Corporations Amendment (Insolvency) Act 2007 (132 of 2007)

Schedule 4   Fine-tuning voluntary administration

Part 2   Rights to property during administration

Corporations Act 2001

54   After section 441J

Insert:

441JA Sale of property subject to a lien or pledge

If:

(a) a company is under administration; and

(b) property of the company is subject to a lien or pledge; and

(c) the property is in the possession of the holder of the lien or pledge; and

(d) either:

(i) there is no other security over the property; or

(ii) there are one or more other securities over the property, but none of the debts secured by those other securities has a priority that is equal to or higher than the priority of the debt secured by the lien or pledge; and

(e) the holder of the lien or pledge sells the property;

then:

(f) if the net proceeds of sale equals the debt secured by the lien or pledge - the holder is entitled to retain the net proceeds; or

(g) if the net proceeds of sale exceeds the debt secured by the lien or pledge - the holder is entitled to retain so much of the net proceeds as equals the amount of the debt secured by the lien or pledge, but must pay the excess to the administrator on behalf of the company; or

(h) if the net proceeds of sale fall short of the debt secured by the lien or pledge - the holder is entitled to retain the net proceeds.