Corporations Act 2001

CHAPTER 5 - EXTERNAL ADMINISTRATION  

PART 5.3B - RESTRUCTURING OF A COMPANY  

Note: This Part does not apply to a CCIV or a sub-fund of a CCIV: see Division 4 of Part 8B.6 .

Division 1 - Preliminary  

SECTION 452A  

452A   OBJECT OF THIS PART  

The object of this Part, and Schedule 2 to the extent that it relates to this Part, is to provide for a restructuring process for eligible companies that allows the companies:

(a)    to retain control of the business, property and affairs while developing a plan to restructure with the assistance of a small business restructuring practitioner; and

(b)    to enter into a restructuring plan with creditors.

Note: Schedule 2 contains additional rules about the restructuring process.

SECTION 452B  

452B   MEANING OF PROPERTY  

In this Part:

property
of a company includes any PPSA retention of title property of the company.

Note: See sections 9 (definition of property ) and 51F (PPSA retention of title property).

Division 2 - Restructuring  

Subdivision A - When restructuring begins and ends  

SECTION 453A  

453A   MEANING OF RESTRUCTURING  

The restructuring of a company:

(a)    begins when a restructuring practitioner for the company is appointed under section 453B ; and

(b)    ends in the circumstances prescribed by the regulations.

Subdivision B - Appointment of restructuring practitioner  

SECTION 453B   APPOINTING A RESTRUCTURING PRACTITIONER  

453B(1)    
A company may, by writing, appoint a small business restructuring practitioner for the company if:

(a)    the eligibility criteria for restructuring are met in relation to the company on the day the appointment is made; and

(b)    the board has resolved to the effect that:

(i) 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

(ii) a restructuring practitioner for the company should be appointed.

453B(2)    
A company must not appoint a restructuring practitioner under subsection (1) if:

(aa)    

the company is, or is a related body corporate of, a body regulated by APRA (within the meaning of the Australian Prudential Regulation Authority Act 1998 ); or

(a)    the company is already under restructuring; or

(b)    the company has made a restructuring plan that has not yet terminated; or

(c)    the company is under administration; or

(d)    the company has executed a deed of company arrangement that has not yet terminated; or

(e)    a person holds an appointment as liquidator, provisional liquidator or administrator of the company.

SECTION 453C   ELIGIBILITY CRITERIA FOR RESTRUCTURING  

453C(1)    
The eligibility criteria for restructuring are met in relation to a company if, on the day on which a restructuring practitioner for the company is appointed:

(a)    in a case where the regulations prescribe a test for eligibility based on the liabilities of the company - that test is satisfied; and

(b)    no person who:

(i) is a director of the company; or

(ii) has been a director of the company within the 12 months immediately preceding that day;

has been a director of another company that has been under restructuring or been the subject of a simplified liquidation process within a period prescribed by the regulations, unless exempt under regulations made for the purposes of subsection (2) ; and

(c)    the company has not been under restructuring or been the subject of a simplified liquidation process within a period prescribed by the regulations, unless exempt under regulations made for the purposes of subsection (2) .

453C(2)    
The regulations may prescribe:

(a)    tests for eligibility based on the liabilities of companies for the purposes of paragraph (1)(a) ; and

(b)    circumstances in which the directors of companies are exempt from the requirement in paragraph (1)(b) ; and

(c)    circumstances in which companies are exempt from the requirement in paragraph (1)(c) .

SECTION 453D   DECLARATION BY RESTRUCTURING PRACTITIONER - RELEVANT RELATIONSHIPS  

453D(1)    

As soon as practicable after being appointed, a restructuring practitioner for a company must make a declaration of relevant relationships.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

453D(2)    
The restructuring practitioner must give a copy of the declaration under subsection (1) to as many of the company ' s creditors as reasonably practicable.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

453D(3)    
As soon as practicable after making a declaration under subsection (1) , the restructuring practitioner must lodge a copy of the declaration with ASIC.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

453D(4)    
If:

(a)    at a particular time, the restructuring practitioner makes a declaration of relevant relationships under subsection (1) or this subsection; and

(b)    at a later time:

(i) the declaration has become out-of-date; or

(ii) the restructuring practitioner becomes aware of an error in the declaration;

the restructuring practitioner must, as soon as practicable, make a replacement declaration of relevant relationships.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

453D(5)    
The restructuring practitioner must give a copy of the replacement declaration under subsection (4) to as many of the company ' s creditors as reasonably practicable.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

453D(6)    
As soon as practicable after making a replacement declaration under subsection (4) , the restructuring practitioner must lodge a copy of the replacement declaration with ASIC.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

453D(7)    
In a prosecution for an offence constituted by a failure to include a particular matter in a declaration under this section, it is a defence if the defendant proves that:

(a)    the defendant made reasonable enquiries; and

(b)    after making these enquiries, the defendant had no reasonable grounds for believing that the matter should have been included in the declaration.

Subdivision C - Role of the restructuring practitioner during restructuring  

SECTION 453E   FUNCTIONS, DUTIES AND POWERS OF THE RESTRUCTURING PRACTITIONER  

453E(1)    
The functions of the restructuring practitioner for a company under restructuring are:

(a)    to provide advice to the company on matters relating to restructuring; and

(b)    to assist the company to prepare a restructuring plan; and

(c)    to make a declaration to creditors in accordance with the regulations in relation to a restructuring plan proposed to the creditors; and

(d)    any other functions given to the restructuring practitioner under this Act.

453E(2)    
The regulations may make provision for and in relation to the following:

(a)    the functions of the restructuring practitioner for a company under restructuring;

(b)    the duties of the restructuring practitioner for a company under restructuring;

(c)    the powers of the restructuring practitioner for a company under restructuring;

(d)    the rights and liabilities of a person who is or has been the restructuring practitioner for a company arising out of the performance of the functions and duties, and the exercise of the powers, of the person as restructuring practitioner.

SECTION 453F   DIRECTORS TO HELP RESTRUCTURING PRACTITIONER  

453F(1)    
A director of a company under restructuring must:

(a)    attend on the restructuring practitioner; and

(b)    give the restructuring practitioner information about the company ' s business, property, affairs and financial circumstances; and

(c)    allow the restructuring practitioner to inspect and take copies of the company ' s books;

at the times and in the manner reasonably required by the restructuring practitioner.

453F(2)    
A person must not fail to comply with subsection (1) .

Penalty: 120 penalty units.

453F(3)    
An offence based on subsection (1) is an offence of strict liability.

453F(4)    
Subsection (3) does not apply to the extent that the person has a reasonable excuse.

Note: A defendant bears an evidential burden in relation to the matter in subsection (4) , see subsection 13.3(3) of the Criminal Code .

SECTION 453G  

453G   RESTRUCTURING PRACTITIONER ' S RIGHT TO INSPECT BOOKS HELD BY OTHER PERSONS  

If the books of a company under restructuring are held by a person other than the company, that person must permit the restructuring practitioner for the company to inspect and make copies of the company ' s books at any reasonable time.

SECTION 453H  

453H   RESTRUCTURING PRACTITIONER ACTS AS COMPANY ' S AGENT  

When performing a function or duty, or exercising a power, as restructuring practitioner for a company under restructuring, the restructuring practitioner is taken to be acting as the company ' s agent.

SECTION 453J   RESTRUCTURING PRACTITIONER MAY TERMINATE RESTRUCTURING  

453J(1)    
The restructuring practitioner for a company under restructuring may, at any time, terminate the restructuring of the company:

(a)    if the restructuring practitioner believes on reasonable grounds that:

(i) the company does not meet the eligibility criteria for restructuring; or

(ii) it would not be in the interests of the creditors to make a restructuring plan; or

(iii) it would be in the interests of the creditors for the restructuring to end; or

(iv) it would be in the interests of the creditors for the company to be wound up; or

(b)    on any other grounds prescribed by the regulations.

