied that the company is or may become insolvent and that an administration is likely to result in a better return for the company's creditors and shareholders than would result from an immediate liquidation of the company; or
b: it is just and equitable to do so.
239M: Appointment must not be revoked
1: The appointment of an administrator must not be revoked.
2: This does not apply to removal by the Court or by the creditors. Corporations Act 2001 (Australia) s 449A
239N: Appointment of 2 or more administrators
1: Two or more persons may be appointed administrators in any case where this Act provides for the appointment of an administrator.
2: If 2 or more persons are appointed administrators of a company,—
a: an administrator's function or power may be performed or exercised by any 1 of them, or by any 2 or more of them together, except so far as the order, instrument, or resolution appointing them provides otherwise; and
b: a reference in this Act to an administrator or the administrator refers to whichever 1 or more of the administrators the case requires. Corporations Act 2001 (Australia) s 451A
239O: Remuneration of administrator
1: The administrator is entitled to charge reasonable remuneration for carrying out his or her duties and exercising his or her powers as administrator.
2: The Court may, on the application of the administrator, a director or officer of the company, a creditor, or a shareholder, review or fix the administrator's remuneration at a level that is reasonable in the circumstances.
3: A creditor or shareholder may make an application under subsection (2) 1993 No 105 ss 276(1), 284(1)(e)
3: Resignation and removal of administrator
239P: When office of administrator is vacant
The office of administrator is vacant if the administrator—
a: resigns; or
b: dies; or
c: becomes disqualified from appointment as an administrator ( see section 239F(2)
d: is removed by the Court. Corporations Act 2001 (Australia) s 449C(1)
239Q: Administrator may resign
1: The administrator may resign by giving written notice to the company and to his or her appointor.
2: The administrator must—
a: give written notice of the resignation to as many of the company's creditors as practicable; and
b: advertise the resignation in accordance with section 3(1)(b) Corporations Act 2001 (Australia) s 449C(1)(c)
239R: Removal of administrator
1: The administrator may be removed—
a: by the Court, on the application of a creditor, the liquidator (if the company is in liquidation), or the Registrar; or
b: by a resolution of creditors passed at the first creditors' meeting; or
c: by a resolution of creditors at a meeting convened under section 239T(1)
2: The creditors may not remove the administrator by a resolution passed at a creditors' meeting unless—
a: the same resolution also appoints as administrator another person who is not disqualified; and
b: the person named in the resolution as the new administrator has, before the resolution is considered, tabled at the meeting—
i: a signed, written consent to act as administrator; and
ii: an interests statement. Corporations Act 2001 (Australia) ss 436E(4), 449B
239S: Appointor may appoint new administrator to fill vacancy
1: The appointor of an administrator may appoint a replacement to fill the vacancy that occurs if the administrator—
a: resigns; or
b: dies; or
c: becomes disqualified.
2: The appointment of a replacement administrator by a company must be made by a resolution of the board of the company. Corporations Act 2001 (Australia) s 449C
239T: Creditors must consider appointment of replacement administrator
1: A replacement administrator, unless appointed by the Court or by the creditors under section 239R(1)(b)
2: The meeting must be held not more than 5 working days after the date on which the replacement administrator is appointed.
3: The replacement administrator must convene the meeting by—
a: giving written notice of the meeting to as many of the company's creditors as reasonably practicable; and
b: advertising the meeting in accordance with section 3(1)(b)
4: The replacement administrator must take the steps in subsection (3) Corporations Act 2001 (Australia) s 449C(4), (5)
4: Effect of appointment of administrator
239U: Outline of administrator's role
While a company is in administration, the administrator—
a: has control of the company's business, property, and affairs; and
b: may carry on that business and manage that property and those affairs; and
c: may terminate or dispose of all or part of that business, and may dispose of any of that property; and
d: may perform any function, and exercise any power, that the company or any of its officers could perform or exercise if the company were not in administration. Corporations Act 2001 (Australia) s 437A(1)
239V: Administrator's powers
1: The administrator has the powers—
a: to carry out the functions and duties of an administrator under this Act; and
b: conferred on an administrator under this Act.
2: An administrator's powers include the powers to—
a: begin, continue, discontinue, and defend legal proceedings; and
b: carry on, to the extent necessary for the administration of the company, the business of the company; and
c: appoint an agent to do anything that the administrator has power to do. 1993 No 105 s 260(1)
239W: Administrator is company's agent
The administrator of a company, when performing a function or exercising a power in that capacity, is the company's agent. Corporations Act 2001 (Australia) s 437B
239X: Effect on directors
1: The appointment of an administrator does not remove the directors of the company from office.
2: However, a director of a company that is in administration must not exercise or perform, or purport to exercise or perform, a function or power as a director of the company except—
a: with the prior, written approval of the administrator; or
b: as expressly permitted by this Part. Corporations Act 2001 (Australia) s 437C
239Y: Effect on employees
1: The appointment of an administrator does not automatically terminate an employment agreement to which the company is a party.
2: The administrator is not personally liable for any obligation of the company under an employment agreement to which the company is a party, unless—
a: the administrator expressly adopts the agreement in writing; or
b: subsection (3)
3: The administrator is personally liable for payment of wages or salary that, during the administration of the company, accrue under a contract of employment with the company that was entered into before the administrator's appointment, unless the administrator has lawfully given notice of the termination of the contract within 14 days of appointment.
4: The Court may, on the administrator's application, extend the period of 14 days in subsection (3)
5: From the date of the appointment of the administrator, the duty of good faith set out in section 4 of the Employment Relations Act 2000 subsection (2)
239Z: Effect on dealing with company property
1: A transaction or dealing by a company in administration, or by a person on behalf of the company, that affects the company's property is void unless the transaction or dealing was entered into—
a: by the administrator, on the company's behalf; or
b: with the administrator's prior written consent; or
c: under an order of the Court.
2: The Court may validate a transaction or dealing that is void under subsection (1)
3: Subsection (1)
a: out of an account kept by the company with the bank; and
b: in good faith and in the ordinary course of the bank's banking business; and
c: on or before the day on which the bank was notified in writing by the administrator that the administration had begun, or before the bank had reason to believe that the company was in administration, whichever was earlier.
4: A director or officer of the company commits an offence if he or she—
a: purported, on the company's behalf, to enter into a transaction or dealing that is void under subsection (1)
b: was in any other way knowingly concerned in, or party to, the void transaction or dealing, whether—
i: by act or omission; or
ii: directly or indirectly. Corporations Act 2001 (Australia) s 437D
239AA: Company officer's liability for compensation for void transaction or dealing
The Court may order a director or officer of a company who is convicted of an offence under section 239Z(4) Corporations Act 2001 (Australia) s 437E(1)
239AB: Effect on transfer of shares
1: A share in a company in administration must not be transferred and the rights or liabilities of a shareholder of the company must not be altered.
2: However, the administrator may consent to the transfer of a share in a company in administration if the administrator is satisfied that the transfer is in the best interests of the company's creditors.
3: Also, despite subsection (1)
a: for the transfer of a share in a company in administration, but only after the administrator has been asked to consent to the transfer and has refused or failed to respond in a reasonable time; or
b: altering the rights and liabilities of a shareholder in a company in administration. Corporations Act 2001 (Australia) s 437F
239AC: Effect on liquidation
1: The appointment of an administrator to a company in liquidation suspends the liquidation, including the powers of the liquidator to act on the company's behalf, but does not remove the liquidator from office.
2: The liquidator may apply to the Court for any orders that may be necessary in relation to the suspension of the liquidation.
3: In this section, liquidator includes a liquidator or interim liquidator appointed before the administration began.
239AD: Effect on receivership
The appointment of an administrator to a company in receivership does not remove the receiver from office.
5: Administrator's investigation of company's affairs
239AE: Administrator must investigate company's affairs and consider possible courses of action
As soon as practicable after the administration of a company begins, the administrator must—
a: investigate the company's business, property, affairs, and financial circumstances; and
b: form an opinion about each of the following matters:
i: whether it would be in the creditors' interests for the company to execute a deed of company arrangement:
ii: whether it would be in the creditors' interests for the administration to end:
iii: whether it would be in the creditors' interests for a liquidator to be appointed. Corporations Act 2001 (Australia) s 438A
239AF: Directors' statement of company's position
1: Within 5 working days after the administration of a company begins, the directors must give to the administrator a statement about the company's business, property, affairs, and financial circumstances.
2: The administrator may extend the time for compliance with subsection (1)
3: The administrator must table the directors' statement—
a: at the first creditors' meeting; or
b: if the administrator has extended the time for compliance by the directors, at the watershed meeting. Corporations Act 2001 (Australia) s 438B(2)
239AG: Administrator's right to documents, etc
Sections 261 and 263 to 267
239AH: Administrator may lodge report with Registrar
The administrator may lodge a report with the Registrar specifying any matter that, in his or her opinion, should be brought to the Registrar's notice. Corporations Act 2001 (Australia) s 438D(2)
239AI: Administrator must report misconduct
1: The administrator must as soon as practicable report the matter to the Registrar if the administrator believes that—
a: a past or present director, officer, or shareholder of the company has committed an offence in relation to the company; or
b: an offence material to the administration has been committed by the company or any director, officer, or shareholder of the company under this Act or any of the following Acts:
i: the Crimes Act 1961
ii: the Securities Act 1978
iii: the Securities Markets Act 1988
iv: the Financial Reporting Act 1993
v: the Takeovers Act 1993
c: a person who has taken part in the formation, promotion, administration, management, or liquidation of the company—
i: may have misapplied or retained or become liable or accountable for the company's money or property (whether in New Zealand or elsewhere); or
ii: may have been guilty of negligence, default, or breach of duty or trust in relation to the company.
2: In any case where the administrator makes a report under subsection (1)
a: provision of information; and
b: access to documents; and
c: facilities for inspecting and copying documents.
3: In any case where the Court is satisfied that the administrator should make a report under subsection (1) Corporations Act 2001 (Australia) s 438D
6: Creditors' meetings generally
239AJ: Administrator must call creditors' meetings
The administrator must call—
a: the first creditors' meeting, for the appointment (if any) of a committee of creditors; and
b: the watershed meeting ( see section 239AS
c: other creditors' meetings as required (for example, because an administrator has been replaced).
239AK: Conduct of creditors' meetings
1: The following clauses of Schedule 5
a: subject to section 239AZ, clause 4
b: clauses 6 to 11
2: At any meeting of creditors or class of creditors held under this Part, a resolution is adopted if a majority in number representing 75% in value of the creditors or class of creditors voting in person, or by proxy vote or by postal vote, vote in favour of the resolution.
3: The administrator or the administrator's nominee must chair a creditors' meeting, and has a casting vote.
