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Corporations Bill 2001

Part 5.3A Administration of a company’s affairs with a view to executing a deed of company arrangement

Division 1 Preliminary

435A   Object of Part

                   The object of this Part is to provide for the business, property and affairs of an insolvent company 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 members than would result from an immediate winding up of the company.

435B   Definitions

                   In this Part, unless the contrary intention appears:

receiver includes a receiver and manager.

435C   When administration begins and ends

             (1)  The administration of a company:

                     (a)  begins when an administrator of the company is appointed under section 436A, 436B or 436C; and

                     (b)  ends on the happening of whichever event of a kind referred to in subsection (2) or (3) happens first after the administration begins.

             (2)  The normal outcome of the administration of a company is that:

                     (a)  a deed of company arrangement is executed by both the company and the deed’s administrator; or

                     (b)  the company’s creditors resolve under paragraph 439C(b) that the administration should end; or

                     (c)  the company’s creditors resolve under paragraph 439C(c) that the company be wound up.

             (3)  However, the administration of a company may also end because:

                     (a)  the Court orders, under section 447A or otherwise, that the administration is to end, for example, because the Court is satisfied that the company is solvent; or

                     (b)  the convening period, as fixed by subsection 439A(5), for a meeting of the company’s creditors ends:

                              (i)  without the meeting being convened in accordance with section 439A; and

                             (ii)  without an application being made for the Court to extend under subsection 439A(6) the convening period for the meeting; or

                     (c)  an application for the Court to extend under subsection 439A(6) the convening period for such a meeting is finally determined or otherwise disposed of otherwise than by the Court extending the convening period; or

                     (d)  the convening period, as extended under subsection 439A(6), for such a meeting ends without the meeting being convened in accordance with section 439A; or

                     (e)  such a meeting convened under section 439A ends (whether or not it was earlier adjourned) without a resolution under section 439C being passed at the meeting; or

                      (f)  the company contravenes subsection 444B(2) by failing to execute a proposed deed of company arrangement; or

                     (g)  the Court appoints a provisional liquidator of the company, or orders that the company be wound up.

             (4)  During the administration of a company, the company is taken to be under administration.



 

Division 2 Appointment of administrator and first meeting of creditors

436A   Company may appoint administrator if board thinks it is or will become insolvent

             (1)  A company may, by writing, appoint an administrator of the company if the board has resolved to the effect that:

                     (a)  in the opinion of the directors voting for the resolution, the company is insolvent, or is likely to become insolvent at some future time; and

                     (b)  an administrator of the company should be appointed.

             (2)  Subsection (1) does not apply to a company that is already being wound up.

436B   Liquidator may appoint administrator

             (1)  A liquidator or provisional liquidator of a company may by writing appoint an administrator of the company if he or she thinks that the company is insolvent, or is likely to become insolvent at some future time.

             (2)  With the leave of the Court, a liquidator or provisional liquidator of a company may appoint himself or herself under subsection (1).

             (3)  Subsection (2) has effect subject to Division 14.

436C   Chargee may appoint administrator

             (1)  A person who is entitled to enforce a charge on the whole, or substantially the whole, of a company’s property may by writing appoint an administrator of the company if the charge has become, and is still, enforceable.

             (2)  Subsection (1) does not apply to a company that is already being wound up.

436D   Company already under administration

                   An administrator cannot be appointed under section 436A, 436B or 436C if the company is already under administration.

436E   Purpose and timing of first meeting of creditors

             (1)  The administrator of a company under administration must convene a meeting of the company’s creditors in order to determine:

                     (a)  whether to appoint a committee of creditors; and

                     (b)  if so, who are to be the committee’s members.

             (2)  The meeting must be held within 5 business days after the administration begins.

             (3)  The 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)  causing notice of the meeting to be published:

                              (i)  in a national newspaper; or

                             (ii)  in each State or Territory in which the company has its registered office or carries on business, in a daily newspaper that circulates generally in that State or Territory;

at least 2 business days before the meeting.

             (4)  At the meeting, the company’s creditors may also, by resolution:

                     (a)  remove the administrator from office; and

                     (b)  appoint someone else as administrator of the company.

436F   Functions of committee of creditors

             (1)  The functions of a committee of creditors of a company under 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)  A committee cannot give directions to the administrator, except as provided in subsection (3).

             (3)  As and when a committee reasonably requires, the administrator must report to the committee about matters relating to the administration.

436G   Membership of committee

                   A person can be a member of a committee of creditors of a company under administration if, and only if, he or she is:

                     (a)  a creditor of the company; or

                     (b)  the attorney of such a creditor because of a general power of attorney; or

                     (c)  authorised in writing by such a creditor to be such a member.



 

Division 3 Administrator assumes control of company’s affairs

437A   Role of administrator

             (1)  While a company is under 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 under administration.

             (2)  Nothing in subsection (1) limits the generality of anything else in it.

437B   Administrator acts as company’s agent

                   When performing a function, or exercising a power, as administrator of a company under administration, the administrator is taken to be acting as the company’s agent.

437C   Powers of other officers suspended

             (1)  While a company is under administration, a person (other than the administrator) cannot perform or exercise, and must not purport to perform or exercise, a function or power as an officer of the company, except with the administrator’s written approval.

             (2)  Subsection (1) does not remove an officer of a company from his or her office.

             (3)  Section 437D does not limit the generality of subsection (1) of this section.

             (4)  In this section:

officer , in relation to a company under administration, includes:

                     (a)  a receiver who is not also a manager; and

                     (b)  a receiver and manager appointed by a court; and

                     (c)  a liquidator or provisional liquidator appointed by the Court before the administration began.

             (5)  However, a person is not an officer of a company for the purposes of this section merely because he or she is an employee of the company.

437D   Only administrator can deal with company’s property

             (1)  This section applies where:

                     (a)  a company under administration purports to enter into; or

                     (b)  a person purports to enter into, on behalf of a company under administration;

a transaction or dealing affecting property of the company.

             (2)  The transaction or dealing is void unless:

                     (a)  the administrator entered into it on the company’s behalf; or

                     (b)  the administrator consented to it in writing before it was entered into; or

                     (c)  it was entered into under an order of the Court.

             (3)  Subsection (2) does not apply to a payment made:

                     (a)  by an Australian ADI out of an account kept by the company with the ADI; and

                     (b)  in good faith and in the ordinary course of the ADI’s banking business; and

                     (c)  after the administration began and on or before the day on which:

                              (i)  the administrator gives to the ADI (under subsection 450A(3) or otherwise) written notice of the appointment that began the administration; or

                             (ii)  the administrator complies with paragraph 450A(1)(b) in relation to that appointment;

                            whichever happens first.

             (4)  Subsection (2) has effect subject to an order that the Court makes after the purported transaction or dealing.

             (5)  If, because of subsection (2), the transaction or dealing is void, or would be void apart from subsection (4), an officer of the company who:

                     (a)  purported to enter into the transaction or dealing on the company’s behalf; or

                     (b)  was in any other way, by act or omission, directly or indirectly, knowingly concerned in, or party to, the transaction or dealing;

contravenes this subsection.

437E   Order for compensation where officer involved in void transaction

             (1)  Where:

                     (a)  a court finds a person guilty of an offence constituted by a contravention of subsection 437D(5) (including such an offence that is taken to have been committed because of section 5 of the Crimes Act 1914 ); and

                     (b)  the court is satisfied that the company or another person has suffered loss or damage because of the act or omission constituting the offence;

the court may (whether or not it imposes a penalty) order the first-mentioned person to pay compensation to the company or other person, as the case may be, of such amount as the order specifies.