453J(2)    
The restructuring practitioner for a company under restructuring terminates the restructuring of the company by giving notice in accordance with this section.

453J(3)    
The notice must:

(a)    be in writing; and

(b)    include all information prescribed by the regulations; and

(c)    be given to:

(i) the company; and

(ii) as many of the company ' s creditors as reasonably practicable.

453J(4)    
The termination takes effect on the day on which notice under this section is given to the company.

Subdivision D - Conduct of company during restructuring  

SECTION 453K   CONTROL OF COMPANY UNDER RESTRUCTURING  

453K(1)    
Subject to this Part, while a company is under restructuring the company has control of the company ' s business, property and affairs.

453K(2)    
While a company is under restructuring, a receiver or controller appointed for the purposes of Part 5.2 (whether under an instrument relating to a security interest or a court order) may only perform the functions and exercise the powers of a receiver or controller in relation to a security interest if:

(a)    section 454C , 454D or 454E applies to the enforcement of the security interest; or

(b)    section 454K or 454L applies to the enforcement of a right, or the performance or exercise of a function or power, over property to which the security interest relates.

SECTION 453L   CONDUCTING THE BUSINESS OF THE COMPANY DURING RESTRUCTURING  

Transactions and dealings affecting property

453L(1)    
A person contravenes this section if:

(a)    a company is under restructuring; and

(b)    the person is a director of the company; and

(c)    either:

(i) the company purports to enter into a transaction or dealing affecting the property of the company and the person approves of that action; or

(ii) the person purports to enter into a transaction or dealing affecting the property of the company on behalf of the company.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

Circumstances in which transactions and dealings may occur

453L(2)    
Subsection (1) does not apply if:

(a)    entering into the transaction or dealing was in the ordinary course of the company ' s business; or

(b)    the restructuring practitioner has consented to the transaction or dealing and, if any conditions are imposed on that consent, those conditions are met; or

(c)    the transaction or dealing was entered into under an order of the Court.

453L(3)    
Subsection (1) 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 restructuring began and on or before the day on which:

(i) the restructuring practitioner gives to the ADI written notice of the appointment that began the restructuring; or

(ii) publishes a notice of the appointment that began the restructuring in accordance with the regulations;

whichever happens first.

453L(4)    
The regulations may prescribe circumstances in which entering into a transaction or dealing is, or is not, to be treated as in the ordinary course of a company ' s business.

Transactions and dealings in contravention of subsection (1) void

453L(5)    
A transaction or dealing entered into in contravention of subsection (1) is void, unless the Court orders otherwise.

Restructuring practitioner ' s consent

453L(6)    
The restructuring practitioner for a company under restructuring may only give consent under paragraph (2)(b) if the restructuring practitioner believes on reasonable grounds that it would be in the interests of the creditors for the company to enter into the transaction or dealing.

453L(7)    
The restructuring practitioner may give consent subject to conditions.

Interpretive provisions

453L(8)    
For the purposes of this section, a director who votes in favour of a resolution approving, or who otherwise approves, the company entering into a transaction or dealing affecting the property of the company is taken to have approved the company purporting to take that action.

SECTION 453M   ORDER FOR COMPENSATION WHERE DIRECTOR INVOLVED IN VOID TRANSACTION  

453M(1)    
Where:

(a)    a court finds a person guilty of an offence constituted by a contravention of subsection 453L(1) ; 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.

453M(2)    
An order under subsection (1) may be enforced as if it were a judgment of the court.

453M(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.

SECTION 453N  

453N   EFFECT OF THINGS DONE DURING RESTRUCTURING OF COMPANY  

A payment made, transaction entered into, or any other act or thing done, in good faith by:

(a)    the restructuring practitioner for a company under restructuring; or

(b)    a company under restructuring with the consent of the restructuring practitioner for the company; or

(c)    a company under restructuring in compliance with an order of the Court;

is valid and effectual for the purposes of this Act, and is not liable to be set aside in a winding up of the company.

SECTION 453P   EFFECT OF RESTRUCTURING ON COMPANY ' S MEMBERS  

Transfer of shares

453P(1)    
A transfer of shares in a company that is made while the company is under restructuring is void except if:

(a)    both:

(i) the restructuring practitioner gives written consent to the transfer; and

(ii) that consent is unconditional; or

(b)    all of the following subparagraphs apply:

(i) the restructuring practitioner gives written consent to the transfer;

(ii) that consent is subject to one or more specified conditions;

(iii) those conditions have been satisfied; or

(c)    the Court makes an order under subsection (4) authorising the transfer.

453P(2)    
The restructuring practitioner may only give consent under paragraph (1)(a) or (b) if the restructuring practitioner believes on reasonable grounds that the transfer is in the best interests of the company ' s creditors as a whole.

453P(3)    
If the restructuring practitioner refuses to give consent under paragraph (1)(a) or (b) to a transfer of shares in the company:

(a)    the prospective transferor; or

(b)    the prospective transferee; or

(c)    a creditor of the company;

may apply to the Court for an order authorising the transfer.

453P(4)    
If the Court is satisfied, on an application under subsection (3) , that the transfer is in the best interests of the company ' s creditors as a whole, the Court may, by order, authorise the transfer.

453P(5)    
If the restructuring practitioner gives consent under paragraph (1)(b) to a transfer of shares in the company:

(a)    the prospective transferor; or

(b)    the prospective transferee; or

(c)    a creditor of the company;

may apply to the Court for an order setting aside any or all of the conditions to which the consent is subject.

453P(6)    
If the Court is satisfied, on an application under subsection (5) , that any or all of the conditions covered by the application are not in the best interests of the company ' s creditors as a whole, the Court may, by order, set aside any or all of the conditions.

453P(7)    
The restructuring practitioner is entitled to be heard in a proceeding before the Court in relation to an application under subsection (3) or (5) .

Alteration in the status of members

453P(8)    
An alteration in the status of members of a company that is made while the company is under restructuring is void except if:

(a)    both:

(i) the restructuring practitioner gives written consent to the alteration; and

(ii) that consent is unconditional; or

(b)    all of the following subparagraphs apply:

(i) the restructuring practitioner gives written consent to the alteration;

(ii) that consent is subject to one or more specified conditions;

(iii) those conditions have been satisfied; or

(c)    the Court makes an order under subsection (12) authorising the alteration.

Note: An alteration in the status of members of a company that is made while a company is under restructuring may not be void if it is made for the purposes of the conversion and write-off provisions determined by APRA (see Subdivision B of Division 1A of Part II of the Banking Act 1959 , Division 2 of Part IIIA of the Insurance Act 1973 and Division 1A of Part 10A of the Life Insurance Act 1995 ).

453P(9)    
The restructuring practitioner may only give consent under paragraph (8)(a) or (b) if the restructuring practitioner believes on reasonable grounds that the alteration is in the best interests of the company ' s creditors as a whole.

453P(10)    
The restructuring practitioner must refuse to give consent under paragraph (8)(a) or (b) if the alteration would contravene Part 2F.2 .

453P(11)    
If the restructuring practitioner refuses to give consent under paragraph (8)(a) or (b) to an alteration in the status of members of a company:

(a)    a member of the company; or

(b)    a creditor of the company;

may apply to the Court for an order authorising the alteration.

453P(12)    
If the Court is satisfied, on an application under subsection (11) , that:

(a)    the alteration is in the best interests of the company ' s creditors as a whole; and

(b)    the alteration does not contravene Part 2F.2 ;

the Court may, by order, authorise the alteration.