4: For the purposes of voting at a creditors' meeting, the administrator may estimate the amount of a creditor's claim that is for any reason uncertain.
5: On the application of the administrator, or of a creditor who is aggrieved by an estimate made by the administrator, the Court must determine the amount of the claim as it sees fit.
239AL: Joint meetings of creditors of related companies in administration
1: The administrators of related companies may call meetings of creditors of their respective companies to be held at the same time and place, but only with the consent of all the creditors.
2: In the case of a joint meeting, a creditor of a company in administration may vote only on a resolution that relates to the administration of the company of which that person is a creditor.
3: For the purposes of subsection (1)
a: a written notice that complies with subsection (4)
b: the creditor has not objected to the joint meeting within the time, and in the manner, specified in the written notice.
4: The notice must—
a: be in writing; and
b: state the administrator's postal, email, and street addresses; and
c: state the names of the related companies in respect of which the joint meeting is to be held; and
d: state that the creditor to whom it is sent may object to the joint meeting by sending a written objection to the administrator at the administrator's postal, email, or street address for receipt by the administrator within the time specified in the notice; and
e: state that, unless the creditor objects in accordance with the notice, the creditor will be taken to have agreed to the joint meeting.
5: For the purposes of subsection (4)(d)
239AM: Power of Court where outcome of voting at creditors' meeting determined by related entity
1: This section applies if the Court is satisfied that—
a: a resolution at a creditors' meeting under this Part was passed, defeated, or required to be decided by a casting vote; and
b: the resolution would not have been passed, defeated, or required to be decided by a casting vote if the vote or votes cast by a particular related creditor or particular related creditors were disregarded; and
c: the passing of the resolution, or the failure to pass it,—
i: is contrary to the interests of the creditors, or a class of creditors, as a whole; and
ii: has prejudiced, or is reasonably likely to prejudice, the interest of the creditors who voted against the resolution, or for it, as the case may be, to an extent that is unreasonable having regard to—
A: the benefits accruing to the related creditor, or to some or all of the related creditors, from the resolution, or from the failure to pass the resolution; and
B: the nature of the relationship between the related creditor and the company, or between the related creditors and the company; and
C: any other related matter.
2: The Court may, on the application of a creditor or the administrator,—
a: order that the resolution be set aside:
b: order that a new meeting be held to consider and vote on the resolution:
c: order that a specified related creditor or creditors must not vote on the resolution or on a resolution to vary or amend it:
d: make any other orders that the Court thinks necessary.
3: In this section,— promoter section 2(1) of the Securities Act 1978 related creditor related entity
a: a promoter; or
b: a relative or spouse of a promoter; or
c: a relative of a spouse of a promoter; or
d: a director or shareholder; or
e: a relative or spouse of a director or shareholder; or
f: a relative of a spouse of a director or shareholder; or
g: a related company; or
h: a beneficiary under a trust of which the company in administration is or has at any time been a trustee; or
i: a relative or spouse of that beneficiary; or
j: a relative of a spouse of that beneficiary; or
k: a company one of whose directors is also a director of the company in administration; or
l: a trustee of a trust under which a person ( A Corporations Act 2001 (Australia) s 600A
7: First creditors' meeting to appoint creditors' committee
239AN: Administrator must call first creditors' meeting
1: The administrator must call the first creditors' meeting to—
a: decide whether to appoint a creditors' committee and, if so, to appoint its members; and
b: decide whether to replace the administrator.
2: The meeting must be held within 8 working days after the date on which the administration began. Corporations Act 2001 (Australia) s 436E(1), (2)
239AO: Notice of first and subsequent creditors' meetings
1: The administrator must call the first and subsequent creditors' meetings by—
a: giving written notice of the meeting to as many of the company's creditors as reasonably practicable; and
b: advertising the meeting in accordance with section 3(1)(b)
2: The administrator must take the steps in subsection (1) Corporations Act 2001 (Australia) s 436E(3)
239AP: Administrator must table interests statement
1: The administrator must table at the first creditors' meeting an interests statement that complies with subsection (2)
2: The interests statement must disclose whether the administrator, or a firm of which the administrator is a partner, has a relationship (whether professional, business, or personal) with the company in administration, or any of its officers, shareholders, or creditors.
3: The administrator must, before tabling the interests statement, make the inquiries that are reasonably necessary for ensuring that the interests statement is complete.
239AQ: Functions of creditors' committee
1: The functions of the creditors' committee of a company in administration are—
a: to consult with the administrator about matters relating to the administration; and
b: to receive and consider reports by the administrator.
2: The committee must not give directions to the administrator, but the administrator must report to the committee about matters relating to the administration as and when the committee reasonably requires. Corporations Act 2001 (Australia) s 436F
239AR: Membership of creditors' committee
A person may be a member of the creditors' committee only if he or she is—
a: a creditor of the company; or
b: the agent of a creditor under a general power of attorney; or
c: authorised in writing by a creditor to be a member. Corporations Act 2001 (Australia) s 436G
8: Watershed meeting
239AS: What watershed meeting is
The watershed meeting is the meeting of creditors called by the administrator to decide the future of the company and, in particular, whether the company and the deed administrator should execute a deed of company arrangement.
239AT: Administrator must convene watershed meeting
1: The administrator must convene the watershed meeting within the convening period.
2: The convening period subsection (3)
3: The Court may, on the administrator's application, extend the convening period.
4: The application to extend may be made before or after the convening period has expired.
239AU: Notice of watershed meeting
1: The administrator must convene the watershed meeting by—
a: giving written notice of the meeting to as many of the company's creditors as reasonably practicable; and
b: advertising the meeting in accordance with section 3(1)(b)
2: The administrator must take the steps in subsection (1)
3: The following documents must accompany the notice of the watershed meeting that is sent to the company's creditors:
a: a report by the administrator about—
i: the company's business, property, affairs, and financial circumstances; and
ii: any other matter material to the creditors' decisions to be considered at the meeting; and
b: a statement setting out the administrator's opinion, with reasons for that opinion, about each of the following matters:
i: whether it would be in the creditors' interests for the company to execute a deed of company arrangement:
ii: whether it would be in the creditors' interests for the administration to end:
iii: whether it would be in the creditors' interests for the company to be placed in liquidation; and
c: if a deed of company arrangement is proposed, a statement setting out the details of the proposed deed. Corporations Act 2001 (Australia) s 439A(3), (4)
239AV: When watershed meeting must be held
The watershed meeting must be held within 5 working days after the end of the convening period or extended convening period, as the case may be. Corporations Act 2001 (Australia) s 439A(2)
239AW: Directors must attend watershed meeting
1: The directors of the company must attend the watershed meeting, including any occasion to which the meeting is adjourned, but cannot be required to answer questions at the meeting.
2: A director need not attend the watershed meeting if—
a: the director has a valid reason for not attending; or
b: the administrator or the creditors by resolution have excused the director from attending.
3: A director attending the watershed meeting must leave for all or part of the remainder of the meeting if required by a resolution of the creditors to do so.
4: A director who contravenes subsection (1) subsection (2) section 373(1)
239AX: Disclosure of voting arrangements
The administrator and the directors of the company under administration must, before the meeting votes on any resolution, inform the meeting of any voting arrangement of which the administrator or a director, as the case may be, is aware that requires 1 or more creditors to vote in a particular way on any resolution that will or may be voted on by the meeting.
239AY: Court may order that pooled property owners are separate class
1: On the application of the administrator, the Court may order that, for the limited purposes of this section only, pooled property owners are a separate class.
2: In this section— pooled property owners requisite majority resolution
3: Each pooled property owner is bound by the deed of company arrangement as if that person had voted in favour of the resolution at the watershed meeting if—
a: the Court has ordered that the pooled property owners are a separate class; and
b: at the watershed meeting the creditors (including the pooled property owners) approved the resolution; and
c: the requisite majority of the pooled property owners were included in the creditors who voted in favour of the resolution.
4: It is not necessary that a separate meeting of the pooled property owners be held for the purpose of voting on the resolution.
5: Subsection (3) sections 239ACS and 239ACT
239AZ: Adjournment of watershed meeting
1: The watershed meeting may be adjourned, but only to a day that is not more than 30 working days after the first day on which the meeting was held.
2: However, the Court may, on the administrator's application, order that the meeting be adjourned for more than 30 working days. Corporations Act 2001 (Australia) s 439B(2)
239ABA: What creditors may decide at watershed meeting
At the watershed meeting, the creditors may—
a: resolve that the company execute a deed of company arrangement specified in the resolution (and it does not matter that the deed to be executed differs from any proposed deed of which details were given in the notice of the meeting); or
b: resolve that the administration should end; or
c: unless the company is already in liquidation, by resolution appoint a liquidator. Corporations Act 2001 (Australia) s 439C
239ABB: What happens if proposed deed not fully approved at watershed meeting
1: If, at the watershed meeting, the creditors resolve that the company execute a deed of company arrangement, but the proposed deed is not fully approved at the meeting, then the administrator must take the steps set out in section 239ACP
2: The administrator must inform the creditors at the watershed meeting that—
a: they have the right to inspect and comment on the draft deed; and
b: the administrator has the ultimate responsibility for drafting the deed and the executed deed may differ from the draft.
9: Protection of company's property during administration
239ABC: Charge unenforceable
Subject to subpart 10
a: with the administrator's written consent; or
b: with the permission of the Court. Corporations Act 2001 (Australia) s 440B
239ABD: Owner or lessor must not recover property used by company
During the administration of a company, the owner or lessor of property that was used or occupied by, or is in the possession of, the company must not take possession of the property or otherwise recover it, except—
a: with the administrator's written consent; or
b: with the permission of the Court. Corporations Act 2001 (Australia) s 440C
239ABE: Proceeding must not be begun or continued
During the administration of a company, a proceeding in a court against the company or in relation to any of its property must not be begun or continued, except—
a: with the administrator's written consent; or
b: with the permission of the Court and in accordance with the terms that the Court imposes. Corporations Act 2001 (Australia) s 440D
239ABF: Administrator not liable in damages for refusing consent
An administrator is not liable in damages for a refusal to give an approval or consent for the purposes of this subpart. Corporations Act 2001 (Australia) s 440E
239ABG: Enforcement process halted
During the administration of a company, an enforcement process in relation to the company's property must not be begun or continued except with the permission of the Court and in accordance with the terms that the Court imposes. Corporations Act 2001 (Australia) s 440F
239ABH: Duties of court officer in relation to company's property
1: This section applies to a court officer, that is, a sheriff or registrar or other appropriate officer of the court, who receives written notice that a company is in administration.
