Corporations Act 2001

SCHEDULE 2 - INSOLVENCY PRACTICE SCHEDULE (CORPORATIONS)  

Note: See section 600K .

PART 3 - GENERAL RULES RELATING TO EXTERNAL ADMINISTRATIONS  

Division 75 - Meetings  

SECTION 75-41   OUTCOME OF VOTING AT CREDITORS ' MEETING DETERMINED BY RELATED ENTITY - COURT POWERS  

Application of this section

75-41(1)    
This section applies if, on the application of a creditor of a company under external administration, the external administrator of the company or ASIC, the Court is satisfied of the following matters:

(a) a proposal has been voted on by creditors (either at a meeting of the creditors or under section 75-40 without a meeting);

(b) if the vote or votes that a particular related creditor, or particular related creditors, of the company cast on the proposal had been disregarded for the purposes of determining whether or not the proposal was passed, the proposal:

(i) if it was in fact passed - would not have been passed; or

(ii) if in fact it was not passed - would have been passed;

or the question would have had to be decided on a casting vote;

(c) the passing of the proposal, or the failure to pass it, as the case requires:

(i) is contrary to the interests of the creditors as a group or of that class of creditors as a group, as the case may be; or

(ii) has prejudiced, or is reasonably likely to prejudice, the interests of the creditors who voted against the proposal, or for it, as the case may be, to an extent that is unreasonable having regard to the matters in subsection (2).

Unreasonable prejudice to interests of creditors - matters to be taken into account

75-41(2)    
For the purposes of subparagraph (1)(c)(ii), the matters are:

(a) the benefits resulting to the related creditor, or to some or all of the related creditors, from the proposal if passed, or from the failure to pass the proposal, as the case may be; and

(b) the nature of the relationship between the related creditor and the company, or of the respective relationships between the related creditors and the company; and

(c) any other relevant matter.

Court may make orders

75-41(3)    
The Court may make one or more of the following:

(a) an order that the proposal be considered and voted on at a meeting of the creditors convened and held as specified in the order;

(b) an order directing that the related creditor is not, or such of the related creditors as the order specifies are not, entitled to vote on:

(i) the proposal; or

(ii) a resolution to amend or vary the proposal;

(c) if the proposal was passed - an order setting aside the resolution passing the proposal;

(d) such other orders as the Court thinks fit.

Definition - related creditor

75-41(4)    
In this section:

related creditor
, for the purposes of a vote, in relation to a company, means a person who, when the vote was cast, was a related entity, and a creditor, of the company.