453P(13)    
If the restructuring practitioner gives consent under paragraph (8)(b) to an alteration in the status of members of a company:

(a)    a member of the company; or

(b)    a creditor of the company;

may apply to the Court for an order setting aside any or all of the conditions to which the consent is subject.

453P(14)    
If the Court is satisfied, on an application under subsection (13) , that any or all of the conditions covered by the application are not in the best interests of the company ' s creditors as a whole, the Court may, by order, set aside any or all of the conditions.

453P(15)    
The restructuring practitioner is entitled to be heard in a proceeding before the Court in relation to an application under subsection (11) or (13) .

Subdivision E - Effect on company etc. during restructuring  

SECTION 453Q   WINDING UP COMPANY  

453Q(1)    
The Court is to adjourn the hearing of an application for an order to wind up a company if the company is under restructuring and the Court is satisfied that it is in the interests of the company ' s creditors for the company to continue under restructuring rather than be wound up.

453Q(2)    
The Court is not to appoint a provisional liquidator of a company if the company is under restructuring and the Court is satisfied that it is in the interests of the company ' s creditors for the company to continue under restructuring rather than have a provisional liquidator appointed.

SECTION 453R   RESTRICTIONS ON EXERCISE OF THIRD PARTY PROPERTY RIGHTS  

General rule

453R(1)    
During the restructuring of a company, the restrictions set out in the table at the end of this section apply in relation to the exercise of the rights of a person (the third party ) in property of the company, or other property used or occupied by, or in the possession of, the company, as set out in the table.

Note: The property of the company includes any PPSA retention of title property of the company (see section 452B ).

Exception - consent of restructuring practitioner or leave of court

453R(2)    
The restrictions set out in the table at the end of this section do not apply in relation to the exercise of a third party ' s rights in property if the rights are exercised:

(a) with the restructuring practitioner ' s written consent; or

(b) with the leave of the Court.

Possessory security interests - continued possession

453R(3)    
If a company ' s property is subject to a possessory security interest, and the property is in the lawful possession of the secured party, the secured party may continue to possess the property during the restructuring of the company.

Restrictions on exercise of third party rights
Item	If the third party is …	then …
1	a secured party in relation to property of the company, and is not otherwise covered by this table	the third party cannot enforce the security interest.
2	a secured party in relation to a possessory security interest in the property of the company	the third party cannot sell the property, or otherwise enforce the security interest.
3	a lessor of property used or occupied by, or in the possession of, the company, including a secured party (a PPSA secured party ) in relation to a PPSA security interest in goods arising out of a lease of the goods	the following restrictions apply:
		(a)	distress for rent must not be carried out against the property;
		(b)	the third party cannot take possession of the property or otherwise recover it;
		(c)	if the third party is a PPSA secured party - the third party cannot otherwise enforce the security interest.
4	an owner (other than a lessor) of property used or occupied by, or in the possession of, the company, including a secured party (a PPSA secured party ) in relation to a PPSA security interest in the property	the following restrictions apply:
		(a)	the third party cannot take possession of the property or otherwise recover it;
		(b)	if the third party is a PPSA secured party - the third party cannot otherwise enforce the security interest.

SECTION 453S   STAY OF PROCEEDINGS  

453S(1)    
During the restructuring 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 restructuring practitioner ' s written consent; or

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

453S(2)    
Subsection (1) does not apply to:

(a)    a criminal proceeding; or

(b)    a prescribed proceeding.

SECTION 453T  

453T   SUSPENSION OF ENFORCEMENT PROCESS  

During the restructuring 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.

SECTION 453U   DUTIES OF COURT OFFICER IN RELATION TO PROPERTY OF COMPANY  

453U(1)    
This section applies where an officer of a court (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 restructuring.

453U(2)    
During the restructuring, 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 restructuring practitioner):

(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 restructuring practitioner) money received because of the attachment of such a debt.

453U(3)    
The court officer must deliver to the restructuring practitioner any property of the company that is in the court officer ' s possession under a process of execution (whenever begun).

453U(4)    
The court officer must pay to the restructuring practitioner 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.

453U(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) .

453U(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.

453U(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.

453U(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 restructuring practitioner, despite anything else in this section.

SECTION 453V   LIS PENDENS TAKEN TO EXIST  

453V(1)    
This section has effect only for the purposes of a law about the effect of a lis pendens on purchasers or mortgagees.

453V(2)    
During the restructuring of the company, an application to wind up the company is taken to be pending.

453V(3)    
An application that is taken because of subsection (2) to be pending constitutes a lis pendens.

SECTION 453W   RESTRUCTURING NOT TO TRIGGER LIABILITY OF DIRECTOR OR RELATIVE UNDER GUARANTEE OF COMPANY ' S LIABILITY  

453W(1)    
During the restructuring 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 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 or relative;

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

453W(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.

453W(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.

453W(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.

SECTION 453X  

453X   PROPERTY SUBJECT TO A BANKER ' S LIEN - EXEMPTION FROM THIS SUBDIVISION  

If:

(a)    a company is under restructuring; and

(b)    

property of the company consists of:

(i) cash in the form of notes or coins; or

(ii) a negotiable instrument; or

(iii) a security (as defined by subsection 92(1) ); or

(iv) a derivative; and

(c)    the property is subject to a possessory security interest; and

(d)    

the secured party is:

(i) an ADI (within the meaning of the Banking Act 1959 ); or

(ii) the operator of a clearing and settlement facility;

this Subdivision does not apply to the property.

Subdivision F - Rights of secured party, owner or lessor during restructuring  

SECTION 454A  

454A   APPLICATION OF SUBDIVISION  

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

SECTION 454B  

454B   APPLICATION OF SECTIONS 454C TO 454H - PPSA SECURITY INTERESTS  

Sections 454C to 454H only apply in relation to the enforcement of a PPSA security interest if the security interest is perfected, within the meaning of the Personal Property Securities Act 2009 , at the time the enforcement starts.

SECTION 454C   SECURED PARTY ACTS BEFORE OR DURING DECISION PERIOD  

Scope

454C(1)    
This section applies if:

(a)    the whole, or substantially the whole, of the property of a company under restructuring is subject to a security interest; and

(b)    before or during the decision period, the secured party enforced the security interest in relation to all property (including any PPSA retention of title property) of the company subject to the security interest, whether or not the security interest was enforced in the same way in relation to all that property.

454C(2)    
This section also applies if:

(a)    a company is under restructuring; and

(b)    the same person is the secured party in relation to each of 2 or more security interests in property (including PPSA retention of title property) of the company; and

(c)    the property of the company (the secured property ) subject to the respective security interests together constitutes the whole, or substantially the whole, of the company ' s property; and

(d)    before or during the decision period, the secured party enforced the security interests in relation to all the secured property:

(i) whether or not the security interests were enforced in the same way in relation to all the secured property; and

(ii) whether or not any of the security interests was enforced in the same way in relation to all the property of the company subject to that security interest; and

(iii) in so far as the security interests were enforced in relation to property of the company by a receiver or controller appointed for the purposes of Part 5.2 (whether under an instrument relating to the security interest or a court order) - whether or not the same person was appointed in respect of all of the last-mentioned property.

Power of enforcement by secured party, receiver or controller

454C(3)    
Nothing in section 453K , 453R , 453T , 453U or 454N , or in an order under subsection 454P(1) , prevents any of the following from enforcing the security interest, or any of the security interests:

(a)    the secured party;

(b)    a receiver or controller appointed for the purposes of Part 5.2 (whether under an instrument relating to the security interest or a court order, and even if appointed after the decision period).

SECTION 454D   WHERE ENFORCEMENT OF SECURITY INTEREST BEGINS BEFORE RESTRUCTURING  

454D(1)    
This section applies if, before the beginning of the restructuring of a company, a secured party, 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 security interest in that property.