2: During the administration, the court officer must not—
a: take action to sell property of the company under an execution process; or
b: pay to a person (other than the administrator)—
i: proceeds of the sale of the company's property (at any time) under an execution process; or
ii: money of the company seized (at any time) under an execution process; or
iii: money paid (at any time) to avoid seizure or sale of property of the company under an execution process; or
c: take action in relation to the attachment of a debt due to the company; or
d: pay to any person (other than the administrator) money received because of the attachment of a debt due to the company.
3: The court officer must deliver to the administrator any property of the company that is in the court officer's possession under an execution process (whenever begun).
4: The court officer must pay to the administrator all proceeds or money of a kind referred to in subsection (2)(b) or (d)
a: are in the court officer's possession; or
b: have been paid into the court and have not since been paid out.
5: The costs of the execution or attachment are a first charge over property delivered under subsection (3) subsection (4)
6: In order to give effect to a charge under subsection (5)
7: The court may, if it is satisfied that it is appropriate to do so, permit the court officer to take action, or make a payment, that subsection (2)
8: A person who buys property in good faith under a sale under an execution process obtains a good title to the property as against the company and the administrator, despite anything else in this section. Corporations Act 2001 (Australia) s 440G
239ABI: Lis pendens
1: This section has effect only for the purposes of a law about the effect of a lis pendens
2: During the administration of a company, an application for the appointment of a liquidator to the company is taken to be pending.
3: An application that is taken because of subsection (2) lis pendens Corporations Act 2001 (Australia) s 440H
239ABJ: Administration not to trigger enforcement of guarantee of liability of director or relative
1: During the administration of a company, except with the Court's permission and in accordance with the terms that the Court may impose, a guarantee of a liability of the company must not be enforced against—
a: a director of the company; or
b: that person's spouse or relative.
2: In this section, liability Corporations Act 2001 (Australia) s 440J(1)
10: Rights of secured creditor, owner, or lessor
239ABK: Meaning of terms used in this subpart
In this subpart, unless the context otherwise requires,— decision period
a: begins—
i: if notice of the appointment of the administrator must be given to the secured creditor under section 239ADW(1)(c)
ii: in any other case, on the day when the administration begins; and
b: ends at the end of the tenth working day after the day when it begins enforce
a: to appoint a receiver of property of the company under a power contained in an instrument relating to the charge; or
b: to obtain an order for the appointment of a receiver of that property for the purpose of enforcing the charge; or
c: to enter into possession, or assume control, of that property for that purpose; or
d: to appoint a person to enter into possession or assume control (whether as agent for the secured creditor or for the company) for that purpose; or
e: to exercise, as secured creditor or as a receiver or person so appointed, a right, power, or remedy existing because of the charge, whether arising under an instrument relating to the charge, under a written or unwritten law, or otherwise.
239ABL: If secured creditor acts before or during decision period
1: This section applies if—
a: the whole, or substantially the whole, of the property of a company in administration is subject to a charge; and
b: before or during the decision period, the secured creditor enforces the charge in relation to all property of the company subject to the charge, whether or not the charge is enforced in the same way in relation to all that property.
2: This section also applies if—
a: a company is in administration; and
b: the same person is the secured creditor in relation to each of 2 or more charges over the property of the company; and
c: the property of the company (in this subsection called the charged property
d: before or during the decision period, the secured creditor enforces together the charges in relation to all the charged property—
i: whether or not the charges are enforced in the same way in relation to all the charged property; and
ii: whether or not any of the charges is enforced in the same way in relation to all the property of the company subject to that charge; and
iii: in so far as the charges are enforced in relation to property of the company in a way referred to in paragraph (a), (b), or (d) section 239ABK
3: Nothing in section 239ABC section 239ABO
a: the secured creditor:
b: a receiver or person appointed as mentioned in paragraph (a), (b), or (d) section 239ABK
4: Section 239Z subsection (3)(b) Corporations Act 2001 (Australia) s 441A
239ABM: If enforcement of charges begins before administration
1: This section applies if, before the beginning of the administration of a company, a secured creditor, receiver, or other person, for the purpose of enforcing a charge over the property,—
a: entered into possession, or assumed control, of the property of the company; or
b: entered into an agreement to sell the property; or
c: made arrangements for the property to be offered for sale by public auction; or
d: publicly invited tenders for the purchase of the property; or
e: exercised any other power in relation to the property.
2: Nothing in section 239ABC
3: Section 239Z
a: in the exercise of a power of the secured creditor as secured creditor; or
b: in the performance or exercise of a function or power of the receiver or other person. Corporations Act 2001 (Australia) s 441B
239ABN: Charge over perishable property
1: This section applies if perishable property of a company in administration is subject to a charge.
2: Nothing in section 239ABC paragraph (a), (b), or (d) section 239ABK
3: Section 239Z
a: in the exercise of a power of the secured creditor as secured creditor; or
b: in the performance or exercise of a function or power of the receiver or other person. Corporations Act 2001 (Australia) s 441C
239ABO: Court may limit powers of secured creditor, etc, in relation to property subject to charge
1: This section—
a: applies if,—
i: for the purpose of enforcing a charge over property of a company, the secured creditor, a receiver, or other person does an act of a kind referred to in section 239ABM(1)
ii: the company is in administration when the secured creditor, receiver, or other person does that act, or an administrator is later appointed to the company:
b: does not apply in a case where section 239ABL
2: On an application by the administrator, the Court may order the secured creditor, receiver, or other person not to perform specified functions or exercise specified powers, except as permitted by the order.
3: The Court may make an order only if satisfied that what the administrator proposes to do during the administration will adequately protect the secured creditor's interests.
4: An order—
a: may be made only, and has effect only, during the administration; and
b: has effect despite section 239ABM and 239ABN Corporations Act 2001 (Australia) s 441D
239ABP: Giving notice under security agreement
Section 239ABC Corporations Act 2001 (Australia) s 441E
239ABQ: If recovery of property begins before administration
1: This section applies if, before the beginning of the administration of a company, a receiver or other person, for the purpose of enforcing a right of the owner or lessor of the property to take possession of the property or otherwise recover it,—
a: entered into possession of, or assumed control of, property used or occupied by, or in the possession of, the company; or
b: exercised any other power in relation to the property.
2: Section 239ABD
3: Section 239Z Corporations Act 2001 (Australia) s 441F
239ABR: Recovering perishable property
1: Nothing in section 239ABD
2: Section 239Z Corporations Act 2001 (Australia) s 441G
239ABS: Court may limit powers of receiver, etc, in relation to property used by company
1: This section applies if,—
a: for the purpose of enforcing a right of the owner or lessor of property used or occupied by, or in the possession of, a company to take possession of the property or otherwise recover it, a person—
i: enters into possession, or assumes control, of the property; or
ii: exercises any other power in relation to the property; and
b: the company is in administration when the person does so, or an administrator is later appointed to the company.
2: On an application by the administrator, the Court may order the person not to perform specified functions, or exercise specified powers, in relation to the property, except as permitted by the order.
3: The Court may make an order only if satisfied that what the administrator proposes to do during the administration will adequately protect the interests of the owner or lessor.
4: An order—
a: may be made only, and has effect only, during the administration; and
b: has effect despite sections 239ABQ and 239ABR Corporations Act 2001 (Australia) s 441H
239ABT: Giving notice under agreement about property
Nothing in section 239ABD Corporations Act 2001 (Australia) s 441J
11: Interface with liquidation
239ABU: When liquidator may be appointed to company in administration
A liquidator may be appointed to a company in administration—
a: by the Court, on an application for the appointment of a liquidator under section 241(2)(c)
b: by resolution of the creditors at the watershed meeting or at a meeting convened under section 239ADF
239ABV: Court may adjourn application for liquidation
The Court may adjourn an application under section 241(2)(c) Corporations Act 2001 (Australia) s 440A(2)
239ABW: Court must not appoint interim liquidator if administration in creditors' interests
The Court must not appoint an interim liquidator of a company in administration if the Court is satisfied that it is in the interests of the company's creditors for the company to continue in administration rather than have an interim liquidator appointed. Corporations Act 2001 (Australia) s 440A(3)
239ABX: Effect of appointment of liquidator
The appointment of a liquidator to a company in administration ends the administration.
239ABY: Former administrator is default liquidator
In the case of the appointment of a liquidator to a company in administration by the creditors, the former administrator is the liquidator if—
a: the creditors' resolution does not nominate a person for appointment; or
b: the person nominated is disqualified from acting as the liquidator or has not consented in writing; or
c: the person nominated is for any other reason unable or unwilling to act as liquidator.
239ABZ: Person in control of company must lodge revised report with Registrar
1: This section applies when a liquidator is appointed to a company that is in administration or under a deed of company arrangement.
2: The administrator or, if the company is under a deed of company arrangement, the deed administrator must as soon as practicable lodge the following documents with the Registrar:
a: a copy of the administrator's report that accompanied the notice to creditors of the watershed meeting; and
b: a further report updating the administrator's report with any matters of which the administrator or deed administrator is aware that—
i: are not referred to in the administrator's report, or have changed since that report; and
ii: affect the financial position of the company.
3: If there is no administrator or deed administrator acting when the company is placed in liquidation, the director or directors of the company at the date of liquidation must take the steps described in subsection (2)
239ACA: Act of administrator in good faith must not be set aside in liquidation
A payment made, transaction entered into, or any other act or thing done, in good faith, by or with the consent of the administrator of a company in administration, must not be set aside in a liquidation of the company. Corporations Act 2001 (Australia) s 451C(b)
239ACB: Voidable transactions
1: The voidable transaction provisions do not apply to a transaction by a company in administration if the transaction is—
a: carried out by or with the authority of the administrator or deed administrator; or
b: specifically authorised by the deed of company arrangement and carried out by the deed administrator.
2: In this section, voidable transaction provisions sections 292 to 296
12: Deed administrator
239ACC: Who is deed administrator
The administrator of the company is the deed administrator, unless the creditors at the watershed meeting by resolution appoint someone else to be the deed administrator. Corporations Act 2001 (Australia) s 444A(2)
239ACD: Who may be appointed deed administrator
1: A natural person who is not disqualified under subsection (2)
2: Unless the Court orders otherwise, a person is disqualified from appointment as a deed administrator if that person is—
a: disqualified under section 280(1)
b: prohibited from being a deed administrator by an order made under section 239ADV
239ACE: Deed administrator must consent in writing
A person must not be appointed deed administrator unless that person has consented in writing and has not withdrawn the consent at the time when the deed of company arrangement is executed. Corporations Act 2001 (Australia) s 448A
239ACF: Appointment of deed administrator must not be revoked
Except in the case of removal by the Court, the appointment of the deed administrator must not be revoked. Corporations Act 2001 (Australia) s 449A
239ACG: Appointment of 2 or more deed administrators
1: Two or more persons may be appointed deed administrators in any case where this Act provides for the appointment of a deed administrator.