Note:          Section 73A defines when a court is taken to find a person guilty of an offence.

             (2)  An order under subsection (1) may be enforced as if it were a judgment of the court.

             (3)  The power of a court under section 1318 to relieve a person from liability as mentioned in that section extends to relieving a person from liability to be ordered under this section to pay compensation.

437F   Effect of administration on company’s members

                   A transfer of shares in a company, or an alteration in the status of members of a company, that is made during the administration of the company is void except so far as the Court otherwise orders.



 

Division 4 Administrator investigates company’s affairs

438A   Administrator to investigate 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 interests of the company’s creditors 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 wound up.

438B   Directors to help administrator

             (1)  As soon as practicable after the administration of a company begins, each director must:

                     (a)  deliver to the administrator all books in the director’s possession that relate to the company, other than books that the director is entitled, as against the company and the administrator, to retain; and

                     (b)  if the director knows where other books relating to the company are—tell the administrator where those books are.

             (2)  Within 7 days after the administration of a company begins or such longer period as the administrator allows, the directors must give to the administrator a statement about the company’s business, property, affairs and financial circumstances.

             (3)  A director of a company under administration must:

                     (a)  attend on the administrator at such times; and

                     (b)  give the administrator such information about the company’s business, property, affairs and financial circumstances;

as the administrator reasonably requires.

             (4)  A person must not, without reasonable excuse, fail to comply with subsection (1), (2) or (3).

438C   Administrator’s rights to company’s books

             (1)  A person is not entitled, as against the administrator of a company under administration:

                     (a)  to retain possession of books of the company; or

                     (b)  to claim or enforce a lien on such books;

but such a lien is not otherwise prejudiced.

             (2)  Paragraph (1)(a) does not apply in relation to books of which a secured creditor of the company is entitled to possession otherwise than because of a lien, but the administrator is entitled to inspect, and make copies of, such books at any reasonable time.

             (3)  The administrator of a company under administration may give to a person a written notice requiring the person to deliver to the administrator, as specified in the notice, books so specified that are in the person’s possession.

             (4)  A notice under subsection (3) must specify a period of at least 3 business days as the period within which the notice must be complied with.

             (5)  A person must comply with a notice under subsection (3) except so far as the person is entitled, as against the company and the administrator, to retain possession of the books.

438D   Reports by administrator

             (1)  If it appears to the administrator of a company under administration that:

                     (a)  a past or present officer, or a member, of the company may have been guilty of an offence in relation to the company; or

                     (b)  a person who has taken part in the formation, promotion, administration, management or winding up of the company:

                              (i)  may have misapplied or retained, or may have become liable or accountable for, money or property (in Australia or elsewhere) of the company; or

                             (ii)  may have been guilty of negligence, default, breach of duty or breach of trust in relation to the company;

the administrator must:

                     (c)  lodge a report about the matter as soon as practicable; and

                     (d)  give ASIC such information, and such access to and facilities for inspecting and taking copies of documents, as ASIC requires.

             (2)  The administrator may also lodge further reports specifying any other matter that, in his or her opinion, it is desirable to bring to ASIC’s notice.

             (3)  If it appears to the Court:

                     (a)  that a past or present officer, or a member, of a company under administration has been guilty of an offence in relation to the company; or

                     (b)  that a person who has taken part in the formation, promotion, administration, management or winding up of a company under administration has engaged in conduct of a kind referred to in paragraph (1)(b) in relation to the company;

and that the administrator has not lodged a report about the matter, the Court may, on the application of an interested person, direct the administrator to lodge such a report.



 

Division 5 Meeting of creditors decides company’s future

439A   Administrator to convene meeting and inform creditors

             (1)  The administrator of a company under administration must convene a meeting of the company’s creditors within the convening period as fixed by subsection (5) or extended under subsection (6).

Note:          For body corporate representatives’ powers at a meeting of the company’s creditors, see section 250D.

             (2)  The meeting must be held within 5 business days after the end of the convening period.

             (3)  The 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)  causing notice of the meeting to be published:

                              (i)  in a national newspaper; or

                             (ii)  in each State or Territory in which the company has its registered office or carries on business, in a daily newspaper that circulates generally in that State or Territory;

at least 5 business days before the meeting.

             (4)  The notice given to a creditor under paragraph (3)(a) must be accompanied by a copy of:

                     (a)  a report by the administrator about the company’s business, property, affairs and financial circumstances; and

                     (b)  a statement setting out the administrator’s 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 wound up;

                            and his or her reasons for those opinions; and

                     (c)  if a deed of company arrangement is proposed—a statement setting out details of the proposed deed.

             (5)  The convening period is:

                     (a)  if the administration begins on a day that is in December, or is less than 28 days before Good Friday—the period of 28 days beginning on that day; or

                     (b)  otherwise—the period of 21 days beginning on the day when the administration begins.

             (6)  The Court may extend the convening period on an application made within the period referred to in paragraph (5)(a) or (b), as the case requires.

439B   Conduct of meeting

             (1)  At a meeting convened under section 439A, the administrator is to preside.

             (2)  A meeting convened under section 439A may be adjourned from time to time, but cannot be adjourned to a day that is more than 60 days after the first day on which the meeting was held, even if no resolution under section 439C has been passed at the meeting.

439C   What creditors may decide

                   At a meeting convened under section 439A, the creditors may resolve:

                     (a)  that the company execute a deed of company arrangement specified in the resolution (even if it differs from the proposed deed (if any) details of which accompanied the notice of meeting); or

                     (b)  that the administration should end; or

                     (c)  that the company be wound up.



 

Division 6 Protection of company’s property during administration

440A   Winding up company

             (1)  A company under administration cannot be wound up voluntarily, except as provided by section 446A.

             (2)  The Court is to adjourn the hearing of an application for an order to wind up a company if the company is under administration and the Court is satisfied that it is in the interests of the company’s creditors for the company to continue under administration rather than be wound up.

             (3)  The Court is not to appoint a provisional liquidator of a company if the company is under administration and the Court is satisfied that it is in the interests of the company’s creditors for the company to continue under administration rather than have a provisional liquidator appointed.

440B   Charge unenforceable

                   During the administration of a company, a person cannot enforce a charge on property of the company, except:

                     (a)  with the administrator’s written consent; or

                     (b)  with the leave of the Court.

440C   Owner or lessor cannot recover property used by company

                   During the administration of a company, the owner or lessor of property that is used or occupied by, or is in the possession of, the company cannot take possession of the property or otherwise recover it, except:

                     (a)  with the administrator’s written consent; or

                     (b)  with the leave of the Court.

440D   Stay of proceedings

             (1)  During the administration of a company, a proceeding in a court against the company or in relation to any of its property cannot be begun or proceeded with, except:

                     (a)  with the administrator’s written consent; or

                     (b)  with the leave of the Court and in accordance with such terms (if any) as the Court imposes.

             (2)  Subsection (1) does not apply to:

                     (a)  a criminal proceeding; or

                     (b)  a prescribed proceeding.

440E   Administrator not liable in damages for refusing consent

                   A company’s administrator is not liable to an action or other proceeding for damages in respect of a refusal to give an approval or consent for the purposes of this Division.