454D(2)    
Nothing in section 453K , 453R , 453T , 453U or 454N , or in an order made under subsection 454P(1) , prevents the secured party, receiver or other person from enforcing the security interest in relation to that property.

SECTION 454E   SECURITY INTEREST IN PERISHABLE PROPERTY  

Scope

454E(1)    
This section applies if perishable property of a company under restructuring is subject to a security interest.

Power of enforcement by secured party, receiver or controller

454E(2)    
Nothing in section 453K , 453R or 454N , or in an order made under subsection 454P(1) , prevents any of the following from enforcing the security interest, so far as it is a security interest in perishable property:

(a)    the secured party;

(b)    a receiver or controller appointed for the purposes of Part 5.2 (whether under an instrument relating to the security interest or a court order, and even if appointed after the decision period).

SECTION 454F   COURT MAY LIMIT POWERS OF SECURED PARTY ETC. IN RELATION TO SECURED PROPERTY  

454F(1)    
This section applies if:

(a)    for the purpose of enforcing a security interest in property of a company, the secured party, or a receiver or other person, does or proposes to do an act of a kind referred to in a paragraph of subsection 454D(1) ; and

(b)    the company is under restructuring when the secured party, receiver or other person does or proposes to do the act, or the company later begins to be under restructuring;

but does not apply in a case where section 454C applies.

454F(2)    
On application by the restructuring practitioner, the Court may order the secured party, receiver or other person not to perform specified functions, or exercise specified powers, except as permitted by the order.

454F(3)    
The Court may only make an order if satisfied that the secured party ' s interests will be adequately protected during the restructuring of the company.

454F(4)    
An order may only be made, and only has effect, during the restructuring.

454F(5)    
An order has effect despite sections 454D and 454E .

SECTION 454G  

454G   GIVING A NOTICE UNDER A SECURITY AGREEMENT ETC.  

Nothing in section 453K , 453R or 454N , or in an order made under subsection 454P(1) , prevents a person from giving a notice under the provisions of an agreement or instrument under which a security interest is created or arises.

SECTION 454H   SALE OF PROPERTY SUBJECT TO A POSSESSORY SECURITY INTEREST  

Scope

454H(1)    
This section applies if:

(a)    a company is under restructuring; and

(b)    property of the company is subject to a possessory security interest; and

(c)    the property is in the possession of the secured party; and

(d)    either:

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

(ii) there are one or more other security interests in the property, but none of the debts secured by those other security interests has a priority that is equal to or higher than the priority of the debt secured by the possessory security interest; and

(e)    the secured party sells the property.

Distribution of proceeds of sale

454H(2)    
The secured party is entitled to retain proceeds of the sale as follows:

(a)    if the net proceeds of sale equals the debt secured by the possessory security interest - the secured party is entitled to retain the net proceeds;

(b)    if the net proceeds of sale exceeds the debt secured by the possessory security interest - the secured party is entitled to retain so much of the net proceeds as equals the amount of the debt secured by the security interest, but must pay the excess to the restructuring practitioner on behalf of the company;

(c)    if the net proceeds of sale fall short of the debt secured by the possessory security interest - the secured party is entitled to retain the net proceeds.

SECTION 454J  

454J   SCOPE OF SECTIONS 454K TO 454M  

Sections 454K to 454M do not apply in relation to the enforcement of a right, or the performance or exercise of a function or power, if the enforcement, performance or exercise is authorised by (or because of) a transaction or dealing that gives rise to a security interest in the property concerned.

Example: An example of a transaction or dealing in relation to which sections 454K to 454M do not apply because of this section is a commercial consignment of personal property. Such a transaction gives rise to a PPSA security interest because of section 12 of the Personal Property Securities Act 2009 . The consigned property is PPSA retention of title property of the company (see sections 51F and 452B ).

Note: Sections 454C to 454H (property subject to security interests) may apply in relation to transactions or dealings to which this Subdivision does not apply because of this section. For example, sections 454C to 454H would apply in relation to a commercial consignment of personal property, because such a transaction gives rise to a PPSA security interest.

SECTION 454K   WHERE RECOVERY OF PROPERTY BEGINS BEFORE RESTRUCTURING  

454K(1)    
This section applies if, before the beginning of the restructuring 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.

454K(2)    
Nothing in section453K or 453R prevents the receiver or other person from performing a function, or exercising a power, in relation to the property.

SECTION 454L  

454L   RECOVERING PERISHABLE PROPERTY  

Nothing in section 453K or 453R prevents a person from taking possession of, or otherwise recovering, perishable property.

SECTION 454M   COURT MAY LIMIT POWERS OF RECEIVER ETC. IN RELATION TO PROPERTY USED BY COMPANY  

454M(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 restructuring when the person does so, or the company later begins to be under restructuring.

454M(2)    
On application by the restructuring practitioner, 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.

454M(3)    
The Court may only make an order if satisfied that the interests of the owner or lessor will be adequately protected during the restructuring of the company.

454M(4)    
An order may only be made, and only has effect, during the restructuring.

454M(5)    
An order has effect despite sections 454K and 454L .

Subdivision G - Enforcement rights triggered by restructuring  

SECTION 454N   STAY ON ENFORCING RIGHTS MERELY BECAUSE THE COMPANY IS UNDER RESTRUCTURING ETC.  

Stay on enforcing rights

454N(1)    
A right cannot be enforced against a company for:

(a)    the reason that the company has come or is under restructuring; or

(b)    the company ' s financial position, if the company is under restructuring; or

(c)    a reason, prescribed by the regulations for the purposes of this paragraph, that relates to:

(i) the company coming, or possibly coming, under restructuring; or

(ii) the company ' s financial position;

if the company later comes under restructuring; or

(d)    a reason that, in substance, is contrary to this subsection;

if the right arises for that reason by express provision (however described) of a contract, agreement or arrangement.

Note: This result is subject to subsections (5) and (7) , and to any order under section 454P .

Example: A right to terminate a contract will not be enforceable to the extent that those rights are triggered by the company coming under restructuring.

Period of the stay

454N(2)    
The right cannot be enforced as described in subsection (1) during the period (the stay period ) starting when the restructuring of the company begins and ending at the later of the following:

(a)    when the restructuring ends;

(b)    if one or more orders are made under subsection (3) for the company as the result of an application made before the restructuring ends - when the last made of those orders ceases to be in force;

(c)    if the company ceases to be under restructuring because of a resolution or order for the company to be wound up - when the company ' s affairs have been fully wound up.

454N(3)    
The Court:

(a)    may order an extension of the stay period for the company if the Court is satisfied that the extension is appropriate having regard to the interests of justice; and

(b)    before deciding an application for an order under paragraph (a) , may grant an interim order, but must not require the applicant to give an undertaking as to damages as a condition for doing so.

Enforcing rights after the stay for reasons relating to earlier circumstances

454N(4)    
The right is unenforceable against the company indefinitely after the end of the stay period to the extent that a reason for seeking to enforce the right:

(a)    is the company ' s financial position before the end of the stay period; or

(b)    is the company having come or been under restructuring before the end of the stay period; or

(c)    is a reason, prescribed by the regulations for the purposes of this paragraph, relating to circumstances in existence during the stay period; or

(d)    is a reason referred to in paragraph (1)(c) or (d) .