2: If 2 or more persons are appointed deed administrators jointly,—
a: a deed administrator's function or power may be performed or exercised by any 1 of them, or by any 2 or more of them together, except so far as the order, instrument, or resolution appointing them provides otherwise; and
b: a reference in this Act to a deed administrator or the deed administrator refers to whichever 1 or more of the deed administrators the case requires. Corporations Act 2001 (Australia) s 451B
239ACH: When office of deed administrator vacant
The office of the deed administrator is vacant if the deed administrator—
a: resigns; or
b: becomes disqualified from appointment as a deed administrator ( see section 239ACD(2)
c: is removed by the Court.
239ACI: Deed administrator may resign
The deed administrator may resign by giving written notice to the company.
239ACJ: Removal of deed administrator
1: The Court may—
a: remove the deed administrator, and appoint a person in his or her place; or
b: appoint a new deed administrator, if the deed of company arrangement has not yet terminated but for some reason no deed administrator is acting.
2: The Court may make an order under subsection (1)
239ACK: Remuneration of deed administrator
1: The deed administrator is entitled to charge reasonable remuneration for carrying out his or her duties and exercising his or her powers as deed administrator.
2: The Court may, on the application of the deed administrator, a director or officer of the company, a creditor, or a shareholder, review or fix the deed administrator's remuneration at a level that is reasonable in the circumstances.
3: A creditor or shareholder may make an application under subsection (2) 1993 No 105 ss 276(1), 284(1)(e)
239ACL: Deed administrator may sell shares in company
1: The deed administrator may sell existing shares in the company—
a: with the consent of the shareholder in question; or
b: if the shareholder does not consent, with the permission of the Court given on an application of the deed administrator.
2: The shareholder concerned, a creditor, or the Registrar may oppose an application by the administrator for the Court's permission.
13: Execution and effect of deed of company arrangement
239ACM: When this subpart applies
This subpart applies when the creditors, at the watershed meeting, have resolved that the company execute a deed of company arrangement. Corporations Act 2001 (Australia) s 444A(1)
239ACN: Preparation and contents of deed
1: The deed administrator must prepare a document that sets out the terms of the deed.
2: The document must also specify the following:
a: who the deed administrator is:
b: the property of the company (whether or not it is already owned by the company when it executes the deed) that will be available to pay creditors:
c: the nature and duration of any moratorium period for which the deed provides:
d: to what extent the company will be released from its debts:
e: the conditions (if any) for the deed to come into operation:
f: the conditions (if any) for the deed to continue in operation:
g: the circumstances in which the deed terminates:
h: the order in which the proceeds of realisation of the property referred to in paragraph (b)
i: the day (which is called the cut-off day
3: The document is treated as including any prescribed provisions, except those prescribed provisions that the document expressly excludes. Corporations Act 2001 (Australia) s 444A(3)–(5)
239ACO: Execution of deed
1: The deed is a deed of company arrangement when it is executed by both the company in administration and the deed administrator.
2: The deadline for the execution of the deed by the company and the deed administrator is—
a: 15 working days after the watershed meeting has approved it; or
b: the further time that the Court allows, if the deed administrator has applied to the Court for an extension before the end of the initial period of 15 working days after approval.
3: The company may not execute the deed unless the board of the company has, by resolution, authorised the deed to be executed by the company or on its behalf.
4: Subsection (3) section 239X Corporations Act 2001 (Australia) s 444B
239ACP: Procedure if deed not fully approved at watershed meeting
1: If, at the watershed meeting, the creditors resolve that the company execute a deed of company arrangement, but the proposed deed is not fully approved at the meeting, then—
a: the administrator must draft the complete deed and circulate it to the creditors within 10 working days after the meeting (called in this section the preparation period
b: the creditors have a period of 3 working days (called in this section the inspection period
c: the company and the deed administrator must execute the deed within 2 working days (called in this section the execution period
2: The Court may extend the preparation period by up to 10 working days, on an application by the administrator, but only if the application is made within the original preparation period.
3: The Court may extend the execution period by up to 2 working days, on an application by the administrator, but only if the application is made within the original execution period.
239ACQ: Creditor must not act inconsistently with deed, etc, before execution
1: In this section, interim period
a: execution of the deed by the company and the deed administrator; or
b: expiry of the period during which the deed may be executed.
2: In the interim period, in so far as a person would be bound by the deed if it had already been executed, that person—
a: must not do anything inconsistent with the deed, except with the permission of the Court; and
b: must not take a step that is prohibited under section 239ACU Corporations Act 2001 (Australia) s 444C
239ACR: Company's failure to execute deed
If the creditors at the watershed meeting have passed a resolution that the company execute a deed of company arrangement, and the company fails to do so within the deadline for execution, then, notwithstanding section 239E(2)(e)
a: the administrator must apply for the appointment of a liquidator to the company; or
b: if the company is already in liquidation, the administrator must apply for the liquidation to resume.
239ACS: Who is bound by deed
A deed of company arrangement binds—
a: the company's creditors, to the extent provided by section 239ACT
b: the company; and
c: the company's directors, officers, and shareholders; and
d: the deed administrator. Corporations Act 2001 (Australia) s 444G
239ACT: Extent to which deed binds creditors
1: A deed of company arrangement binds all creditors in respect of claims that arise on or before the cut-off day ( see section 239ACN(2)(i)
2: This section does not prevent a secured creditor from enforcing or otherwise dealing with the charge, except so far as—
a: the deed provides otherwise in relation to a secured creditor who at the watershed meeting voted in favour of the resolution as a result of which the company executed the deed; or
b: the Court orders otherwise under section 239ACV(1)(a)
3: This section does not affect a right that an owner or lessor of property has in relation to that property, except so far as—
a: the deed provides otherwise in relation to an owner or lessor of property who at the watershed meeting voted in favour of the resolution as a result of which the company executed the deed; or
b: the Court orders otherwise under section 239ACV(1)(b) Corporations Act 2001 (Australia) s 444D
239ACU: Person bound by deed must not take steps to liquidate, etc
1: A person who is bound by a deed of company arrangement must not, while the deed is in force,—
a: apply, or continue with an application, to the Court for the appointment of a liquidator of the company:
b: except with the Court's permission, begin or continue a proceeding against the company or in relation to any of its property:
c: except with the Court's permission, begin or continue an enforcement process against the company's property.
2: In this section, property Corporations Act 2001 (Australia) s 444E
239ACV: Court may restrain creditors and others from enforcing charge or recovering property
1: The Court may, at any time after creditors have resolved at the watershed meeting that a deed of company arrangement be executed, order that, except as permitted by the order,—
a: a secured creditor must not enforce or otherwise deal with the charge; or
b: the owner or lessor of property that is used or occupied by the company or is in the company's possession must not take possession of the property or otherwise recover it.
2: The Court may make the order only if—
a: it is satisfied that achieving the purposes of the deed would be materially adversely affected if the order was not made; and
b: having regard to the terms of the deed and the order, and any other relevant matter, it is satisfied that the interests of the person affected by the order, that is the creditor, property owner, or lessor, will be adequately protected.
3: An application for an order under this section may be made only,—
a: if the deed has not yet been executed, by the administrator; or
b: if the deed has been executed, by the deed administrator.
4: The Court's order may be made subject to conditions. Corporations Act 2001 (Australia) s 444F
239ACW: Effect of deed on company's debts
1: A deed of company arrangement releases the company from a debt only in so far as—
a: the deed provides for the release; and
b: the creditor concerned is bound by the deed.
2: The release of the company from a debt under subsection (1)
a: a guarantor of the debt; or
b: a person who has indemnified the creditor concerned against default by the company in relation to the debt. Corporations Act 2001 (Australia) s 444H
239ACX: Court may rule on validity of deed
1: The Court may rule on the validity of a deed of company arrangement if there is doubt, on a specific ground, whether a deed of company arrangement—
a: was entered into in accordance with this Part; or
b: complies with this Part.
2: An application under this section may be made by—
a: the deed administrator; or
b: a shareholder or creditor of the company; or
c: the Registrar.
3: On an application under this section,—
a: the Court may declare the deed void or not void:
b: if the deed is void for contravention of a provision of this Part, the Court may validate the deed, or any part of it, provided the Court is satisfied that—
i: the provision was substantially complied with; and
ii: no injustice will result for anyone bound by the deed if the contravention is disregarded.
4: The Court may, if it declares that a provision of the deed is void, vary the deed, but only if the deed administrator consents. Corporations Act 2001 (Australia) s 445G
14: Administrator's duty to file accounts
239ACY: Administrator includes deed administrator
In this subpart, unless the context otherwise requires, administrator
239ACZ: Administrator must file accounts
1: Every administrator must file an account with the Registrar for each of the following periods:
a: the period of 6 months (or shorter, as the administrator decides) after the day on which the administrator was appointed; and
b: each subsequent period of 6 months during which the administrator holds office; and
c: the period between the last period of the kind referred to in paragraph (b)
2: The administrator must file the account within 20 working days after the end of the period in question.
3: The account must be in the prescribed form and must show,—
a: for each period, the administrator's receipts and payments; and
b: for each period except the first, the aggregates of the administrator's receipts and payments since the day on which the administrator was appointed. Corporations Act 2001 (Australia) s 432(1), (1A)(a), (b)
15: Variation and termination of deed
239ADA: Creditors may vary deed
The creditors may vary a deed of company arrangement by a resolution passed at a meeting convened under section 239ADF Corporations Act 2001 (Australia) s 445A
239ADB: Court may cancel creditors' variation
1: A creditor of a company in administration may apply to the Court for an order cancelling the variation of the deed of company arrangement by the creditors.
2: On the application, the Court may, if it is just and equitable to do so,—
a: cancel or confirm the variation, wholly or in part, on specified conditions (if any); and
b: make any other orders that the Court thinks appropriate. Corporations Act 2001 (Australia) s 445B
239ADC: Termination of deed
A deed of company arrangement may be terminated—
a: by the Court under section 239ADD
b: by a resolution of the creditors under section 239ADE
c: automatically, if the deed specifies circumstances in which the deed will terminate, and those circumstances occur. Corporations Act 2001 (Australia) s 445C
239ADD: Termination by Court
1: The Court may terminate a deed of company arrangement on the application of—
a: the company; or
b: a creditor; or
c: the deed administrator; or
d: any other interested person.
2: The Court may terminate a deed of company arrangement if it is satisfied that—
a: an information breach has occurred; or
b: there has been a material contravention of the deed by a person bound by it; or
c: effect cannot be given to the deed without injustice or undue delay; or
d: the deed or a provision of it is, an act or omission done or made under the deed was, or an act or omission proposed to be done or made under the deed would be,—
i: oppressive or unfairly prejudicial to, or unfairly discriminatory against, 1 or more of the creditors; or
ii: contrary to the interests of the company as a whole; or
e: the deed should be terminated for some other reason.