440F   Suspension of enforcement process

                   During the administration of a company, no enforcement process in relation to property of the company can be begun or proceeded with, except:

                     (a)  with the leave of the Court; and

                     (b)  in accordance with such terms (if any) as the Court imposes.

440G   Duties of court officer in relation to property of company

             (1)  This section applies where an officer of a court (in this section called the court officer ), being:

                     (a)  a sheriff; or

                     (b)  the registrar or other appropriate officer of the court;

receives written notice of the fact that a company is under administration.

             (2)  During the administration, the court officer cannot:

                     (a)  take action to sell property of the company under a process of execution; or

                     (b)  pay to a person (other than the administrator):

                              (i)  proceeds of selling property of the company (at any time) under a process of execution; or

                             (ii)  money of the company seized (at any time) under a process of execution; or

                            (iii)  money paid (at any time) to avoid seizure or sale of property of the company under a process of execution; or

                     (c)  take action in relation to the attachment of a debt due to the company; or

                     (d)  pay to a person (other than the administrator) money received because of the attachment of such a debt.

             (3)  The court officer must deliver to the administrator any property of the company that is in the court officer’s possession under a process of execution (whenever begun).

             (4)  The court officer must pay to the administrator all proceeds or money of a kind referred to in paragraph (2)(b) or (d) that:

                     (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 on property delivered under subsection (3) or proceeds or money paid under subsection (4).

             (6)  In order to give effect to a charge under subsection (5) on proceeds or money, the court officer may retain, on behalf of the person entitled to the charge, so much of the proceeds or money as the court officer thinks necessary.

             (7)  The Court may, if it is satisfied that it is appropriate to do so, permit the court officer to take action, or to make a payment, that subsection (2) would otherwise prevent.

             (8)  A person who buys property in good faith under a sale under a process of execution gets a good title to the property as against the company and the administrator, despite anything else in this section.

440H   Lis pendens taken to exist

             (1)  This section has effect only for the purposes of a law about the effect of a lis pendens on purchasers or mortgagees.

             (2)  During the administration of a company, an application to wind up the company is taken to be pending.

             (3)  An application that is taken because of subsection (2) to be pending constitutes a lis pendens.

440J   Administration not to trigger liability of director or relative under guarantee of company’s liability

             (1)  During the administration of a company:

                     (a)  a guarantee of a liability of the company cannot be enforced, as against:

                              (i)  a director of the company who is a natural person; or

                             (ii)  a spouse, de facto spouse or relative of such a director; and

                     (b)  without limiting paragraph (a), a proceeding in relation to such a guarantee cannot be begun against such a director, spouse, de facto spouse or relative;

except with the leave of the Court and in accordance with such terms (if any) as the Court imposes.

             (2)  While subsection (1) prevents a person ( the creditor ) from:

                     (a)  enforcing as against another person ( the guarantor ) a guarantee of a liability of a company; or

                     (b)  beginning a proceeding against another person ( the guarantor ) in relation to such a guarantee;

section 1323 applies in relation to the creditor and the guarantor as if:

                     (c)  a civil proceeding against the guarantor had begun under this Act; and

                     (d)  the creditor were the only person of a kind referred to in that section as an aggrieved person.

Note:          Under section 1323 the Court can make a range of orders to ensure that a person can meet the person’s liabilities.

             (3)  The effect that section 1323 has because of a particular application of subsection (2) is additional to, and does not prejudice, the effect the section otherwise has.

             (4)  In this section:

guarantee , in relation to a liability of a company, includes a relevant agreement (as defined in section 9) because of which a person other than the company has incurred, or may incur, whether jointly with the company or otherwise, a liability in respect of the liability of the company.

liability means a debt, liability or other obligation.



 

Division 7 Rights of chargee, owner or lessor

441A   Where chargee acts before or during decision period

             (1)  This section applies where:

                     (a)  the whole, or substantially the whole, of the property of a company under administration is subject to a charge; and

                     (b)  before or during the decision period, the chargee enforced the charge in relation to all property of the company subject to the charge, whether or not the charge was enforced in the same way in relation to all that property.

             (2)  This section also applies where:

                     (a)  a company is under administration; and

                     (b)  the same person is the chargee in relation to each of 2 or more charges on property of the company; and

                     (c)  the property of the company (in this subsection called the charged property ) subject to the respective charges together constitutes the whole, or substantially the whole, of the company’s property; and

                     (d)  before or during the decision period, the chargee enforced the charges in relation to all the charged property:

                              (i)  whether or not the charges were enforced in the same way in relation to all the charged property; and

                             (ii)  whether or not any of the charges was 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 were enforced in relation to property of the company in a way referred to in paragraph (a), (b) or (d) of the definition of enforce in section 9—whether or not the same person was appointed in respect of all of the last-mentioned property.

             (3)  Nothing in section 437C or 440B, or in an order under subsection 444F(2), prevents any of the following from enforcing the charge, or any of the charges:

                     (a)  the chargee;

                     (b)  a receiver or person appointed as mentioned in paragraph (a), (b) or (d) of the definition of enforce in section 9 as that definition applies in relation to the charge, or any of the charges (even if appointed after the decision period).

             (4)  Section 437D does not apply in relation to a transaction or dealing that affects property of the company and is entered into by:

                     (a)  the chargee; or

                     (b)  a receiver or person of a kind referred to in paragraph (3)(b) of this section;

in the performance or exercise of a function or power as chargee, or as such a receiver or person, as the case may be.

441B   Where enforcement of charge begins before administration

             (1)  This section applies if, before the beginning of the administration of a company, a chargee, receiver or other person:

                     (a)  entered into possession, or assumed control, of property of the company; or

                     (b)  entered into an agreement to sell such property; or

                     (c)  made arrangements for such property to be offered for sale by public auction; or

                     (d)  publicly invited tenders for the purchase of such property; or

                     (e)  exercised any other power in relation to such property;

for the purpose of enforcing a charge on that property.

             (2)  Nothing in section 437C or 440B prevents the chargee, receiver or other person from enforcing the charge in relation to that property.

             (3)  Section 437D does not apply in relation to a transaction or dealing that affects that property and is entered into:

                     (a)  in the exercise of a power of the chargee as chargee; or

                     (b)  in the performance or exercise of a function or power of the receiver or other person;

as the case may be.

441C   Charge on perishable property

             (1)  This section applies where perishable property of a company under administration is subject to a charge.

             (2)  Nothing in section 437C or 440B prevents:

                     (a)  the chargee; or

                     (b)  a receiver or person appointed (at any time) as mentioned in paragraph (a), (b) or (d) of the definition of enforce in section 9;

from enforcing the charge, so far as it is a charge on perishable property.

             (3)  Section 437D does not apply in relation to a transaction or dealing that affects perishable property of the company and is entered into by:

                     (a)  the chargee; or

                     (b)  a receiver or person appointed (at any time) as mentioned in paragraph (a), (b) or (d) of the definition of enforce in section 9;

in the performance or exercise of a function or power as chargee, or as such a receiver or person, as the case may be.

441D   Court may limit powers of chargee etc. in relation to charged property

             (1)  This section applies if:

                     (a)  for the purpose of enforcing a charge on property of a company, the chargee, or a receiver or other person, does an act of a kind referred to in a paragraph of subsection 441B(1); and

                     (b)  the company is under administration when the chargee, receiver or other person does the act, or the company later begins to be under administration;

but does not apply in a case where section 441A applies.

             (2)  On application by the administrator, the Court may order the chargee, receiver or other person not to perform specified functions, or exercise specified powers, except as permitted by the order.