Rights not subject to the stay

454N(5)    
Subsection (1) does not apply to the right if it is:

(a)    a right under a contract, agreement or arrangement entered into after the company comes under restructuring; or

(b)    a right under a contract, agreement or arrangement entered into before 1 July 2018; or

(c)    a right contained in a kind of contract, agreement or arrangement:

(i) prescribed by the regulations for the purposes of this subparagraph; or

(ii) declared under paragraph (6)(a) ; or

(d)    a right of a kind:

(i) prescribed by the regulations for the purposes of this subparagraph; or

(ii) declared under paragraph (6)(b) ; or

(e)    a right of a kind declared under paragraph (6)(c) , and the circumstances specified in that declaration exist.

454N(6)    
For the purposes of subsection (5) , the Minister may, by legislative instrument:

(a)    declare kinds of contracts, agreements or arrangements referred to in a specified law of the Commonwealth; or

(b)    declare kinds of rights to which subsection (1) does not apply; or

(c)    declare kinds of rights to which subsection (1) does not apply in specified circumstances.

454N(7)    
Subsection (1) does not apply to the right to the extent that:

(a)    the restructuring practitioner for the company; or

(b)    if an administrator of the company, or an administrator of a deed of company arrangement executed by the company, is appointed after the restructuring ends - the administrator; or

(c)    if a liquidator of the company is appointed after the restructuring ends - the liquidator;

has consented in writing to the enforcement of the right.

Stay on company ' s right to new advance of money or credit

454N(8)    
If:

(a)    one or more rights of an entity cannot be enforced against a company for a period because of subsection (1) ; and

(b)    the company has a right under a contract, agreement or arrangement against the entity for a new advance of money or credit;

that right of the company cannot be enforced during the same period.

SECTION 454P   LIFTING THE STAY ON ENFORCING RIGHTS  

454P(1)    
The Court may order that subsection 454N(1) does not apply for one or more rights against a company if the Court is satisfied that this is appropriate in the interests of justice.

454P(2)    
An application for the order may be made by the holder of those rights.

SECTION 454Q   ORDER FOR RIGHTS TO BE ENFORCEABLE ONLY WITH LEAVE OF THE COURT  

Orders

454Q(1)    
The Court may order that one or more rights under a contract, agreement or arrangement are enforceable against a company only:

(a)    with the leave of the Court; and

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

Example: The order could be sought for a right to terminate for convenience.

454Q(2)    
The Court may make the order if:

(a)    the company is under restructuring; and

(b)    the Court is satisfied that:

(i) the rights are being exercised; or

(ii) the rights are likely to be exercised; or

(iii) there is a threat to exercise the rights;

because of one or more reasons referred to in paragraphs 454N(1)(a) to (d) ; and

(c)    an application for the order is made by the restructuring practitioner for the company.

454Q(3)    
An order under subsection (1) must specify the period for which it applies. In working out the period, the Court must have regard to:

(a)    subsections 454N(2) , (3) and (4) ; and

(b)    the interests of justice.

454Q(4)    
Subsection (1) does not apply to a right referred to in subsection 454N(5) or (7) .

Note: An order under subsection (1) also does not restrict certain secured creditors (see sections 454C to 454H ).

Interim orders

454Q(5)    
Before deciding an application for an order under subsection (1) , the Court may grant an interim order for one or more rights under a contract, agreement or arrangement not to be enforced against a company.

454Q(6)    
The Court must not require an applicant for an order under subsection (1) to give an undertaking as to damages as a condition of granting an interim order.

SECTION 454R   SELF-EXECUTING PROVISIONS  

454R(1)    
The object of subsection (2) is to ensure that a self-executing provision:

(a)    cannot start to apply against a company for certain reasons; and

(b)    can be the subject of a Court order providing that the provision can only start to apply against a company with the leave of the Court, and in accordance with such terms (if any) as the Court imposes.

454R(2)    
Sections 454N to 454Q also apply in relation to a self-executing provision in a corresponding way to the way they apply in relation to a right. For this purpose, assume those sections apply with such modifications as are necessary, including any prescribed by the regulations for the purposes of this subsection.

Note 1: This subsection achieves the object in subsection (1) by extending the application of all of the outcomes, exceptions and powers in sections 454N to 454Q .

Note 2: These modifications include, for example, treating:

(a) a reference that a right cannot be enforced (however described) as including a reference that a self-executing provision cannot start to apply; and

(b) the words " if the right arises for that reason by express provision (however described) of a contract, agreement or arrangement " as being omitted from subsection 454N(1) ; and

(c) a reference that one or more rights are enforceable as including a reference that one or more self-executing provisions can start to apply; and

(d) paragraph 454Q(2)(b) as alternatively providing that the Court is satisfied that one or more reasons referred to in paragraphs 454N(1)(a) to (d) can cause the self-executing provisions to start to apply.

454R(3)    
In this section:

self-executing provision
means a provision of a contract, agreement or arrangement that can start to apply automatically:

(a) for one or more reasons; and

(b) without any party to the contract, agreement or arrangement making a decision that the provision should start to apply.

SECTION 454S  

454S   WHEN OTHER LAWS PREVAIL - CERTAIN OTHER COMMONWEALTH ACTS  

If there is any inconsistency between sections 454N to 454R and one of the following Acts, that Act prevails to the extent of the inconsistency:

(a)    the Payment Systems and Netting Act 1998 ;

(b)    the International Interests in Mobile Equipment (Cape Town Convention) Act 2013 .

Division 3 - Restructuring plan  

SECTION 455A   PROPOSING A RESTRUCTURING PLAN  

455A(1)    
A company may propose a restructuring plan to its creditors.

455A(2)    
The company is taken to be insolvent if the company does so.

455A(3)    
The regulations may prescribe the time at which the company is taken to have done so, for the purpose of determining when the company became insolvent under subsection (2) .

SECTION 455B   RESTRUCTURING PLAN  

Proposing a restructuring plan

455B(1)    
The regulations may make provision for and in relation to the following:

(a)    proposing a restructuring plan;

(b)    the matters that must or may be included in a restructuring plan;

(c)    accepting and rejecting a proposal for a restructuring plan;

(d)    the circumstances in which a proposal for a restructuring plan lapses;

(e)    the consequences of a proposal for a restructuring plan lapsing.

Making, varying and terminating a restructuring plan

455B(2)    
The regulations may make provision for and in relation to the following:

(a)    making a restructuring plan;

(b)    the consequences of making a restructuring plan;

(c)    the variation of a restructuring plan;

(d)    the termination of a restructuring plan;

(e)    the consequences of a restructuring plan being varied or terminating.

Debts and claims

455B(3)    
The regulations may make provision for and in relation to the following:

(a)    debts and claims that must or may be dealt with in a restructuring plan;

(b)    the calculation of the value of those debts and claims under a restructuring plan;

(c)    the proof and ranking of those debts and claims under a restructuring plan;

(d)    the property of a company that must or may be used in payment of those debts and claims under a restructuring plan;

(e)    the payment of those debts and claims under a restructuring plan;

(f)    the period within which those debts and claims must be paid under a restructuring plan;

(g)    the treatment of those debts and claims under a restructuring plan if the property of the company is not sufficient to satisfy those debts and claims in full;

(h)    the nature and duration of any moratorium on the enforcement of debts of and claims against a company that makes a restructuring plan;

(i)    the effect of a restructuring plan on rights, obligations and liabilities in relation to debts of and claims against a company.

Contributories

455B(4)    
The regulations may make provision for and in relation to the following:

(a)    the identification of contributories of the company;

(b)    the rights, obligations and liabilities of contributories of the company in relation to a restructuring plan.

Circumstances in which restructuring plan void

455B(5)    
The regulations may make provision for and in relation to the following:

(a)    the circumstances in which all or part of a restructuring plan is void;

(b)    the consequences if all or part of a restructuring plan is void.

Contravention of a restructuring plan

455B(6)    
The regulations may make provision for and in relation to the following:

(a)    the circumstances in which a restructuring plan is contravened;

(b)    the consequences if a restructuring plan is contravened.

