Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Cross-Border Insolvency Bill 2007

Part 2 Model Law on Cross-Border Insolvency

   

5   Definitions

             (1)  In this Act:

Australia does not include the Territory of Christmas Island or the Territory of Cocos (Keeling) Islands.

Model Law means the Model Law on Cross-Border Insolvency of the United Nations Commission on International Trade Law, set out in the Annex to United Nations General Assembly Resolution A/RES/52/158 (1997), the English text of which is set out in Schedule 1 to this Act.

Note:          In 2007, the text of United Nations General Assembly Resolutions was accessible through the United Nations Internet site (www.un.org).

             (2)  An expression that is used in both this Act and the Model Law (whether or not a particular meaning is given to it by the Model Law) has, in this Act, the same meaning as in the Model Law.

6   Model Law to have force of law in Australia

                   Subject to this Act, the Model Law, with the modifications set out in this Part, has the force of law in Australia.

7   References in Model Law to this State

             (1)  In the Model Law (as it has the force of law in Australia), a reference to this State is a reference to Australia.

Note:          See also section 19 for references to laws/law of this State and court of this State.

             (2)  If, because of subsection (1), the Model Law refers to Australia in a geographical sense, the reference does not include an external Territory.

Note:          Paragraph 17(a) of the Acts Interpretation Act 1901 would otherwise provide that Australia includes the Territory of Christmas Island and the Territory of Cocos (Keeling) Islands.

8   Identifying Australian laws relating to insolvency

                   The Model Law has the force of law in Australia as if the Model Law referred to:

                     (a)  the Bankruptcy Act 1966 ; and

                     (b)  Chapter 5 (other than Parts 5.2 and 5.4A), and section 601CL, of the Corporations Act 2001 ;

wherever the Model Law provides that the laws of the enacting State relating to insolvency are to be identified.

9   Entities that are not covered by the Model Law

                   Entities prescribed by the regulations are designated for the purposes of paragraph 2 of Article 1 of the Model Law (as it has the force of law in Australia).

Note 1:       The effect of prescribing an entity is that the Model Law does not apply to it.

Note 2:       The regulations may prescribe the entity by reference to a class. See subsection 13(3) of the Legislative Instruments Act 2003 .

10   Courts competent to perform functions under Model Law

                   The following courts are taken to be specified in Article 4 of the Model Law (as it has the force of law in Australia) as courts competent to perform the functions referred to in the Model Law relating to recognition of foreign proceedings and cooperation with foreign courts:

                     (a)  if the functions relate to a proceeding involving a debtor who is an individual—the Federal Court of Australia;

                     (b)  if the functions relate to a proceeding involving a debtor other than an individual:

                              (i)  the Federal Court of Australia; and

                             (ii)  the Supreme Court of a State or Territory.

Note:          References in the Model Law to a court or the court are, because of this section, to be read as references to the Federal Court of Australia or the Supreme Court of a State or Territory.

11   Functions of the trustee (in bankruptcy proceedings) and the registered liquidator (in corporate insolvencies)

                   The Model Law has the force of law in Australia as if the Model Law referred to whichever of the following is appropriate:

                     (a)  the trustee (within the meaning of subsection 5(1) of the Bankruptcy Act 1966 );

                     (b)  a registered liquidator (within the meaning of section 9 of the Corporations Act 2001 );

wherever the Model Law indicates that the title of the person or body administering a reorganization or liquidation under the law of the enacting State is to be inserted.

12   Access of foreign creditors to Australian insolvency proceedings

             (1)  For the purposes of Article 13 of the Model Law (as it has the force of law in Australia), the alternative wording set out in footnote 2 to the Model Law replaces paragraph 2 of that Article.

             (2)  For the purposes of the replacement paragraph, the claims of foreign creditors, other than those concerning tax and social security obligations, must not be ranked lower than the unsecured claims of other creditors solely because the creditor concerned is a foreign creditor.

13   Application for recognition of foreign proceeding

                   In addition to the requirement in paragraph 3 of Article 15 of the Model Law (as it has the force of law in Australia) that an application for recognition be accompanied by a statement identifying all foreign proceedings in respect of the debtor that are known to the foreign representative, the application must be accompanied by a statement identifying:

                     (a)  all proceedings under the Bankruptcy Act 1966 in respect of the debtor; and

                     (b)  any appointment of a receiver (within the meaning of section 416 of the Corporations Act 2001 ), or a controller or a managing controller (both within the meaning of section 9 of that Act), in relation to the property of the debtor; and

                     (c)  all proceedings under Chapter 5, or section 601CL, of the Corporations Act 2001 in respect of the debtor;

that are known to the foreign representative.