             (3)  The Court may only make an order if satisfied that what the administrator proposes to do during the administration will adequately protect the chargee’s interests.

             (4)  An order may only be made, and only has effect, during the administration.

             (5)  An order has effect despite sections 441B and 441C.

441E   Giving a notice under a charge

                   Nothing in section 437C or 440B prevents a person from giving a notice under the provisions of a charge.

441F   Where 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:

                     (a)  entered into possession, 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 such property;

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.

             (2)  Nothing in section 437C or 440C prevents the receiver or other person from performing a function, or exercising a power, in relation to the property.

             (3)  Section 437D does not apply in relation to a transaction or dealing that affects the property and is entered into in the performance or exercise of a function or power of the receiver or other person.

441G   Recovering perishable property

             (1)  Nothing in section 437C or 440C prevents a person from taking possession of, or otherwise recovering, perishable property.

             (2)  Section 437D does not apply in relation to a transaction or dealing that affects perishable property and is entered into 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.

441H   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 under administration when the person does so, or the company later begins to be under administration.

             (2)  On 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 only make an order 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 may only be made, and only has effect, during the administration.

             (5)  An order has effect despite sections 441F and 441G.

441J   Giving a notice under an agreement about property

                   Nothing in section 437C or 440C prevents a person from giving a notice to a company under an agreement relating to property that is used or occupied by, or is in the possession of, the company.

441K   Effect of Division

                   Except as expressly provided, nothing in this Division limits the generality of anything else in it.



 

Division 8 Powers of administrator

442A   Additional powers of administrator

                   Without limiting section 437A, the administrator of a company under administration has power to do any of the following:

                     (a)  remove from office a director of the company;

                     (b)  appoint a person as such a director, whether to fill a vacancy or not;

                     (c)  execute a document, bring or defend proceedings, or do anything else, in the company’s name and on its behalf;

                     (d)  whatever else is necessary for the purposes of this Part.

442B   Dealing with property subject to a floating charge that has crystallised

             (1)  This section applies where a charge on property of a company under administration was a floating charge when created but has since become a fixed or specific charge.

             (2)  Subject to sections 442C and 442D, the administrator may deal with any of that property as if the charge were still a floating charge.

442C   When administrator may dispose of encumbered property

             (1)  The administrator of a company under administration or of a deed of company arrangement must not dispose of:

                     (a)  property of the company that is subject to a charge; or

                     (b)  property that is used or occupied by, or is in the possession of, the company but of which someone else is the owner or lessor.

             (2)  Subsection (1) does not prevent a disposal:

                     (a)  in the ordinary course of the company’s business; or

                     (b)  with the written consent of the chargee, owner or lessor, as the case may be; or

                     (c)  with the leave of the Court.

             (3)  The Court may only give leave under paragraph (2)(c) if satisfied that arrangements have been made to protect adequately the interests of the chargee, owner or lessor, as the case may be.

442D   Administrator’s powers subject to powers of chargee, receiver etc.

             (1)  Where section 441A applies, the administrator’s functions and powers are subject to the functions and powers of a person as:

                     (a)  the chargee; or

                     (b)  a receiver or person of a kind referred to in paragraph 441A(3)(b) (even if appointed after the decision period).

             (2)  Where section 441C applies, then, so far as concerns perishable property of the company, the administrator’s functions and powers are subject to the functions and powers of a person as:

                     (a)  the chargee; or

                     (b)  a receiver or person appointed (at any time) as mentioned in paragraph (a), (b) or (d) of the definition of enforce in section 9.

             (3)  Where section 441B, 441F or 441G applies, then, so far as concerns the property referred to in subsection 441B(1), 441F(1) or 441G(1), the administrator’s functions and powers are subject to the functions and powers of the chargee, receiver or other person.

442E   Administrator has qualified privilege

                   A person who is or has been the administrator of a company under administration has qualified privilege in respect of a statement that he or she has made, whether orally or in writing, in the course of performing or exercising any of his or her functions and powers as administrator of the company.

442F   Protection of persons dealing with administrator

             (1)  Sections 128 and 129 apply in relation to a company under administration as if:

                     (a)  a reference in those sections to the company, or to an officer of the company, included a reference to the administrator; and

                     (b)  a reference in those sections to an assumption referred to in section 129 included a reference to an assumption that the administrator is:

                              (i)  acting within his or her functions and powers as administrator; and

                             (ii)  in particular, is complying with this Act.

             (2)  The effect that sections 128 and 129 have because of subsection (1) of this section is additional to, and does not prejudice, the effect that sections 128 and 129 otherwise have in relation to a company under administration.



 

Division 9 Administrator’s liability and indemnity for debts of administration

Subdivision A Liability

443A   General debts

             (1)  The administrator of a company under administration is liable for debts 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)  services rendered; or

                     (b)  goods bought; or

                     (c)  property hired, leased, used or occupied.

             (2)  Subsection (1) has effect despite any agreement to the contrary, but without prejudice to the administrator’s rights against the company or anyone else.

443B   Payments for property used or occupied by, or in the possession of, the company

             (1)  This section applies if, under an agreement made before the administration of a company began, the company continues to use or occupy, or to be in possession of, property of which someone else is the owner or lessor.

             (2)  Subject to this section, the administrator is liable for so much of the rent or other amounts payable by the company under the agreement as is attributable to a period:

                     (a)  that begins more than 7 days after the administration began; and

                     (b)  throughout which:

                              (i)  the company continues to use or occupy, or to be in possession of, the property; and

                             (ii)  the administration continues.

             (3)  Within 7 days after the beginning of the administration, the administrator may give to the owner or lessor a notice that specifies the property and states that the company does not propose to exercise rights in relation to the property.

             (4)  Despite subsection (2), the administrator is not liable for so much of the rent or other amounts payable by the company under the agreement as is attributable to a period during which a notice under subsection (3) is in force, but such a notice does not affect a liability of the company.

             (5)  A notice under subsection (3) ceases to have effect if:

                     (a)  the administrator revokes it by writing given to the owner or lessor; or

                     (b)  the company exercises, or purports to exercise, a right in relation to the property.

             (6)  For the purposes of subsection (5), the company does not exercise, or purport to exercise, a right in relation to the property merely because the company continues to occupy, or to be in possession of, the property, unless the company:

                     (a)  also uses the property; or

                     (b)  asserts a right, as against the owner or lessor, so to continue.

             (7)  Subsection (2) does not apply in relation to so much of a period as elapses after:

                     (a)  a receiver of the property is appointed; or

                     (b)  a chargee appoints an agent, under the provisions of a charge on the property, to enter into possession, or to assume control, of the property; or

                     (c)  a chargee takes possession, or assumes control, of the property under the provisions of a charge on the property;

but this subsection does not affect a liability of the company.

             (8)  Subsection (2) does not apply in so far as a court, by order, excuses the administrator from liability, but an order does not affect a liability of the company.

             (9)  The administrator is not taken because of subsection (2):

                     (a)  to have adopted the agreement; or

                     (b)  to be liable under the agreement otherwise than as mentioned in subsection (2).

443BA   Certain taxation liabilities

             (1)  The administrator of a company is liable to pay to the Commissioner of Taxation:

                     (a)  each amount payable under a remittance provision because of a deduction made by the administrator; and

                     (b)  without limiting paragraph (a), so much of each amount payable under a remittance provision because of a deduction made by the company during the administration as equals so much of the deduction as is attributable to a period throughout which the administration continued;

even if the amount became payable after the end of the administration.