The restructuring practitioner

455B(7)    
The regulations may make provision for and in relation to the following:

(a)    the appointment of a restructuring practitioner for a restructuring plan;

(b)    the functions of the restructuring practitioner for a restructuring plan;

(c)    the duties of the restructuring practitioner for a restructuring plan;

(d)    the powers of the restructuring practitioner for a restructuring plan;

(e)    the rights, obligations and liabilities of the restructuring practitioner for a restructuring plan arising out of the performance of the functions and duties, and the exercise of the powers, of the restructuring practitioner for the plan.

General

455B(8)    
Without limiting anything in this section, the regulations may make provision for and in relation to any information (including personal information within the meaning of the Privacy Act 1988 ), report or other document that must or may be created or given in relation to a proposal for a restructuring plan, or a restructuring plan.

Division 4 - The restructuring practitioner  

Subdivision A - Qualifications of restructuring practitioners  

SECTION 456A  

456A   APPOINTEE MUST CONSENT  

A person cannot be appointed as restructuring practitioner for a company or for a restructuring plan 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.

SECTION 456B   RESTRUCTURING PRACTITIONER MUST BE REGISTERED LIQUIDATOR  

456B(1)    
A person must not consent to be appointed, and must not act as restructuring practitioner for a company or for a restructuring plan.

456B(2)    
Subsection (1) does not apply if the person is a registered liquidator.

Note: A defendant bears an evidential burden in relation to the matter in subsection (2) , see subsection 13.3(3) of the Criminal Code .

456B(3)    
An offence based on subsection (1) is an offence of strict liability.

SECTION 456C   DISQUALIFICATION OF PERSON CONNECTED WITH COMPANY  

456C(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, restructuring practitioner for a company or for a restructuring plan 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:

(i) administrator or liquidator of the company or a related body corporate; or

(ii) administrator of a deed of company arrangement executed by the company or a related body corporate; or

(iii) restructuring practitioner for the company or a related body corporate; or

(iv) restructuring practitioner for a restructuring plan made 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 a director, secretary, senior manager or employee of the company; or

(d)    the person is a director, secretary, senior manager or employee of a body corporate that is a secured party in relation to 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.

456C(2)    
An offence based on subsection (1) is an offence of strict liability.

456C(3)    
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 section 21 of 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.

456C(4)    
For the purposes of this section, a person is taken to be a director, secretary, senior manager, employee or auditor of a company if:

(a)    the person is or has, within the last 2 years, been a director, secretary, senior manager, employee, auditor or promoter of the company or a related body corporate; and

(b)    ASIC has not directed that the person not be taken to be a director, secretary, senior manager, employee or auditor for the purposes of this section.

ASIC may give a direction under paragraph (b) only if it thinks fit in the circumstances of the case.

456C(5)    
For the purposes of paragraphs (1)(g) and (h) , officer does not include liquidator.

Subdivision B - Removal and replacement of restructuring practitioner  

SECTION 456D  

456D   APPOINTMENT OF RESTRUCTURING PRACTITIONER CANNOT BE REVOKED  

The appointment of a person as restructuring practitioner for a company or for a restructuring plan cannot be revoked.

SECTION 456E   VACANCY IN OFFICE OF RESTRUCTURING PRACTITIONER FOR COMPANY  

456E(1)    
Where the restructuring practitioner for a company:

(a)    dies; or

(b)    becomes prohibited from acting as restructuring practitioner for the company; or

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

the appointer may appoint someone else as restructuring practitioner for the company.

456E(2)    
In subsection (1) :

appointer
, in relation to the restructuring practitioner for a company, means:

(a) if the restructuring practitioner was appointed by the Court under Division 90 of Schedule 2 (review of the external administration of a company) or subsection (4) of this section - the Court; or

(b) the company.

456E(3)    
An appointment under subsection (1) by the company must be made by resolution of the board.

456E(4)    
Where a company is under restructuring, but for some reason no restructuring practitioneris acting, the Court may appoint a person as restructuring practitioner on the application of ASIC or of an officer, member or creditor of the company.

SECTION 456F   DECLARATIONS BY REPLACEMENT RESTRUCTURING PRACTITIONER - RELEVANT RELATIONSHIPS  

Scope

456F(1)    
This section applies to a restructuring practitioner appointed under subsection 456E(1) otherwise than by the Court.

Declaration of relationships

456F(2)    
As soon as practicable after being appointed, the restructuring practitioner must make a declaration of relevant relationships.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

Notification of creditors

456F(3)    
The restructuring practitioner must:

(a)    give a copy of the declaration under subsection (2) to as many of the company ' s creditors as reasonably practicable; and

(b)    do so at the same time as notice of the appointment is given under section 457A .

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

456F(4)    
As soon as practicable after making a declaration under subsection (2) , the restructuring practitioner must lodge a copy of the declaration with ASIC.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

Updating of declaration

456F(5)    
If:

(a)    at a particular time, the restructuring practitioner makes a declaration of relevant relationships under subsection (2) or this subsection; and

(b)    at a later time:

(i) the declaration has become out-of-date; or

(ii) the restructuring practitioner becomes aware of an error in the declaration;

the restructuring practitioner must, as soon as practicable, make a replacement declaration of relevant relationships.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

456F(6)    
As soon as practicable after making a replacement declaration under subsection (5) , the restructuring practitioner must lodge a copy of the replacement declaration with ASIC.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

Defence

456F(7)    
In a prosecution for an offence constituted by a failure to include a particular matter in a declaration under this section, it is a defence if the defendant proves that:

(a)    the defendant made reasonable enquiries; and

(b)    after making these enquiries, the defendant had no reasonable grounds for believing that the matter should have been included in the declaration.

Subdivision C - Rights, obligations and liabilities in relation to the restructuring practitioner  

SECTION 456G   RIGHTS, OBLIGATIONS AND LIABILITIES OF A COMPANY AND ITS OFFICERS IN RELATION TO THE RESTRUCTURING PRACTITIONER  

456G(1)    
The regulations may make provision for and in relation to the following:

(a)    the rights, obligations and liabilities of a company that is or has been under restructuring in relation to a person who is or has been the restructuring practitioner for the company;

(b)    the rights, obligations and liabilities of a company that has at any time made a restructuring plan in relation to a person who is or has been the restructuring practitioner for the restructuring plan;

(c)    the rights, obligations and liabilities of the officers and former officers of a company that is or has been under restructuring in relation to a person who is or has been the restructuring practitioner for the company;

(d)    the rights, obligations and liabilities of the officers and former officers of a company that has at any time made a restructuring plan in relation to a person who is or has been a restructuring practitioner for the restructuring plan.

456G(2)    
The rights, obligations and liabilities provided for in the regulations are in addition to any other rights, obligations and liabilities provided for under this Act.

SECTION 456H  

456H   NO LIABILITY FOR CONSENT ETC.  

A person who is or has been the restructuring practitioner for a company under restructuring is not liable to an action or other proceeding for damages in respect of:

(a)    a decision to terminate, or not to terminate, the restructuring of a company under section 453J ; or

(b)    a decision to give, or refuse to give, an approval or consent under this Division.

SECTION 456J  

456J   RIGHT OF INDEMNITY  

A person who is or has been the restructuring practitioner for a company under restructuring is entitled to be indemnified out of the company ' s property (other than any PPSA retention of title property subject to a PPSA security interest that is perfected within the meaning of the Personal Property Securities Act 2009 ) for:

(a)    any debts or liabilities incurred, or damages or losses sustained, in good faith and without negligence, by the restructuring practitioner:

(i) in the performance or purported performance of the restructuring practitioner ' s functions or duties; or

(ii) in the exercise or purported exercise of the restructuring practitioner ' s powers; and

(b)    the remuneration to which the restructuring practitioner is entitled under Insolvency Practice Rules made under Subdivision DA of Division 60 of Schedule 2 .