3: The Court must not terminate the deed without first taking into account the rights of third parties.
4: In this section, an information breach
a: false or misleading information about the company's business, property, affairs, or financial circumstances—
i: was given to the administrator or the creditors; or
ii: was contained in a report or statement under section 239AU(3)
b: there was an omission from the report or statement referred to in paragraph (a)(ii)
c: the information or the omission, as the case may be, can reasonably have been expected to be material to the creditors in deciding whether to vote in favour of the resolution that the company execute the deed of company arrangement. Corporations Act 2001 (Australia) s 445D
239ADE: Termination by creditors
1: The creditors, by a resolution passed at a meeting convened under section 239ADF
2: The creditors may also appoint a liquidator if the notice of the meeting sets out a proposed resolution that a liquidator be appointed to the company. Corporations Act 2001 (Australia) s 445E
239ADF: Creditors' meeting to consider proposed variation or termination of deed
1: The deed administrator—
a: may at any time convene a meeting of the company's creditors to consider a variation to, or the termination of, the deed; and
b: must convene a meeting if requested to do so in writing by creditors whose claims against the company are not less than 10% in value of the total value of all creditors' claims.
2: The deed administrator must convene the meeting by—
a: giving written notice to as many of the company's creditors as reasonably practicable; and
b: advertising the meeting in accordance with section 3(1)(b)
3: The administrator must take the steps in subsection (2)
4: The notice given to the creditors must set out any resolution for varying or terminating the deed that is to be considered by the meeting.
5: The deed administrator must preside at the meeting.
6: The meeting may be adjourned from time to time. Corporations Act 2001 (Australia) s 445F
16: Administrator's liability and indemnity for debts of administration
239ADG: Administrator not liable for company's debts except as provided in this subpart and in section 239Y
The administrator is not liable for the debts of the company except as provided in this subpart and in section 239Y Corporations Act 2001 (Australia) s 443C
239ADH: Administrator liable for general debts
1: The administrator is liable for debts that he or she incurs in the performance or exercise, or purported performance or exercise, of any of his or her functions and powers as administrator, for—
a: the purpose of funding the company; or
b: any services rendered; or
c: any goods bought; or
d: any property hired, leased, or occupied.
2: Subsection (1) Corporations Act 2001 (Australia) s 443A
239ADI: Administrator's liability for rent
1: The administrator is personally liable, to the extent specified in subsection (2)
a: made before the administration began; and
b: relating to the use, possession, or occupation of property by the company.
2: The administrator is liable for rent and other payments that accrue in the period—
a: beginning more than 7 days after the administration begins; and
b: throughout which—
i: the company continues to use or occupy, or be in possession of, the property; and
ii: the administration continues; and
c: ending on the earliest of the following:
i: the end of the administration; or
ii: the administrator ceasing to hold office; or
iii: the appointment of a receiver of the property; or
iv: the appointment of an agent by a secured creditor of the property, under the provisions of a charge over the property, to enter into possession or to assume control of the property; or
v: when a secured creditor takes possession or assumes control of the property under the provisions of a charge over the property.
3: The administrator is not taken, because of subsection (2)
a: to have adopted the agreement; or
b: to be liable under the agreement except as set out in subsection (2)
4: This section does not affect the liability of the company for rent and other payments due under the agreement. Corporations Act 2001 (Australia) s 443B(1), (2), (7), (9)
239ADJ: Administrator not liable for rental if non-use notice in force
1: The administrator is not liable under section 239ADI
2: In this section, non-use notice
a: is given by the administrator to the owner or the lessor of the property within 7 days after the administration begins; and
b: specifies the property to which it relates; and
c: states that the company does not propose to use the property or otherwise exercise any rights in relation to it.
3: A non-use notice ceases to have effect if—
a: the administrator revokes it by written notice to the owner or lessor; or
b: the company exercises, or purports to exercise, a right in relation to the property.
4: In subsection (3)(b)
a: also uses the property; or
b: asserts a right, as against the owner or the lessor, to continue to occupy or be in possession.
5: A non-use notice does not affect the company's liability for rent and other payments. Corporations Act 2001 (Australia) s 443B(3)–(6)
239ADK: Court may exempt administrator from liability for rent
The Court may exempt an administrator from liability for rent and other payments under section 239ADI Corporations Act 2001 (Australia) s 443B(8)
239ADL: Administrator's indemnity
The administrator is indemnified out of the company's property for—
a: a personal liability incurred in the due performance of his or her duties, but not a personal liability incurred in bad faith or negligently; and
b: the remuneration to which the administrator is entitled under section 239O Corporations Act 2001 (Australia) s 443D
239ADM: Administrator's right of indemnity has priority over other debts
Subject to section 312
a: all the company's unsecured debts; and
b: debts of the company secured by a charge of the kind described in clause 2(1)(b) of Schedule 7 Corporations Act 2001 (Australia) s 443E
239ADN: Lien to secure indemnity
1: The administrator has a lien on the company's property to secure a right of indemnity under this subpart.
2: A lien under subsection (1) Corporations Act 2001 (Australia) s 443F
17: Powers of Court
239ADO: Court's general power
1: The Court may make any order that it thinks appropriate about how this Part is to operate in relation to a particular company.
2: For example, the Court may terminate the administration under subsection (1)
a: because the company is solvent; or
b: because the provisions of this Part are being abused; or
c: for some other reason.
3: The Court's order may be made subject to conditions.
4: The Court may make an order under this section on the application of—
a: the company or a shareholder of the company; or
b: a creditor of the company; or
c: the administrator; or
d: the deed administrator; or
e: the Registrar; or
f: any other interested person. Corporations Act 2001 (Australia) s 447A
239ADP: Orders to protect creditors during administration
1: On the application of the Registrar, the Court may make any order that it thinks necessary to protect the interests of the company's creditors while the company is in administration.
2: On the application of a creditor of a company, the Court may make any order that it thinks necessary to protect the interests of that creditor while the company is in administration.
3: An order may be made subject to conditions. Corporations Act 2001 (Australia) s 447B
239ADQ: Court may rule on validity of administrator's appointment
1: If there is doubt, on a specific ground, as to the validity of the appointment of a person as administrator or deed administrator, any of the following persons may apply to the Court for a ruling on the validity of the appointment:
a: the person appointed; or
b: the company in question; or
c: any of the company's creditors.
2: In ruling that the appointment is invalid, the Court is not limited to the grounds specified in the application. Corporations Act 2001 (Australia) s 447C
239ADR: Administrator may seek directions
1: The administrator or the deed administrator may apply to the Court for directions in relation to the performance or exercise of any of the administrator's functions and powers.
2: The deed administrator may apply to the Court for directions in relation to the operation of, or giving effect to, the deed. Corporations Act 2001 (Australia) s 447D
239ADS: Court may supervise administrator or deed administrator
1: The Court may make any order it thinks just if it is satisfied that—
a: the administrator's or the deed administrator's management of the company's business, property, or affairs is prejudicial to the interests of some or all of the company's creditors or shareholders; or
b: the administrator's or deed administrator's conduct or proposed conduct has been or is or will be prejudicial to those interests.
2: An application for an order under this section may be made by—
a: a creditor or shareholder of the company in question; or
b: the Registrar. Corporations Act 2001 (Australia) s 447E(1)
239ADT: Court may order administrator or deed administrator to remedy default
1: The Court may order an administrator or deed administrator to remedy his or her default.
2: Examples of default include the following:
a: the administrator or deed administrator has failed, as required by this Act or otherwise by law, to make or file any return, account, or other document or to give a notice, and has not remedied the default within 10 working days after service on him or her of a notice by a shareholder or creditor of the company in administration requiring that the default be remedied:
b: the administrator or deed administrator has failed, after being required at any time by the liquidator of the company to do so,—
i: to render proper accounts of, and to vouch, his or her receipts and payments as administrator or deed administrator:
ii: to pay to the liquidator the amount properly payable to the liquidator.
3: An application for an order under this section may be made by—
a: a shareholder or creditor of the company, in the case of a default referred to in subsection (2)(a)
b: the liquidator, in the case of a default referred to in subsection (2)(b)
c: in any case, by the Registrar.
239ADU: Court's power when office of administrator or deed administrator vacant, etc
1: The Court may make any order it thinks just if it is satisfied that,—
a: in the case of a company in administration, the office of the administrator is vacant or no administrator is acting; or
b: in the case of a deed of company arrangement that is still in force, the office of the deed administrator is vacant or no deed administrator is acting.
2: An application for an order under this section may be made by—
a: a creditor or shareholder of the company; or
b: if the company is in liquidation, the liquidator; or
c: the Registrar. Corporations Act 2001 (Australia) s 447E(2)
239ADV: Prohibition order
1: The Court must make a prohibition order in relation to a person if it is shown to the satisfaction of the Court that that person is unfit to act as administrator or deed administrator by reason of persistent failures to comply or the seriousness of a failure to comply.
2: The period of the order is a matter for the discretion of the Court and the Court may make a prohibition period for an indefinite period.
3: A person to whom a prohibition order applies must not act as an administrator or deed administrator in a current or other administration.
4: The Court may make an order under this section in relation to a past or current administrator or deed administrator of a company in administration on the application of—
a: the company or a shareholder of the company; or
b: a creditor of the company; or
c: the administrator or deed administrator of the company; or
d: the Registrar; or
e: any other interested person.
5: In this section, failure to comply
a: under this or any other enactment or law or rules of court; or
b: under any order or direction of the Court made under this subpart.