             (2)  In this section:

remittance provision means any of the following provisions of the Income Tax Assessment Act 1936 :

                     (a)  section 221F (except subsection 221F(12)) or section 221G (except subsection 221G(4A));

                     (b)  subsection 221YHDC(2);

                     (c)  subsection 221YHZD(1) or (1A);

                     (d)  subsection 221YN(1);

and any of the provisions of Subdivision 16-B in Schedule 1 to the Taxation Administration Act 1953 .

unpaid amount , in relation to an estimate, has the same meaning as in Division 8 of Part VI of the Income Tax Assessment Act 1936 .

443C   Administrator not otherwise liable for company’s debts

                   The administrator of a company under administration is not liable for the company’s debts except under this Subdivision.

Subdivision B Indemnity

443D   Right of indemnity

                   The administrator of a company under administration is entitled to be indemnified out of the company’s property for:

                     (a)  debts for which the administrator is liable under Subdivision A or a remittance provision as defined in subsection 443BA(3); and

                     (b)  his or her remuneration as fixed under section 449E.

443E   Right of indemnity has priority over other debts

             (1)  Subject to section 556, a right of indemnity under section 443D has priority over:

                     (a)  all the company’s unsecured debts; and

                     (b)  subject to subsections (2) and (3) of this section, debts of the company secured by a floating charge on property of the company.

             (2)  Where:

                     (a)  debts of a company under administration are secured by a floating charge on property of the company; and

                     (b)  before the beginning of the administration, the chargee:

                              (i)  appointed a receiver of property of the company under a power contained in an instrument relating to the charge; or

                             (ii)  obtained an order for the appointment of a receiver of property of the company for the purpose of enforcing the charge; or

                            (iii)  entered into possession, or assumed control, of property of the company for that purpose; or

                            (iv)  appointed a person so to enter into possession or assume control (whether as agent for the chargee or for the company); and

                     (c)  the receiver or person is still in office, or the chargee is still in possession or control of the property;

the right of indemnity of the administrator under section 443D does not have priority over those debts, except so far as the chargee agrees.

             (3)  Where:

                     (a)  debts of a company under administration are secured by a floating charge on property of the company; and

                     (b)  during the administration, the chargee, consistently with this Part:

                              (i)  appoints a receiver of property of the company under a power contained in an instrument relating to the charge; or

                             (ii)  obtains an order for the appointment of a receiver of property of the company for the purpose of enforcing the charge; or

                            (iii)  enters into possession, or assumes control, of property of the company for that purpose; or

                            (iv)  appoints a person so to enter into possession or assume control (whether as agent for the chargee or for the company);

the right of indemnity of the administrator under section 443D has priority over those debts only in so far as it is a right of indemnity for debts incurred, or remuneration accruing, before written notice of the appointment, or of the entering into possession or assuming of control, as the case may be, was given to the administrator.

443F   Lien to secure indemnity

             (1)  To secure a right of indemnity under section 443D, the administrator has a lien on the company’s property.

             (2)  A lien under subsection (1) has priority over a charge only in so far as the right of indemnity under section 443D has priority over debts secured by the charge.



 

Division 10 Execution and effect of deed of company arrangement

444A   Effect of creditors’ resolution

             (1)  This section applies where, at a meeting convened under section 439A, a company’s creditors resolve that the company execute a deed of company arrangement.

             (2)  The administrator of the company is to be the administrator of the deed, unless the creditors, by resolution passed at the meeting, appoint someone else to be administrator of the deed.

             (3)  The administrator of the deed must prepare an instrument setting out the terms of the deed.

             (4)  The instrument must also specify the following:

                     (a)  the administrator of the deed;

                     (b)  the property of the company (whether or not already owned by the company when it executes the deed) that is to be available to pay creditors’ claims;

                     (c)  the nature and duration of any moratorium period for which the deed provides;

                     (d)  to what extent the company is to 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 proceeds of realising the property referred to in paragraph (b) are to be distributed among creditors bound by the deed;

                      (i)  the day (not later than the day when the administration began) on or before which claims must have arisen if they are to be admissible under the deed.

             (5)  The instrument is taken to include the prescribed provisions, except so far as it provides otherwise.

444B   Execution of deed

             (1)  This section applies where an instrument is prepared under section 444A.

             (2)  The company must execute the instrument within:

                     (a)  21 days after the end of the meeting of creditors; or

                     (b)  such further period as the Court allows on an application made within those 21 days.

             (3)  The board of the company may, by resolution, authorise the instrument to be executed by or on behalf of the company.

             (4)  Subsection (3) has effect despite section 437C, but does not limit the functions and powers of the administrator of the company.

             (5)  The administrator of the deed must execute the instrument before, or as soon as practicable after, the company executes it.

             (6)  When executed by both the company and the deed’s administrator, the instrument becomes a deed of company arrangement.

             (7)  Division 12 provides for consequences of the company contravening subsection (2).

444C   Creditor etc. not to act inconsistently with deed before its execution

             (1)  Where, at a meeting convened under section 439A, a company’s creditors resolve that the company execute a deed of company arrangement, this section applies until:

                     (a)  the deed is executed by both the company and the deed’s administrator; or

                     (b)  the period within which subsection 444B(2) requires the company to execute the deed ends;

whichever happens sooner.

             (2)  In so far as a person would be bound by the deed if it had already been so executed, the person:

                     (a)  must not do anything inconsistent with the deed, except with the leave of the Court; and

                     (b)  is subject to section 444E.

444D   Effect of deed on creditors

             (1)  A deed of company arrangement binds all creditors of the company, so far as concerns claims arising on or before the day specified in the deed under paragraph 444A(4)(i).

             (2)  Subsection (1) does not prevent a secured creditor from realising or otherwise dealing with the security, except so far as:

                     (a)  the deed so provides in relation to a secured creditor who voted in favour of the resolution of creditors because of which the company executed the deed; or

                     (b)  the Court orders under subsection 444F(2).

             (3)  Subsection (1) 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 so provides in relation to an owner or lessor of property who voted in favour of the resolution of creditors because of which the company executed the deed; or

                     (b)  the Court orders under subsection 444F(4).

444E   Protection of company’s property from persons bound by deed

             (1)  Until a deed of company arrangement terminates, this section applies to a person bound by the deed.

             (2)  The person cannot:

                     (a)  make an application for an order to wind up the company; or

                     (b)  proceed with such an application made before the deed became binding on the person.

             (3)  The person cannot:

                     (a)  begin or proceed with a proceeding against the company or in relation to any of its property; or

                     (b)  begin or proceed with enforcement process in relation to property of the company;

except:

                     (c)  with the leave of the Court; and

                     (d)  in accordance with such terms (if any) as the Court imposes.

             (4)  In subsection (3):

property , in relation to the company, includes property used or occupied by, or in the possession of, the company.

444F   Court may limit rights of secured creditor or owner or lessor

             (1)  This section applies where:

                     (a)  it is proposed that a company execute a deed of company arrangement; or

                     (b)  a company has executed such a deed.

             (2)  Subject to subsection 441A(3), the Court may order a secured creditor of the company not to realise or otherwise deal with the security, except as permitted by the order.

             (3)  The Court may only make an order under subsection (2) if satisfied that:

                     (a)  for the creditor to realise or otherwise deal with the security would have a material adverse effect on achieving the purposes of the deed; and

                     (b)  having regard to:

                              (i)  the terms of the deed; and

                             (ii)  the terms of the order; and

                            (iii)  any other relevant matter;

                            the creditor’s interests will be adequately protected.