SECTION 456K   RIGHT OF INDEMNITY HAS PRIORITY OVER OTHER DEBTS  

General rule

456K(1)    
Subject to section 556 , a right of indemnity under section 456J has priority over:

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

(b)    any debts of the company secured by a PPSA security interest in property of the company if, when the restructuring of the company begins, the security interest is vested in the company because of the operation of any of the following provisions:

(i) section 267 or 267A of the Personal Property Securities Act 2009 (property subject to unperfected security interests);

(ii) section 588FL of this Act (collateral not registered within time); and

(c)    subject otherwise to this section - debts of the company secured by a circulating security interest in property of the company.

Debts secured by circulating security interests - receiver appointed before the beginning of restructuring etc.

456K(2)    
A right of indemnity under section 456J does not have priority over debts of the company under restructuring that are secured by a circulating security interest in property of the company, except so far as the secured party agrees, if:

(a)    before the beginning of the restructuring, the secured party:

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

(ii) obtained an order for the appointment of a receiver of property of the company for the purpose of enforcing the security interest; 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 secured party or for the company); and

(b)    the receiver or person is still in office, or the secured party is still in possession or control of the property.

Debts secured by circulating security interests - receiver appointed during restructuring etc.

456K(3)    
Subsection (4) applies if:

(a)    debts of a company under restructuring are secured by a circulating security interest in property of the company; and

(b)    during the restructuring, the secured party, consistently with this Part:

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

(ii) obtains an order for the appointment of a receiver of property of the company for the purpose of enforcing the security interest; 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 secured party or for the company).

456K(4)    
A right of indemnity of the restructuring practitioner under section 456J 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 restructuring practitioner.

Debts secured by circulating security interests - priority over right of indemnity in relation to repayment of money borrowed etc.

456K(5)    
A right of indemnity under section 456J does not have priority over debts of the company under restructuring that are secured by a circulating security interest in property of the company, except so far as the secured party consents in writing, to the extent that the right of indemnity relates to debts incurred for:

(a)    the repayment of money borrowed; or

(b)    interest in respect of money borrowed; or

(c)    borrowing costs.

SECTION 456L   LIEN TO SECURE INDEMNITY  

456L(1)    
To secure a right of indemnity under section 456J , the restructuring practitioner has a lien on the company ' s property.

456L(2)    
A lien under subsection (1) has priority over another security interest only in so far as the right of indemnity under section 456J has priority over debts secured by the other security interest.

SECTION 456LA  

456LA   RESTRUCTURING PRACTITIONER HAS QUALIFIED PRIVILEGE  

A person who is or has been the restructuring practitioner for a company or a company ' s restructuring plan has qualified privilege in respect of a statement that the person has made, whether orally or in writing, in the course of performing or exercising any of the person ' s functions and powers as restructuring practitioner for the company or the plan.

SECTION 456LB   PROTECTION OF PERSONS DEALING WITH RESTRUCTURING PRACTITIONER  

456LB(1)    
Sections 128 and 129 apply in relation to a company that is under restructuring as if:

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

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

(i) acting within the restructuring practitioner ' s functions and powers as restructuring practitioner; and

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

456LB(2)    
Sections 128 and 129 apply in relation to a company that has made a restructuring plan as if:

(a)    a reference in those sections to the company, or to an officer of the company, included a reference to the restructuring practitioner for the plan; and

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

(i) acting within the restructuring practitioner ' s functions and powers as restructuring practitioner; and

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

456LB(3)    
The effect that sections 128 and 129 have because of subsections (1) and (2) of this section is additional to, and does not prejudice, the effect that sections 128 and 129 otherwise have in relation to a company that is under restructuring or that has made a restructuring plan.

Subdivision D - Appointment of 2 or more restructuring practitioners  

SECTION 456M   APPOINTMENT OF 2 OR MORE RESTRUCTURING PRACTITIONERS OF COMPANY  

456M(1)    
Where a provision of this Act provides for a small business restructuring practitioner for a company to be appointed, 2 or more persons may be appointed as small business restructuring practitioners of the company.

456M(2)    
Where, because of subsection (1) , there are 2 or more small business restructuring practitioners of a company:

(a)    a function, duty or power of a restructuring practitioner for 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 appointing them otherwise provides; and

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

SECTION 456N   APPOINTMENT OF 2 OR MORE RESTRUCTURING PRACTITIONERS OF RESTRUCTURING PLAN  

456N(1)    
Where a provision of this Act provides for a small business restructuring practitioner for a restructuring plan to be appointed, 2 or more persons may be appointed as small business restructuring practitioners of the plan.

456N(2)    
Where, because of subsection (1) , there are 2 or more small business restructuring practitioners for a restructuring plan:

(a)    a function, duty or power of a restructuring practitioner for the plan may be performed or exercised by any one of them, or by any 2 or more of them together, except so far as the plan, or the instrument appointing them, otherwise provides; and

(b)    a reference in this Act to a restructuring practitioner, or to the restructuring practitioner, for a restructuring plan is, in the case of the first-mentioned plan, a reference to whichever one or more of those restructuring practitioners the case requires.

Division 5 - Information, reports, documents etc.  

SECTION 457A  

457A   REGULATIONS MAY DEAL WITH INFORMATION ETC.  

The regulations may make provision for and in relation to:

(a)    giving information, providing a report or producing a document to the restructuring practitioner for a company or for a restructuring plan; and

(b)    giving information, providing a report or producing a document to ASIC in relation to a company under restructuring or a company that has made a restructuring plan; and

(c)    giving information, providing a report or producing a document to any other person (including creditors) in relation to a company under restructuring or a company that has made a restructuring plan; and

(d)    publishing information, a report or a document in relation to a company under restructuring or that has made a restructuring plan.

SECTION 457B   NOTICE IN PUBLIC DOCUMENTS OF COMPANY  

457B(1)    
A company under restructuring 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 ( " restructuring practitioner appointed " ).

457B(2)    
An offence based on subsection (1) is an offence of strict liability.

SECTION 457C  

457C   EFFECT OF CONTRAVENTION OF THIS DIVISION  

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

Division 6 - Powers of Court  

SECTION 458A   GENERAL POWER TO MAKE ORDERS  

458A(1)    
The Court may make such order as it thinks appropriate about how this Part is to operate in relation to a particular company.

458A(2)    
An order may be made subject to conditions.

458A(3)    
An order may be made on the application of:

(a)    the company; or

(b)    a creditor of the company; or

(c)    the restructuring practitioner for the company or for a restructuring plan for the company; or

(d)    ASIC; or

(e)    any other interested person.

SECTION 458B   OTHER POWERS OF THE COURT  

458B(1)    
The regulations may:

(a)    confer powers on the Court in relation to the restructure of companies or restructuring plans; and

(b)    prescribe whether those powers are to be exercised on the initiative of the Court or on the application of one or more persons; and

(c)    prescribe persons who may apply to the Court for the exercise of those powers.

458B(2)    
Without limiting subsection (1) , the powers that may be conferred on the Court include the power:

(a)    to vary or terminate a restructuring plan; and

(b)    to declare a restructuring plan void.

458B(3)    
The powers conferred on the Court under regulations made for the purposes of this section are in addition to any other powers conferred on the Court.

Division 7 - Other matters  

SECTION 458C  

458C   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.

SECTION 458D  

458D   MEANING OF RESTRUCTURING RELIEF PERIOD  
In this Act:

restructuring relief period
means the period:

(a) beginning on 1 January 2021; and

(b) ending on 31 March 2021.