6: In subsection (5) relevant duty
7: A copy of every order made under subsection (1)
18: Notices about steps taken under this Part
239ADW: Administrator must give notice of appointment
1: An administrator appointed by the company under section 239I section 239J section 239K section 239L section 239R(2)(a)
a: before the end of the next working day after appointment, lodge a notice of the appointment with the Registrar; and
b: not later than 3 working days after appointment, advertise the appointment in accordance with section 3(1)(b)
c: as soon as practicable, and in any event not later than the end of the next working day after appointment, give written notice of the appointment to—
i: each person who holds a charge over the whole, or substantially the whole, of the company's property; or
ii: each person who holds 2 or more charges in the property of the company if the property of the company subject to those charges together is the whole, or substantially the whole, of the company's property; and
d: in the notice referred to in paragraph (c) section 239ABL
2: The administrator need not give notice under subsection (1) Corporations Act 2001 (Australia) s 450A(1), (3), (4)
239ADX: Secured creditor who appoints administrator must give notice to company
A secured creditor who appoints an administrator under section 239K Corporations Act 2001 (Australia) s 450A(2)
239ADY: Deed administrator must give notice of execution of deed of company arrangement
As soon as practicable after a deed of company arrangement is executed, the deed administrator must—
a: send to each creditor a written notice of the execution of the deed; and
b: advertise the execution of the deed in accordance with section 3(1)(b)
c: file a copy of the deed with the Registrar. Corporations Act 2001 (Australia) s 450B
239ADZ: Deed administrator must give notice of failure to execute deed of company arrangement
If a company does not meet the deadline under section 239ACO or 239ACP(1)(c)
a: cause a notice of the failure to execute the deed to be advertised in accordance with section 3(1)(b)
b: file a copy of the notice with the Registrar. Corporations Act 2001 (Australia) s 450C
239AEA: Deed administrator must give notice of termination by creditors of deed of company arrangement
If the creditors terminate the deed of company arrangement, the deed administrator must as soon as practicable—
a: send a notice of the termination to each of the creditors; and
b: advertise the termination in accordance with section 3(1)(b)
c: file a copy of the notice with the Registrar. Corporations Act 2001 (Australia) s 450D
239AEB: Company must disclose fact of administration
1: A company must set out, in every document issued or signed by, or on behalf of, the company that evidences or creates a legal obligation of the company, after the company's name where it first appears,—
a: for as long as the company is in administration, the words administrator appointed
b: for as a long as a deed of company arrangement is in force, the words subject to deed of company arrangement
2: The Court may, on an application by the company, exempt the company from the requirement in subsection (1)(b)
3: A company that fails to comply with subsection (1) section 373(1) Corporations Act 2001 (Australia) s 450E
239AEC: Notice of change of name
1: A company in administration that changed its name less than 6 months before the appointment of the administrator must, in any document of the company where its name appears, include also its former name.
2: If a company to which subsection (1)
239AED: Effect of contravention of this subpart
A contravention of this subpart does not affect the validity of anything done or omitted under this Part, except so far as the Court orders otherwise. Corporations Act 2001 (Australia) s 450F
19: Miscellaneous
239AEE: Effect of things done during administration of company
A payment made, transaction entered into, or any other act or thing done, in good faith, by or with the consent of the administrator of a company in administration is valid and effective for the purposes of this Act. Corporations Act 2001 (Australia) s 451C(a)
239AEF: Interruption of time for doing act
If there is a time before which, or a period during which, an act for any purpose may or must be done, and this Act prevents the act from being done in time, then the time or period in question is extended by the period during which this Act prevents the act from being done in time. Corporations Act 2001 (Australia) s 451D
20: Set-off and netting agreements
239AEG: Mutual credit and set-off
Where there have been mutual credits, mutual debts, or other mutual dealings between a company and a person who seeks or, but for the operation of this section, would seek to have a claim admitted under a deed of company arrangement,—
a: an account must be taken of what is due from the one party to the other in respect of those credits, debts, or dealings; and
b: an amount due from one party must be set off against an amount due from the other party; and
c: only the balance of the account may be admitted under the deed of company arrangement, or is payable to the company, as the case may be.
239AEH: Application of set-off under netting agreement
1: Sections 239AEI to 239AEP
a: to a netting agreement—
i: made in or evidenced by writing; and
ii: in which the application of sections 239AEI to 239AEP
iii: whether made before or after the commencement of this section; and
b: to all obligations under a netting agreement (whether those obligations are payable in New Zealand currency or in some other currency).
2: Sections 239AEI to 239AEP
a: any disposal of rights under a transaction that is subject to a netting agreement, in contravention of a prohibition in the netting agreement; or
b: the creation of a charge or other interest in respect of the rights referred to in paragraph (a)
3: Nothing in sections 239AEI to 239AEP
a: as the consideration, or part of the consideration, for the issue of a share; or
b: in satisfaction of a call in respect of an outstanding liability of the shareholder made by the board of the company or by the administrator.
239AEI: Calculation of netted balance
If a company in administration is a party to a netting agreement,—
a: any netted balance payable by or to the company must be calculated in accordance with the netting agreement; and
b: that netted balance constitutes, in respect of the transactions that are included in the calculation,—
i: the debt that is owed to the creditor and that may be admitted under the deed of company arrangement; or
ii: the amount that is payable to the company,— as the case may be.
239AEJ: Mutuality required for transactions under bilateral netting agreements
Sections 239AEI to 239AEP
239AEK: When mutuality required for transactions under recognised multilateral netting agreements
1: Sections 239AEI to 239AEP
2: Despite subsection (1), sections 239AEI to 239AEP
a: those transactions do not constitute mutual credits, mutual debts, or other mutual dealings; and
b: a party to any of those transactions is acting as a trustee for another person; and
c: the party acting as trustee is not authorised by the terms of the trust of which the party is a trustee to enter into the transaction.
239AEL: Application of set-off under section 239AEG to transactions subject to netting agreements
1: Section 239AEG sections 239AEI to 239AEP
2: However, a netted balance is to be treated as an amount to which section 239AEG
239AEM: Transactions under netting agreement and effect on certain sections
1: Nothing in sections 239AEH section 56 section 239ACB section 292, 297 or 298
2: However, nothing in section 292(3)
3: For the purposes of sections 292 and 297 transaction
239AEN: Rights under netting agreement not affected by commencement of administration
Nothing in section 239Z
a: the termination, in accordance with the netting agreement, of all or any transactions that are subject to the netting agreement by reason of the occurrence of an event specified in the netting agreement, being an event (including the appointment of an administrator) occurring not later than the commencement of the administration; or
b: the taking of an account, in accordance with the netting agreement, of all money due between the parties to the netting agreement in respect of transactions affected by the termination.
239AEO: Effect of declaration of person as recognised clearing house under
section 310K A person who is declared a recognised clearing house under section 310K sections 239AEI to 239AEP
239AEP: Transactions under recognised multilateral netting agreement not affected by variation or revocation of declaration under section 310K
The variation or revocation of a declaration under section 310K sections 239AEI to 239AEP
a: that is or was subject to a recognised multilateral netting agreement; and
b: that was entered into before the variation or revocation of the declaration.
21: Single administration of related companies in administration
239AEQ: Interpretation of terms for purposes of this subpart
1: In this subpart,— pool section 239AER pool administrator pool company section 239AER
2: For the purposes of the single administration of a pool, in this Part, unless the context indicates otherwise,— administrator company deed administrator deed of company administration section 239AEW
239AER: Court may order single administration for related companies in administration
1: If 2 or more related companies are in administration, the Court may, if it is satisfied that it is just and equitable, order that the administration in respect of each company must proceed together as if they were 1 company to the extent that the Court orders and subject to the terms and conditions that the Court imposes.
2: An application under subsection (1)
3: Notwithstanding anything in this Part, the Court may, on first making the order and otherwise from time to time, make any other order, or give any direction to facilitate giving effect to an order, under subsection (1)
4: The fact that creditors of the company in administration relied on the fact that another company was, or is, related to it is not a ground for making an order under this section. 1993 No 105 s 271(b)
239AES: Notice that application filed must be given to administrators and creditors
1: Unless the Court orders otherwise, an applicant for an order under section 239AER
a: the administrator of each company in administration; and
b: each creditor of each company in administration.
2: The notice must—
a: identify each company to which the proposed order relates; and
b: summarise all information known to the applicant that is material to whether the order should be made; and
c: state that a person to whom the notice must be given may oppose the application by filing a statement of defence in accordance with the High Court Rules.
3: The notice requirement in this section is in addition to anything required by the High Court Rules to be done.
239AET: Guidelines for single administration order
In deciding whether it is just and equitable to make an order under section 239AER
a: the extent to which any of the companies took part in the management of any of the other companies in the proposed pool:
b: the conduct of any of the companies towards the creditors of any of the other companies in the proposed pool:
c: the extent to which the circumstances that gave rise to any of the companies in the proposed pool being placed in administration are attributable to the actions of any of the other companies:
d: the extent to which the businesses of the companies in the proposed pool have been combined:
e: any other matters that the Court thinks fit. 1993 No 105 s 272(2)
239AEU: Court may order that related company in administration be added to existing pool
1: The Court may order that a company in administration that is related to the companies in an existing pool be added to the pool for the purposes of administration.
2: An application under subsection (1)
a: the administrator or any creditor of the company; or
b: the administrator or any creditors of the pool.
3: The Court may make the order if it is satisfied that it is just and equitable to do so having regard to any 1 or more of the criteria in section 239AET
4: Sections 239AER and 239AES
5: The Court must not make the order unless the pool administrator consents.
239AEV: Creditors' meetings in single administration of pool companies
1: The provisions of this Part in relation to creditors' meetings apply except that, subject to subsection (2)
2: If separate voting by creditors is impracticable (because, for example, the affairs of the pool companies are intermingled), the Court may, on the application of the pool administrator, give directions as to how voting at a creditors' meeting must proceed.
239AEW: Pool companies may execute single deed of company administration
For the purposes of the single administration of a pool, the pool companies may execute a single deed of company arrangement. OIC SR 2007/297 2007-11-01 Part 15A Amendments to
Companies Act 1993
7: Commencement of liquidation
Section 241 subsection (2)
2: A liquidator may be appointed by—
a: special resolution of those shareholders entitled to vote and voting on the question; or
b: the board of the company on the occurrence of an event specified in the constitution; or
c: the Court, on the application of—
i: the company; or
ii: a director; or
iii: a shareholder or other entitled person; or
iv: a creditor (including any contingent or prospective creditor); or
v: if the company is in administration, the administrator; or
vi: the Registrar; or
d: a resolution of the creditors passed at the watershed meeting held under section 239AT OIC SR 2007/297 2007-11-01 Section 241(2)
8: Commencement of liquidation to be recorded
Section 241A(1)
d: a liquidator is appointed under section 241(2)(d) OIC SR 2007/297 2007-11-01 Section 241A(1)(d)
9: Liquidator to summon meeting of creditors
Section 243
11: Except for subsection (5) section 241(2)(d) OIC SR 2007/297 2007-11-01 Section 243(11)
10: Court may terminate liquidation
Section 250 subsection (2)
2: An application under this section may be made by—
a: the liquidator; or
b: if the company has executed a deed of company arrangement, the deed administrator; or
c: a director or shareholder of the company; or
d: any other entitled person; or
e: a creditor of the company; or
f: the Registrar.