             (4)  The Court may order the owner or lessor of property that is used or occupied by, or is in the possession of, the company not to take possession of the property or otherwise recover it.

             (5)  The Court may only make an order under subsection (4) if satisfied that:

                     (a)  for the owner or lessor to take possession of the property or otherwise recover it would have a material adverse effect on achieving the purposes of the deed; and

                     (b)  having regard to:

                              (i)  the terms of the deed; and

                             (ii)  the terms of the order; and

                            (iii)  any other relevant matter;

                            the interests of the owner or lessor will be adequately protected.

             (6)  An order under this section may be made subject to conditions.

             (7)  An order under this section may only be made on the application of:

                     (a)  if paragraph (1)(a) applies—the administrator of the company; or

                     (b)  if paragraph (1)(b) applies—the deed’s administrator.

444G   Effect of deed on company, officers and members

                   A deed of company arrangement also binds:

                     (a)  the company; and

                     (b)  its officers and members; and

                     (c)  the deed’s administrator.

444H   Extent of release of company’s debts

                   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.



 

Division 11 Variation, termination and avoidance of deed

445A   Variation of deed by creditors

                   A deed of company arrangement may be varied by a resolution passed at a meeting of the company’s creditors convened under section 445F, but only if the variation is not materially different from a proposed variation set out in the notice of the meeting.

445B   Court may cancel variation

             (1)  Where a deed of company arrangement is varied under section 445A, a creditor of the company may apply to the Court for an order cancelling the variation.

             (2)  On an application, the Court:

                     (a)  may make an order cancelling the variation, or confirming it, either wholly or in part, on such conditions (if any) as the order specifies; and

                     (b)  may make such other orders as it thinks appropriate.

445C   When deed terminates

                   A deed of company arrangement terminates when:

                     (a)  the Court makes under section 445D an order terminating the deed; or

                     (b)  the company’s creditors pass a resolution terminating the deed at a meeting that was convened under section 445F by a notice setting out the proposed resolution; or

                     (c)  if the deed specifies circumstances in which it is to terminate—those circumstances exist;

whichever happens first.

445D   When Court may terminate deed

             (1)  The Court may make an order terminating a deed of company arrangement if satisfied that:

                     (a)  information about the company’s business, property, affairs or financial circumstances that:

                              (i)  was false or misleading; and

                             (ii)  can reasonably be expected to have been material to creditors of the company in deciding whether to vote in favour of the resolution that the company execute the deed;

                            was given to the administrator of the company or to such creditors; or

                     (b)  such information was contained in a report or statement under subsection 439A(4) that accompanied a notice of the meeting at which the resolution was passed; or

                     (c)  there was an omission from such a report or statement and the omission can reasonably be expected to have been material to such creditors in so deciding; or

                     (d)  there has been a material contravention of the deed by a person bound by the deed; or

                     (e)  effect cannot be given to the deed without injustice or undue delay; or

                      (f)  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 so done or made would be:

                              (i)  oppressive or unfairly prejudicial to, or unfairly discriminatory against, one or more such creditors; or

                             (ii)  contrary to the interests of the creditors of the company as a whole; or

                     (g)  the deed should be terminated for some other reason.

             (2)  An order may be made on the application of:

                     (a)  a creditor of the company; or

                     (b)  the company; or

                     (c)  any other interested person.

445E   Creditors may terminate deed and resolve that company be wound up

                   Where:

                     (a)  at a meeting convened under section 445F, the company’s creditors pass a resolution terminating the deed; and

                     (b)  the notice of the meeting set out a proposed resolution that the company be wound up;

the creditors may also resolve at the meeting that the company be wound up.

445F   Meeting of creditors to consider proposed variation or termination of deed

             (1)  The administrator of a deed of company arrangement:

                     (a)  may at any time convene a meeting of the company’s creditors; and

                     (b)  must convene such a meeting if so requested in writing by creditors the value of whose claims against the company is not less than 10% of the value of all the creditors’ claims against the company.

             (2)  A meeting under this section must be convened by the deed’s administrator:

                     (a)  giving written notice of the meeting to as many of the company’s creditors as reasonable practicable; and

                     (b)  causing notice of the meeting to be published:

                              (i)  in a national newspaper; or

                             (ii)  in each State or Territory in which the company has its registered office or carries on business, in a daily newspaper that circulates generally in that State or Territory;

at least 5 business days before the meeting.

             (3)  The notice given to a creditor under paragraph (2)(a) must:

                     (a)  set out each resolution (if any) under section 445A or paragraph 445C(b) that the deed’s administrator proposes that the meeting vote on; and

                     (b)  if the meeting is convened under paragraph (1)(b) of this section—set out each proposed resolution under section 445A or paragraph 445C(b) that is set out in the request.

             (4)  At a meeting convened under this section, the deed’s administrator is to preside.

             (5)  A meeting convened under this section may be adjourned from time to time.

445G   When Court may void or validate deed

             (1)  Where there is doubt, on a specific ground, whether a deed of company arrangement was entered into in accordance with this Part or complies with this Part, the administrator of the deed, a member or creditor of the company, or ASIC, may apply to the Court for an order under this section.

             (2)  On an application, the Court may make an order declaring the deed, or a provision of it, to be void or not to be void, as the case requires, on the ground specified in the application or some other ground.

             (3)  On an application, the Court may declare the deed, or a provision of it, to be valid, despite a contravention of a provision of this Part, if the Court is satisfied that:

                     (a)  the provision was substantially complied with; and

                     (b)  no injustice will result for anyone bound by the deed if the contravention is disregarded.

             (4)  Where the Court declares a provision of a deed of company arrangement to be void, the Court may by order vary the deed, but only with the consent of the deed’s administrator.

445H   Effect of termination or avoidance

                   The termination or avoidance, in whole or in part, of a deed of company arrangement does not affect the previous operation of the deed.



 

Division 12 Transition to creditors’ voluntary winding up

446A   Administrator becomes liquidator in certain cases

             (1)  This section applies if:

                     (a)  the creditors of a company under administration resolve at a particular time under paragraph 439C(c) that the company be wound up; or

                     (b)  a company under administration contravenes subsection 444B(2) at a particular time; or

                     (c)  at a meeting convened under section 445F, a company’s creditors:

                              (i)  pass a resolution terminating a deed of company arrangement executed by the company; and

                             (ii)  also resolve at a particular time under section 445E that the company be wound up.

             (2)  The company is taken:

                     (a)  to have passed, at the time referred to in paragraph (1)(a) or (b) or subparagraph (1)(c)(ii), as the case may be, a special resolution under section 491 that the company be wound up voluntarily; and

                     (b)  to have done so without a declaration having been made and lodged under section 494.

             (3)  Section 497 is taken to have been complied with in relation to the winding up.

             (4)  For the purposes of subsection 499(1):

                     (a)  the company is taken to have nominated:

                              (i)  if paragraph (1)(a) or (b) of this section applies—the administrator of the company; or

                             (ii)  if paragraph (1)(c) of this section applies—the administrator of the deed;

                            to be liquidator for the purposes of the winding up; and

                     (b)  the creditors are taken not to have so nominated anyone.