SECTION 458E   MEANING OF ELIGIBLE FOR TEMPORARY RESTRUCTURING RELIEF  
When is a company eligible for temporary restructuring relief?

458E(1)    
A company is eligible for temporary restructuring relief if:

(a)    before the end of the restructuring relief period, the directors of the company:

(i) make a declaration in writing that sets out the matters mentioned in paragraphs (b), (c) and (d) and, if there is a prescribed form for the declaration, is in the prescribed form; and

(ii) publish notice of the declaration in the prescribed manner; and

(b)    there are reasonable grounds to believe that:

(i) the company is insolvent, or is likely to become insolvent before the declaration under subparagraph (a)(i) expires; and

(ii) the eligibility criteria for restructuring would be met in relation to the company if a restructuring practitioner were appointed on the day on which notice of the declaration under subparagraph (a)(i) is published, or on any day afterwards on which the declaration has not expired; and

(c)    the board has resolved to the effect that a restructuring practitioner for the company should be appointed; and

(d)    there is no:

(i) restructuring practitioner for the company; or

(ii) restructuring practitioner for a restructuring plan made by the company that has not yet terminated; or

(iii) administrator of the company; or

(iv) administrator of a deed of company arrangement executed by the company that has not yet terminated; or

(v) liquidator or provisional liquidator of the company; and

(e)    the declaration under subparagraph (a)(i) has not expired; and

(f)    the company has not otherwise ceased to be eligible for temporary restructuring relief for any reason; and

(g)    the company has not previously been eligible for temporary restructuring relief that has ceased:

(i) because a previous declaration under subparagraph (a)(i) has expired; or

(ii) for any other reason.

458E(2)    
A declaration under subparagraph (1)(a)(i) in relation to a company expires:

(a)    3 months after notice of the declaration is first published in the prescribed manner (the initial relief period ); or

(b)    a further one month after the initial relief period if:

(i) paragraphs (1)(b) , (c) and (d) continue to be satisfied in relation to the company; and

(ii) the directors of the company have taken all reasonable steps to appoint a restructuring practitioner but have been unable to do so; and

(iii) the directors of the company make a further declaration under subsection (3) , and publish notice of that declaration in the prescribed manner; and

(iv) notice of the further declaration is published no later than 2 weeks before the end of the initial relief period.

458E(3)    
A declaration by the directors of a company under this subsection must:

(a)    state that paragraphs (1)(b) , (c) and (d) continue to be satisfied in relation to the company; and

(b)    set out:

(i) the steps that the company has taken to appoint a restructuring practitioner; and

(ii) the steps that the company intends to take to appoint a restructuring practitioner before the declaration under subparagraph (1)(a)(i) expires, if extended under paragraph (2)(b) ; and

(c)    be in writing; and

(d)    if there is a prescribed form for the declaration - be in the prescribed form.

Giving ASIC copies of declarations under this section

458E(4)    
If the directors of a company publish notice of a declaration as mentioned in subparagraph (1)(a)(ii) or (2)(b)(iii) , they must give ASIC a copy of the declaration no later than 5 business days after doing so.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

When does a company cease to be eligible for temporary restructuring relief?

458E(5)    
A company ceases to be eligible for temporary restructuring relief if:

(a)    the declaration under subparagraph (1)(a)(i) under which the company was eligible for temporary restructuring relief expires; or

(b)    the directors of the company fail to comply with subsection (4) ; or

(c)    a small business restructuring practitioner for the company is appointed under section 453B ; or

(d)    an administrator of the company is appointed under section 436A , 436B or 436C ; or

(e)    a liquidator, or provisional liquidator, is appointed to wind up the company; or

(f)    the company publishes notice under subsection 458F(1) or (2) that the company is not, or is not to be treated as, eligible for temporary restructuring relief; or

(g)    the Court orders under section 458G that the company is not eligible for temporary restructuring relief.

SECTION 458F   DIRECTORS DECLARE COMPANY NOT ELIGIBLE FOR TEMPORARY RESTRUCTURING RELIEF  

458F(1)    
The directors of a company contravene this subsection if:

(a)    there are not reasonable grounds to believe either or both of the following:

(i) that the company is insolvent, or is likely to become insolvent before the declaration under subparagraph 458E(1)(a)(i) expires;

(ii) that the eligibility criteria for restructuring would be met in relation to the company if a restructuring practitioner were appointed on the day on which notice of the declaration under subparagraph 458E(1)(a)(i) is published, or on any day afterwards on which the declaration has not expired; and

(b)    one or more of the directors becomes aware of that fact; and

(c)    the directors do not, within 5 business days after one or more of the directors becoming aware of that fact:

(i) make a declaration in writing that the company is not eligible for temporary restructuring relief; and

(ii) publish notice of the declaration in the prescribed manner; and

(iii) give ASIC a copy of the declaration.

Note: This subsection is a civil penalty provision (see section 1317E ).

458F(2)    
The directors of a company may:

(a)    make a declaration in writing that the company is not to be treated as eligible for temporary restructuring relief for any other reason; and

(b)    publish notice of the declaration in the prescribed manner.

458F(3)    
If the directors of a company make a declaration under paragraph (2)(a), the directors must give ASIC a copy of the declaration within 5 business days after doing so.

SECTION 458G   COURT ORDER THAT COMPANY NOT ELIGIBLE FOR TEMPORARY RESTRUCTURING RELIEF  

458G(1)    
The Court may order that a company is not eligible for temporary restructuring relief if there are not reasonable grounds to believe any of the following:

(a)    the company is insolvent, or is likely to become insolvent before the declaration under paragraph 458E(1)(a) expires;

(b)    the eligibility criteria for restructuring would be met in relation to the company if a restructuring practitioner were appointed on any day after notice of the declaration made under subparagraph 458E(1)(a)(i) is published on which the declaration has not expired;

(c)    the company has taken all reasonable steps to appoint a restructuring practitioner;

(d)    the company will take all reasonable steps to appoint a restructuring practitioner before the expiry of the declaration made by the company under subsection 458E(1) .

458G(2)    
The Court may make an order under subsection (1):

(a)    on the application of:

(i) a creditor of the company; or

(ii) ASIC; or

(b)    on the Court ' s own initiative.

458G(3)    
If the Court makes an order in relation to a company under subsection (1), the directors of the company must within 5 business days after the order is made:

(a)    publish notice of the order in the prescribed manner; and

(b)    give ASIC a copy of the order.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

458G(4)    
Nothing in this section limits the power of the Court to make an order that a company is not eligible for temporary restructuring relief for any other reason.

SECTION 458H  

458H   OBLIGATION ON REGISTERED LIQUIDATOR TO REPORT  
A registered liquidator contravenes this section if:

(a)    the directors of a company have published under subparagraph 458E(1)(a)(ii) notice of a declaration under subparagraph 458E(1)(a)(i) that has not expired; and

(b)    the registered liquidator suspects that there are not reasonable grounds to believe either or both of the following:

(i) the company is insolvent, or is likely to become insolvent before the declaration under subparagraph 458E(1)(a)(i) expires;

(ii) the eligibility criteria for restructuring would be met in relation to the company if a restructuring practitioner were appointed on the day on which notice of the declaration made under subparagraph 458E(1)(a)(i) is published, or on any day afterwards on which the declaration has not expired; and

(c)    the company has not ceased to be eligible for temporary restructuring relief under subsection 458E(5) ; and

(d)    the registered liquidator does not give ASIC notice in writing setting out the registered liquidator ' s reasons for forming the suspicion mentioned in paragraph (b) of this section, within 5 business days after first forming the suspicion.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).