2A: On an application by a deed administrator, the Court must have regard to—
a: any misconduct by the company's officers reported by the deed administrator, the liquidator, or the Registrar; and
b: the commercial decision of the creditors in accepting the deed of company arrangement; and
c: whether the deed of company arrangement would leave the company insolvent; and
d: any other matters that the Court thinks fit. OIC SR 2007/297 2007-11-01 Section 250(2) Section 250(2A)
11: Restrictions on rights of creditors to complete execution, distraint, or attachment
Section 251(1)(a) section 241(2)(a) of this Act section 241(2)(a) section 241(2)(d) OIC SR 2007/297 2007-11-01 Section 251(1)(a)
12: Other duties of liquidator
Section 255(3)(a) under paragraph (a) or (b) of subsection (2) of section 241 of this Act under section 241(2)(a), (b), or (d) OIC SR 2007/297 2007-11-01 Section 255(3)(a)
13: Restriction on enforcement of lien over documents
Section 263(2) to the extent of $500 or such greater amount as may be prescribed at the commencement of the liquidation to the extent of 10% of the total value of the debt, up to a maximum amount of $2,000 OIC SR 2007/297 2007-11-01 Section 263(2)
14: Power of Court to require persons to repay money or return property
1: Section 301(1) administrator, manager, OIC SR 2007/297 2007-11-01 Section 301(1)
2: Section 301
4: In making an order under subsection (1) Part 15A OIC SR 2007/297 2007-11-01 Section 301(4) Appointment of liquidator
15: New section 241AA inserted
The following section is inserted after section 241
241AA: Restriction on appointment of liquidator by shareholders or board after application filed for Court appointment
1: This section applies if an application has been filed for the appointment of a liquidator of a company by the Court under section 241(2)(c)
2: A liquidator of the company may only be appointed under section 241(2)(a) or (b)
3: If a liquidator is appointed under section 241(2)(a) or (b) subsection (1) section 283(4) successor to a liquidator section 283(4) liquidator
4: Subsection (2) OIC SR 2007/297 2007-11-01 Section 241AA Liquidator's duty to report to creditors
16: Liquidator to summon meeting of creditors
Section 243 subsection (2)
2: Notice in writing of a meeting of creditors—
a: must be given to every known creditor together with the report and notice referred to in section 255(2)(c)
b: if the liquidator receives a notice under section 245(1)(b)(iii) OIC SR 2007/297 2007-11-01 Section 243(2)
17: Liquidator may dispense with meetings of creditors
Section 245 subsection (2)
2: Notice under subsection (1)(b) section 255(2)(c) OIC SR 2007/297 2007-11-01 Section 245(2)
18: New section 245A inserted
The following section is inserted after section 245
245A: Power of Court where outcome of voting at meeting of creditors determined by related entity
1: This section applies if the Court is satisfied that—
a: a resolution at a meeting of creditors was passed, defeated, or required to be decided by a casting vote; and
b: the resolution would not have been passed, defeated, or required to be decided by a casting vote if the vote or votes cast by a particular related creditor or particular related creditors were disregarded; and
c: the passing of the resolution, or the failure to pass it,—
i: is contrary to the interests of the creditors, or a class of creditors, as a whole; and
ii: has prejudiced, or is reasonably likely to prejudice, the interest of the creditor who voted against the resolution, or for it, as the case may be, to an extent that is unreasonable having regard to—
A: the benefits accruing to the related creditor, or to some or all of the related creditors, from the resolution, or from the failure to pass the resolution; and
B: the nature of the relationship between the related creditor and the company, or between the related creditors and the company; and
C: any other related matter.
2: The Court may, on the application of the liquidator or a creditor,—
a: order that the resolution be set aside:
b: order that a new meeting be held to consider and vote on the resolution:
c: order that a specified related creditor or creditors must not vote on the resolution or on a resolution to vary or amend it:
d: make any other orders that the Court thinks necessary.
3: In this section,— promoter section 2(1) of the Securities Act 1978 related creditor related entity
a: a promoter; or
b: a relative or spouse of a promoter; or
c: a relative of a spouse of a promoter; or
d: a director or shareholder; or
e: a relative or spouse of a director or shareholder; or
f: a relative of a spouse of a director or shareholder; or
g: a related company; or
h: a beneficiary under a trust of which the company in liquidation is or has at any time been a trustee; or
i: a relative or spouse of that beneficiary; or
j: a relative of a spouse of that beneficiary; or
k: a company one of whose directors is also a director of the company in liquidation; or
l: a trustee of a trust under which a person ( A Corporations Act 2001 (Australia) s 600A . OIC SR 2007/297 2007-11-01 Section 245A
19: Other duties of liquidator
1: Section 255(2)(c) subparagraph (i)
i: prepare a list of every known creditor of the company with each creditor's address (if known); and. . OIC SR 2007/297 2007-11-01 Section 255(2)(c)(i)
2: Section 255(2)(c)(ii)
C: the list of creditors referred to in subparagraph (i) . OIC SR 2007/297 2007-11-01 Section 255(2)(c)(ii)(C)
3: Section 255 subsections (5) (6) OIC SR 2007/297 2007-11-01 Section 255(5) Section 255(6)
20: Duty to notify suspected offences
Section 258A(1) paragraph (c)
ca: the Securities Markets Act 1988 . OIC SR 2007/297 2007-11-01 Section 258A(1)(ca) Assignment of liquidator's statutory right to sue
21: New section 260A inserted
The following section is inserted after section 260
260A: Liquidator may assign right to sue under this Act
1: The liquidator may, if the Court has first approved it, assign any right to sue that is conferred on the liquidator by this Act.
2: The application for approval may be—
a: made by the liquidator or the person to whom it is proposed to assign the right to sue; and
b: opposed by a person who is a defendant to the liquidator's action, if already begun, or a proposed defendant. OIC SR 2007/297 2007-11-01 Section 260A Liquidator's power of disclaimer
22: Power to disclaim onerous property
Section 269(2)(a) subparagraph (ii)
ii: property of the company that is unsaleable, or not readily saleable, or that may give rise to a liability to pay money or perform an onerous act; or
iii: a litigation right that, in the opinion of the liquidator, has no reasonable prospect of success or cannot reasonably be funded from the assets of the company; but . OIC SR 2007/297 2007-11-01 Section 269(2)(a)(ii) Section 269(2)(a)(iii) Pooling of assets of related companies
23: New section 271A inserted
The following section is inserted after section 271
271A: Notice that application filed must be given to administrators and creditors
1: Unless the Court orders otherwise, an applicant for an order under section 271(1)(b)
2: An applicant need not give notice to himself or herself.
3: The notice must—
a: identify each company to which the proposed order relates; and
b: summarise all information known to the applicant that is material to whether the order should be made; and
c: state that a person to whom the notice must be given may oppose the application by filing a statement of defence in accordance with the High Court Rules.
4: The notice requirement in this section is in addition to anything required to be done by the High Court Rules. OIC SR 2007/297 2007-11-01 Section 271A Qualifications and supervision of liquidators
24: Qualifications of liquidators
1: Section 280(1) paragraph (c)
ca: a person who has, or whose firm has, within the 2 years immediately before the commencement of the liquidation, provided professional services to the company, unless, within 20 working days before the appointment of the liquidator, the board of the company resolves that the company will, on the appointment of the liquidator, be able to pay its debts and a copy of the resolution is delivered to the Registrar for registration:
cb: a person who has, or whose firm has, within the 2 years immediately before the commencement of the liquidation, had a continuing business relationship (other than through the provision of banking or financial services) with the company, its majority shareholder, any of its directors, or any of its secured creditors, unless, within 20 working days before the appointment of the liquidator, the board of the company resolves that the company will, on the appointment of the liquidator, be able to pay its debts and a copy of the resolution is delivered to the Registrar for registration: . OIC SR 2007/297 2007-11-01 Section 280(1)(ca) Section 280(1)(cb)
2: Section 280(1)
m: a person who is prohibited from being administrator or deed administrator under section 239ADV OIC SR 2007/297 2007-11-01 Section 280(1)(m)
3: Section 280 subsection (1)
1A: Subsection (1)(ca) or (cb) OIC SR 2007/297 2007-11-01 Section 280(1A)
4: Section 280
4: A person other than the Official Assignee must not be appointed a liquidator unless he or she has first certified in writing that he or she is not disqualified under subsection (1) OIC SR 2007/297 2007-11-01 Section 280(4)
5: Nothing in this section affects the qualification of a liquidator in office when this section came into force.
25: Meaning of failure to comply
Section 285
2: In subsection (1) relevant duty OIC SR 2007/297 2007-11-01 Section 285(2)
26: Orders to enforce liquidator's duties
1: Section 286 subsection (5)
5: If the Court is satisfied that a person is unfit to act as a liquidator by reason of persistent failures to comply or the seriousness of a failure to comply,—
a: the Court must make a prohibition order; and
b: the period of the order is a matter for the discretion of the Court but the Court may make a prohibition period for an indefinite period. OIC SR 2007/297 2007-11-01 Section 286(5)
2: Section 286(7) within the preceding 5 years OIC SR 2007/297 2007-11-01 Section 286(7) Voidable transactions
27: Transactions having preferential effect
1: The heading to section 292 Insolvent transaction voidable OIC SR 2007/297 2007-11-01 Section 292 heading
2: Section 292 subsections (1) to (4)
1: A transaction by a company is voidable by the liquidator if it—
a: is an insolvent transaction; and
b: is entered into within the specified period.
2: An insolvent transaction
a: is entered into at a time when the company is unable to pay its due debts; and
b: enables another person to receive more towards satisfaction of a debt owed by the company than the person would receive, or would be likely to receive, in the company's liquidation.
3: In this section, transaction
a: conveying or transferring the company's property:
b: creating a charge over the company's property:
c: incurring an obligation:
d: undergoing an execution process:
e: paying money (including paying money in accordance with a judgment or an order of a court):
f: anything done or omitted to be done for the purpose of entering into the transaction or giving effect to it.
4: In this section, transaction section 32(1) of the Receiverships Act 1993
4A: A transaction that is entered into within the restricted period is presumed, unless the contrary is proved, to be entered into at a time when the company is unable to pay its due debts.
4B: Where—
a: a transaction is, for commercial purposes, an integral part of a continuing business relationship (for example, a running account) between a company and a creditor of the company (including a relationship to which other persons are parties); and
b: in the course of the relationship, the level of the company's net indebtedness to the creditor is increased and reduced from time to time as the result of a series of transactions forming part of the relationship; then—
c: subsection (1)
d: the transaction referred to in paragraph (a) subsection (1) paragraph (c) paragraph (c) OIC SR 2007/297 2007-11-01 Section 292(1) Section 292(2) Section 292(3) Section 292(4) Section 292(4A) Section 292(4B)
3: Section 292(5) subsection (2)(a)(ii) of this section subsections (1) and (4B) OIC SR 2007/297 2007-11-01 Section 292(5)
4: Section 292(6) (3) of this section (4A) OIC SR 2007/297 2007-11-01 Section 292(6)
5: Nothing in this section makes voidable a transaction that was completed before this section came into force, if that transaction would not have been voidable if this section had not come into force.