             (5)  The liquidator must:

                     (a)  within 7 days after the day on which the company is taken to have passed the resolution, lodge a written notice stating that the company is taken because of this section to have passed such a resolution and specifying that day; and

                     (b)  cause a notice of that kind to be published, within 21 days after that day:

                              (i)  in a national newspaper; or

                             (ii)  in each State or Territory in which the company has its registered office or carries on business, in a daily newspaper that circulates generally in that State or Territory.

             (6)  Section 482 applies in relation to the winding up as if it were a winding up in insolvency or by the Court.

Note:          Section 482 empowers the Court to stay or terminate a winding up and give consequential directions.

             (7)  An application under section 482 as applying because of subsection (6) may be made:

                     (a)  despite subsection 499(4), by the company pursuant to a resolution of the board; or

                     (b)  by the liquidator; or

                     (c)  by a creditor; or

                     (d)  by a contributory.

446B   Regulations may provide for transition in other cases

             (1)  The regulations may prescribe cases where:

                     (a)  a company under administration; or

                     (b)  a company that has executed a deed of company arrangement (even if the deed has terminated);

is taken to have passed a special resolution under section 491 that the company be wound up voluntarily.

             (2)  The regulations may provide for Part 5.5 to apply with prescribed modifications in cases prescribed for the purposes of subsection (1).

             (3)  Without limiting subsection (2), the regulations may provide, in relation to such cases, for matters of a kind provided for by any of subsections 446A(2) to (7), inclusive.

             (4)  Regulations in force for the purposes of this section have effect accordingly.



 

Division 13 Powers of Court

447A   General power to make orders

             (1)  The Court may make such order as it thinks appropriate about how this Part is to operate in relation to a particular company.

             (2)  For example, if the Court is satisfied that the administration of a company should end:

                     (a)  because the company is solvent; or

                     (b)  because provisions of this Part are being abused; or

                     (c)  for some other reason;

the Court may order under subsection (1) that the administration is to end.

             (3)  An order may be made subject to conditions.

             (4)  An order may be made on the application of:

                     (a)  the company; or

                     (b)  a creditor of the company; or

                     (c)  in the case of a company under administration—the administrator of the company; or

                     (d)  in the case of a company that has executed a deed of company arrangement—the deed’s administrator; or

                     (e)  ASIC; or

                      (f)  any other interested person.

447B   Orders to protect creditors during administration

             (1)  On the application of ASIC, the Court may make such order as it thinks necessary to protect the interests of a company’s creditors while the company is under administration.

             (2)  On the application of a creditor of a company, the Court may make such order as it thinks necessary to protect the creditor’s interests while the company is under administration.

             (3)  An order may be made subject to conditions.

447C   Court may declare whether administrator validly appointed

             (1)  If there is doubt, on a specific ground, about whether a purported appointment of a person as administrator of a company, or of a deed of company arrangement, is valid, the person, the company or any of the company’s creditors may apply to the Court for an order under subsection (2).

             (2)  On an application, the Court may make an order declaring whether or not the purported appointment was valid on the ground specified in the application or on some other ground.

447D   Administrator may seek directions

             (1)  The administrator of a company under administration, or of a deed of company arrangement, may apply to the Court for directions about a matter arising in connection with the performance or exercise of any of the administrator’s functions and powers.

             (2)  The administrator of a deed of company arrangement may apply to the Court for directions about a matter arising in connection with the operation of, or giving effect to, the deed.

447E   Supervision of administrator of company or deed

             (1)  Where the Court is satisfied that the administrator of a company under administration, or of a deed of company arrangement:

                     (a)  has managed, or is managing, the company’s business, property or affairs in a way that is prejudicial to the interests of some or all of the company’s creditors or members; or

                     (b)  has done an act, or made an omission, or proposes to do an act, or to make an omission, that is or would be prejudicial to such interests;

the Court may make such order as it thinks just.

             (2)  Where the Court is satisfied that:

                     (a)  a company is under administration but:

                              (i)  there is a vacancy in the office of administrator of the company; or

                             (ii)  no administrator of the company is acting; or

                     (b)  a deed of company arrangement has not yet terminated but:

                              (i)  there is a vacancy in the office of administrator of the deed; or

                             (ii)  no administrator of the deed is acting;

the Court may make such order as it thinks just.

             (3)  An order may only be made on the application of ASIC or of a creditor or member of the company.

447F   Effect of Division

                   Nothing in this Division limits the generality of anything else in it.



 

Division 14 Qualifications of administrators

448A   Appointee must consent

                   A person cannot be appointed as administrator of a company or of a deed of company arrangement unless:

                     (a)  the person has consented in writing to the appointment; and

                     (b)  as at the time of the appointment, the person has not withdrawn the consent.

448B   Administrator must be registered liquidator

                   A person must not consent to be appointed, and must not act, as administrator of a company or of a deed of company arrangement unless he or she is a registered liquidator.

448C   Disqualification of person connected with company

             (1)  Subject to this section, a person must not, except with the leave of the Court, seek or consent to be appointed as, or act as, administrator of a company or of a deed of company arrangement if:

                     (a)  the person, or a body corporate in which the person has a substantial holding, is indebted in an amount exceeding $5,000 to the company or to a body corporate related to the company; or

                     (b)  the person is, otherwise than in a capacity as administrator or liquidator of, or as administrator of a deed of company arrangement executed by, the company or a related body corporate, a creditor of the company or of a related body corporate in an amount exceeding $5,000; or

                     (c)  the person is an officer of the company (otherwise than because of being an administrator or liquidator of, or an administrator of a deed of company arrangement executed by, a body corporate related to the company); or

                     (d)  the person is an officer of a body corporate that is a mortgagee of property of the company; or

                     (e)  the person is an auditor of the company; or

                      (f)  the person is a partner or employee of an auditor of the company; or

                     (g)  the person is a partner, employer or employee of an officer of the company; or

                     (h)  the person is a partner or employee of an employee of an officer of the company.

             (2)  For the purposes of paragraph (1)(a), disregard a debt owed by a natural person to a body corporate if:

                     (a)  the body corporate is:

                              (i)  an Australian ADI; or

                             (ii)  a body corporate registered under the Life Insurance Act 1995 ; and

                     (b)  the debt arose because of a loan that the body corporate or entity made to the person in the ordinary course of its ordinary business; and

                     (c)  the person used the amount of the loan to pay the whole or part of the purchase price of premises that the person uses as their principal place of residence.

             (3)  For the purposes of subsection (1), a person is taken to be an officer or auditor of a company if:

                     (a)  the person is an officer or auditor of the company or of a related body corporate; or

                     (b)  except where ASIC, if it thinks fit in the circumstances of the case, directs that this paragraph not apply in relation to the person—the person has, within the last 2 years, been an officer, auditor or promoter of the company or of a related body corporate.

448D   Disqualification of insolvent under administration

                   A person must not consent to be appointed, and must not act, as administrator of a company or of a deed of company arrangement if he or she is an insolvent under administration.



 

Division 15 Removal, replacement and remuneration of administrator

449A   Appointment of administrator cannot be revoked

                   The appointment of a person as administrator of a company or of a deed of company arrangement cannot be revoked.

449B   Court may remove administrator

                   On the application of ASIC or of a creditor of the company concerned, the Court may:

                     (a)  remove from office the administrator of a company under administration or of a deed of company arrangement; and

                     (b)  appoint someone else as administrator of the company or deed.