14   Subsequent information

                   In addition to the requirement in subparagraph (b) of Article 18 of the Model Law (as it has the force of law in Australia) that the foreign representative inform the court promptly of any other foreign proceeding that becomes known to the foreign representative, the foreign representative must inform the court promptly of:

                     (a)  any proceeding under the Bankruptcy Act 1966 regarding the same debtor; and

                     (b)  any appointment of a receiver (within the meaning of section 416 of the Corporations Act 2001 ), or a controller or a managing controller (both within the meaning of section 9 of that Act), in relation to the property of the same debtor; and

                     (c)  any proceeding under Chapter 5, or section 601CL, of the Corporations Act 2001 regarding the same debtor;

that becomes known to the foreign representative.

15   Relief that may be granted upon application for recognition of a foreign proceeding

                   To avoid doubt, no provisions are inserted or referred to in paragraph 2 of Article 19 of the Model Law (as it has the force of law in Australia).

16   Effects of recognition of a foreign main proceeding

                   For the purposes of paragraph 2 of Article 20 of the Model Law (as it has the force of law in Australia), the scope and the modification or termination of the stay or suspension referred to in paragraph 1 of that Article, are the same as would apply if the stay or suspension arose under:

                     (a)  the Bankruptcy Act 1966 ; or

                     (b)  Chapter 5 (other than Parts 5.2 and 5.4A) of the Corporations Act 2001 ;

as the case requires.

17   Actions to avoid acts detrimental to creditors

             (1)  The actions referred to for the purposes of paragraph 1 of Article 23 of the Model Law (as it has the force of law in Australia) are actions arising under or because of:

                     (a)  section 120, 121, 121A, 122, 128B or 128C or Division 4A of Part VI of the Bankruptcy Act 1966 ; or

                     (b)  Division 2 of Part 5.7B of the Corporations Act 2001 .

             (2)  A provision referred to in paragraph (1)(a) or (b) applies, with appropriate changes, in relation to an action for the purposes of a foreign proceeding in the same way it would apply if the action were for the purposes of a proceeding in relation to:

                     (a)  a bankrupt (within the meaning of subsection 5(1) of the Bankruptcy Act 1966 ); or

                     (b)  a company (within the meaning of section 9 of the Corporations Act 2001 );

as the case requires.

18   Forms of cooperation

                   To avoid doubt, no additional forms or examples of cooperation are added by subparagraph (f) of Article 27 of the Model Law (as it has the force of law in Australia).

19   References to laws/law of this State and courts of this State

Laws/law of this State

             (1)  A reference in Article 7 of the Model Law (as it has the force of law in Australia) to laws of this State is a reference to the following laws:

                     (a)  a law of the Commonwealth;

                     (b)  a law of a State;

                     (c)  a law of a Territory (other than an external Territory).

             (2)  A reference in Article 21 of the Model Law (as it has the force of law in Australia) to the laws of this State is a reference to a law of the Commonwealth.

             (3)  A reference in Articles 14, 21, 23, 28 and 29 of the Model Law (as it has the force of law in Australia) to the law of this State is a reference to a law of the Commonwealth.

             (4)  A reference in Article 24 of the Model Law (as it has the force of law in Australia) to the law of this State is a reference to the following laws:

                     (a)  a law of the Commonwealth;

                     (b)  a law of a State;

                     (c)  a law of a Territory (other than an external Territory).

Courts of this State

             (5)  A reference in Article 10 of the Model Law (as it has the force of law in Australia) to the courts of this State is a reference to the following courts:

                     (a)  a federal court;

                     (b)  a court of a State;

                     (c)  a court of a Territory (other than an external Territory).

20   Application

             (1)  This Act applies to proceedings under:

                     (a)  the Bankruptcy Act 1966 ; or

                     (b)  Chapter 5 (other than Parts 5.2 and 5.4A), and section 601CL, of the Corporations Act 2001 ;

commenced before, on or after the commencement of this Part.

             (2)  This Act applies to foreign proceedings commenced on or after the commencement of this Part.