28: Voidable charges
1: Section 293 subsection (1)
1: A charge over any property or undertaking of a company is voidable by the liquidator if—
a: the charge was given within the specified period; and
b: immediately after the charge was given, the company was unable to pay its due debts.
1A: Subsection (1)
a: the charge secures money actually advanced or paid, or the actual price or value of property sold or supplied to the company, or any other valuable consideration given in good faith by the grantee of the charge at the time of, or at any time after, the giving of the charge; or
b: the charge is in substitution for a charge given before the specified period. OIC SR 2007/297 2007-11-01 Section 293(1) Section 293(1A)
2: Section 293(3) (1)(c) of this section (1A)(b) OIC SR 2007/297 2007-11-01 Section 293(3)
3: Section 293(5) (1)(a) (1A)(a) OIC SR 2007/297 2007-11-01 Section 293(5)
4: Section 293(6) a year 2 years OIC SR 2007/297 2007-11-01 Section 293(6)
29: New section 294 substituted
Section 294
294: Procedure for setting aside transactions and charges
1: A liquidator who wishes to set aside a transaction or charge that is voidable under section 292 or 293
a: file a notice with the Court that meets the requirements set out in subsection (2)
b: serve the notice as soon as practicable on—
i: the other party to the transaction or the charge holder, as the case may be; and
ii: any other party from whom the liquidator intends to recover.
2: The liquidator's notice must—
a: be in writing; and
b: state the liquidator's postal, email, and street addresses; and
c: specify the transaction or charge to be set aside; and
d: describe the property or state the amount that the liquidator wishes to recover; and
e: state that the person named in the notice may object to the transaction or charge being set aside by sending to the liquidator a written notice of objection that is received by the liquidator at his or her postal, email, or street address within 20 working days after the liquidator's notice has been served on that person; and
f: state that the written notice of objection must contain full particulars of the reasons for objecting and must identify any documents that evidence or substantiate the reasons for objecting; and
g: state that the transaction or charge will be set aside as against the person named in the notice if that person does not object; and
h: state that if the person named in the notice does object, the liquidator may apply to the Court for the transaction or charge to be set aside.
3: The transaction or charge is automatically set aside as against the person on whom the liquidator has served the liquidator's notice, if that person has not objected by sending to the liquidator a written notice of objection that is received by the liquidator at his or her postal, email, or street address within 20 working days after the liquidator's notice has been served on that person.
4: The notice of objection must contain full particulars of the reasons for objecting and must identify documents that evidence or substantiate the reasons for objecting.
5: A transaction or charge that is not automatically set aside may still be set aside by the Court on the liquidator's application. OIC SR 2007/297 2007-11-01 Section 294
30: New section 295 substituted
Section 295
295: Other orders
If a transaction or charge is set aside under section 294
a: an order that a person pay to the company an amount equal to some or all of the money that the company has paid under the transaction:
b: an order that a person transfer to the company property that the company has transferred under the transaction:
c: an order that a person pay to the company an amount that, in the Court's opinion, fairly represents some or all of the benefits that the person has received because of the transaction:
d: an order that a person transfer to the company property that, in the Court's opinion, fairly represents the application of either or both of the following:
i: money that the company has paid under the transaction:
ii: proceeds of property that the company has transferred under the transaction:
e: an order releasing, in whole or in part, a charge given by the company:
f: an order requiring security to be given for the discharge of an order made under this section:
g: an order specifying the extent to which a person affected by the setting aside of a transaction or by an order made under this section is entitled to claim as a creditor in the liquidation. Corporations Act 2001 (Australia) s 588FF(1)(a)–(d) . OIC SR 2007/297 2007-11-01 Section 295
31: Additional provisions relating to setting aside transactions and charges
Section 296 subsection (3)
3: A court must not order the recovery of property of a company (or its equivalent value) by a liquidator, whether under this Act, any other enactment, or in law or in equity, if the person from whom recovery is sought ( A
a: A acted in good faith; and
b: a reasonable person in A's position would not have suspected, and A did not have reasonable grounds for suspecting, that the company was, or would become, insolvent; and
c: A gave value for the property or altered A's position in the reasonably held belief that the transfer of the property to A was valid and would not be set aside. OIC SR 2007/297 2007-11-01 Section 296(3)
32: Transactions at undervalue
1: Section 297 subsections (1) (2)
1: Under subsection (2) X C
a: A
b: B
2: The liquidator may recover the difference in value (that is, C in the formula in subsection (1)
a: the company entered into the transaction within the specified period; and
b: either—
i: the company was unable to pay its due debts when it entered into the transaction; or
ii: the company became unable to pay its due debts as a result of entering into the transaction. OIC SR 2007/297 2007-11-01 Section 297(1) Section 297(2)
2: Section 297(3) paragraph (a)
a: transaction section 292(3) . OIC SR 2007/297 2007-11-01 Section 297(3)(a)
3: Section 297(3) a year 2 years OIC SR 2007/297 2007-11-01 Section 297(3) New offence for directors
33: Carrying on business fraudulently
Section 380 subsection (2)
3: Every director of a company commits an offence and is liable on conviction to the penalties set out in section 373(4) OIC SR 2007/297 2007-11-01 Section 380(3) Prohibition order
34: Registrar may prohibit persons from managing companies
Section 385(1)
g: that is in voluntary administration under Part 15A OIC SR 2007/297 2007-11-01 Section 385(1)(g) Phoenix companies
35: New sections 386A to 386F inserted
The following sections are inserted after section 386
386A: Director of failed company must not be director, etc, of phoenix company with same or substantially similar name
1: Except with the permission of the Court, or unless 1 of the exceptions in sections 386D to 386F
a: be a director of a phoenix company; or
b: directly or indirectly be concerned in or take part in the promotion, formation, or management of a phoenix company; or
c: directly or indirectly be concerned in or take part in the carrying on of a business that has the same name as the failed company's pre-liquidation name or a similar name.
2: A person who contravenes subsection (1) section 373(4) Insolvency Act 1986 (UK) s 216
386B: Definitions for purpose of phoenix company provisions
1: In sections 386A to 386F director of a failed company director of the failed company failed company phoenix company
a: a pre-liquidation name of the failed company; or
b: a similar name pre-liquidation similar name
2: For the purposes of sections 386A to 386F Insolvency Act 1986 (UK) s 216(6)
386C: Liability for debts of phoenix company
1: A person who contravenes section 386A(1)(a) or (b)
2: A person ( A
a: in the management of the company A acts or is willing to act on instructions given by another person ( B
b: at that time A knows that B is contravening section 386A(1)(a) or (b)
3: In this section, relevant debts
a: in subsection (1)
b: in subsection (2)
4: Liability under this section is joint and several.
5: For the purposes of this section, a person who, as a person involved in the management of a company, has at any time acted on instructions given by a person who he or she knew at the time to be in contravention of section 386A Insolvency Act 1986 (UK) s 217
386D: Exception for person named in successor company notice
1: Section 386A
2: A successor company Part 15A
3: A successor company notice
a: is sent by the successor company to all creditors of the failed company for whom the successor company has an address; and
b: is sent to those creditors within 20 working days after the arrangements for the acquisition of the business are made under subsection (2)
c: specifies—
i: the name and registered number of the failed company; and
ii: the circumstances in which the business has been acquired by the successor business; and
iii: the name that the successor company has assumed, or proposes to assume, for the purpose of carrying on that business; and
iv: any change of name that the successor company has made, or proposes to make, for the purpose of carrying on that business; and
d: states, in respect of a person named in the notice,—
i: his or her full name; and
ii: the duration of his or her directorship of the failed company; and
iii: the extent of his or her involvement in the management of the failed company. Insolvency Rules 1986 (UK) rule 4.228
386E: Exception for temporary period while application for exemption is made
1: A person does not contravene a prohibition in section 386A subsection (2)
2: The temporary period in subsection (1)
a: the close of 6 weeks after the commencement of liquidation; and
b: the date on which the Court makes an order of exemption. Insolvency Rules 1986 (UK) rule 4.229
386F: Exception in relation to non-dormant phoenix company known by pre-liquidation name of failed company for at least 12 months before liquidation
1: The prohibitions in section 386A(1)(a) and (b)
a: it has been known by that name or those names for not less than the period of 12 months before liquidation commences; and
b: it has not been dormant during those 12 months.
2: For the purposes of subsection (1) section 194(2) Insolvency Rules 1986 (UK) rule 4.230 . OIC SR 2007/297 2007-11-01 Section 386A Section 386B Section 386C Section 386D Section 386E Section 386F
36: Consequential amendments to section 126
1: Section 126(1)(b) and clause 12(ab) 386A to 386F, and clause 3(4)(b) OIC SR 2007/297 2007-11-01 Section 126(1)(b)
2: Section 126(1)(c) and clause 12(ab) 386A to 386F, and clause 3(4)(b) OIC SR 2007/297 2007-11-01 Section 126(1)(c)
3: Section 126(1)(d) clause 12(ab) clause 3(4)(b) OIC SR 2007/297 2007-11-01 Section 126(1)(d)
37: Consequential amendment to section 275
Section 275(4) paragraph (a) of clause 1 clause 1(1)(a) OIC SR 2007/297 2007-11-01 Section 275(4)
38: Consequential amendment to section 312
Section 312(2) clause 9(b) clause 2(1)(b) OIC SR 2007/297 2007-11-01 Section 312(2)
39: Consequential amendments to section 373
1: Section 373(1) paragraph 27
27A: section 239AEA(3)
27B: section 239AW(4) . OIC SR 2007/297 2007-11-01 Section 373(1)
2: Section 373(4)
j: section 386A(2) OIC SR 2007/297 2007-11-01 Section 373(4)(j) Schedule 7
40: Schedule 7 substituted
1: Schedule 7 is repealed and the Schedule 7 set out in Schedule 1 OIC SR 2007/297 2007-11-01 Schedule 7
2: If a liquidator is appointed to a company before this section comes into force, the property of the company must be applied in accordance with the priorities stated in Schedule 7 Consequential amendments to other enactments
41: Consequential amendments to other enactments
The enactments specified in Schedule 2 OIC SR 2007/297 2007-11-01 Section 42(1)(c) Section 13(1)(a)(i) Section 13(1)(a)(ii) Section 13(2) Section 104PPA(2)(b) Section 2(1) preferential claims Section 30(1)(b) Section 30(1)(c) Section 30(2) Section 30(2A) Section 30(3)(d) Section 30(3)(e) Section 2(1) voting right Section 2(1) voting right Section 122(1)(c) Section 143(1) Section 143(2) Section 143(3) Section 156L insolvency Section 156L insolvency