449C   Vacancy in office of administrator of company

             (1)  Where the administrator of a company under administration:

                     (a)  dies; or

                     (b)  becomes prohibited from acting as administrator of the company; or

                     (c)  resigns by notice in writing given to his or her appointer and to the company;

his or her appointer may appoint someone else as administrator of the company.

             (2)  In subsection (1):

appointer , in relation to the administrator of a company under administration, means:

                     (a)  if the administrator was appointed by the Court under section 449B or subsection (6) of this section—the Court; or

                     (b)  otherwise:

                              (i)  if the administration began because of an appointment under section 436A—the company; or

                             (ii)  if the administration began because of an appointment under section 436B—a liquidator or provisional liquidator of the company; or

                            (iii)  if the administration began because of an appointment under section 436C—a person who is entitled, or would apart from section 440B or 441D be entitled, to enforce the charge.

             (3)  An appointment under subsection (1) by the company under administration must be made pursuant to a resolution of the board.

             (4)  Within 5 business days after being appointed under subsection (1) as administrator of a company otherwise than by the Court, a person must convene a meeting of the company’s creditors so that they may:

                     (a)  determine whether to remove the person from office; and

                     (b)  if so, appoint someone else as administrator of the company.

             (5)  A person must convene a meeting under subsection (4) by:

                     (a)  giving written notice of the meeting to as many of the company’s creditors as reasonably practicable; and

                     (b)  causing notice of the meeting to be published:

                              (i)  in a national newspaper; or

                             (ii)  in each State or Territory in which the company has its registered office or carries on business, in a daily newspaper that circulates generally in that State or Territory;

at least 2 business days before the meeting.

             (6)  Where a company is under administration, but for some reason no administrator is acting, the Court may appoint a person as administrator on the application of ASIC or of an officer, member or creditor of the company.

             (7)  Subsections (3) and (6) have effect despite section 437C.

449D   Vacancy in office of administrator of deed of company arrangement

             (1)  Where the administrator of a deed of company arrangement:

                     (a)  dies; or

                     (b)  becomes prohibited from acting as administrator of the deed; or

                     (c)  resigns by notice in writing given to the company;

the Court may appoint someone else as administrator of the deed.

             (2)  Where a deed of company arrangement has not yet terminated, but for some reason no administrator of the deed is acting, the Court may appoint a person as administrator of the deed.

             (3)  An appointment may be made on the application of ASIC or of an officer, member or creditor of the company.

449E   Remuneration of administrator

             (1)  The administrator of a company under administration, or of a deed of company arrangement, is entitled to:

                     (a)  such remuneration as is fixed by a resolution of the company’s creditors passed at a meeting convened under section 439A, or under section 439A or 445F, as the case may be; or

                     (b)  if no remuneration is so fixed—such remuneration as the Court fixes on the application of the administrator.

             (2)  Where remuneration is fixed under paragraph (1)(a), the Court may, on the application of the administrator or of an officer, member or creditor of the company:

                     (a)  review the remuneration; and

                     (b)  confirm, increase or reduce it.

             (3)  Subsection (2) has effect despite section 437C.



 

Division 16 Notices about steps taken under Part

450A   Appointment of administrator

             (1)  Where an administrator of a company is appointed under section 436A, 436B or 436C, the administrator must:

                     (a)  lodge a notice of the appointment before the end of the next business day after the appointment; and

                     (b)  cause such a notice to be published, within 3 business days after the appointment:

                              (i)  in a national newspaper; or

                             (ii)  in each State or Territory in which the company has its registered office or carries on business, in a daily newspaper that circulates generally in that State or Territory.

             (2)  As soon as practicable, and in any event before the end of the next business day, after appointing an administrator of a company under section 436C, a person must give to the company a written notice of the appointment.

             (3)  As soon as practicable, and in any event before the end of the next business day, after an administrator of a company is appointed under section 436A, 436B or 436C, he or she must give a written notice of the appointment to:

                     (a)  each person who holds a charge on the whole, or substantially the whole, of the company’s property; and

                     (b)  each person who holds 2 or more charges on property of the company where the property of the company subject to the respective charges together constitutes the whole, or substantially the whole, of the company’s property.

             (4)  An administrator need not give a notice under subsection (3) to the person who appointed the administrator.

450B   Execution of deed of company arrangement

                   As soon as practicable after a deed of company arrangement is executed, the deed’s administrator must:

                     (a)  send to each creditor of the company a written notice of the execution of the deed; and

                     (b)  cause such a notice to be published:

                              (i)  in a national newspaper; or

                             (ii)  in each State or Territory in which the company has its registered office or carries on business, in a daily newspaper that circulates generally in that State or Territory; and

                     (c)  lodge a copy of the deed.

450C   Failure to execute deed of company arrangement

                   As soon as practicable after a company contravenes subsection 444B(2), the deed’s administrator must:

                     (a)  lodge a notice that the company has failed to execute the instrument within the required period; and

                     (b)  cause a notice of the failure to be published as prescribed.

450D   Termination of deed of company arrangement

                   Where a deed of company arrangement terminates because of paragraph 445C(b), the deed’s administrator must:

                     (a)  lodge a notice of the termination; and

                     (b)  send such a notice to each of the company’s creditors; and

                     (c)  cause such a notice to be published as prescribed.

450E   Notice in public documents etc. of company

             (1)  A company under administration must set out, in every public document, and in every negotiable instrument, of the company, after the company’s name where it first appears, the expression (“administrator appointed”).

             (2)  Until a deed of company arrangement terminates, the company must set out, in every public document, and in every negotiable instrument, of the company, after the company’s name where it first appears, the expression (“subject to deed of company arrangement”).

450F   Effect of contravention of this Division

A contravention of this Division does not affect the validity of anything done or omitted under this Part, except so far as the Court otherwise orders.



 

Division 17 Miscellaneous

451A   Appointment of 2 or more administrators of company

             (1)  Where a provision of this Act provides for an administrator of a company to be appointed, 2 or more persons may be appointed as administrators of the company.

             (2)  Where, because of subsection (1), there are 2 or more administrators of a company:

                     (a)  a function or power of an administrator of the company may be performed or exercised by any one of them, or by any 2 or more of them together, except so far as the instrument or resolution appointing them otherwise provides; and

                     (b)  a reference in this Act to an administrator, or to the administrator, of a company is, in the case of the first-mentioned company, a reference to whichever one or more of those administrators the case requires.

451B   Appointment of 2 or more administrators of deed of company arrangement

             (1)  Where a provision of this Act provides for an administrator of a deed of company arrangement to be appointed, 2 or more persons may be appointed as administrators of the deed.

             (2)  Where, because of subsection (1), there are 2 or more administrators of a deed of company arrangement:

                     (a)  a function or power of an administrator of the deed may be performed or exercised by any one of them, or by any 2 or more of them together, except so far as the deed, or the resolution or instrument appointing them, otherwise provides; and

                     (b)  a reference in this Act to an administrator, or to the administrator, of a deed of company arrangement is, in the case of the first-mentioned deed, a reference to whichever one or more of those administrators the case requires.

451C   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 under administration:

                     (a)  is valid and effectual for the purposes of this Act; and

                     (b)  is not liable to be set aside in a winding up of the company.

451D   Time for doing act does not run while act prevented by this Part

                   Where:

                     (a)  for any purpose (for example, the purposes of a law, agreement or instrument) an act must or may be done within a particular period or before a particular time; and

                     (b)  this Part prevents the act from being done within that period or before that time;

the period is extended, or the time is deferred, because of this section, according to how long this Part prevented the act from being done.