THE CORPORATIONS LAW

CHAPTER 5 - EXTERNAL ADMINISTRATION

PART 5.3A - ADMINISTRATION OF A COMPANY'S AFFAIRS WITH A VIEW TO EXECUTING A DEED OF COMPANY ARRANGEMENT

Division 6 - Protection of company's property during administration

SECTION 440J   ADMINISTRATION NOT TO TRIGGER LIABILITY OF DIRECTOR OR RELATIVE UNDER GUARANTEE OF COMPANY'S LIABILITY  

440J(1)  [Guarantees unenforceable]  

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.

440J(2)  [Sec 1323]  

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 Law; 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.

440J(3)  [Effect of sec 1323]  

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.

440J(4)  [Definitions]  

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.

 

Disclaimer and notice of copyright applicable to materials provided by CCH Australia Limited

CCH Australia Limited ("CCH") believes that all information which it has provided in this site is accurate and reliable, but gives no warranty of accuracy or reliability of such information to the reader or any third party. The information provided by CCH is not legal or professional advice. To the extent permitted by law, no responsibility for damages or loss arising in any way out of or in connection with or incidental to any errors or omissions in any information provided is accepted by CCH or by persons involved in the preparation and provision of the information, whether arising from negligence or otherwise, from the use of or results obtained from information supplied by CCH.

The information provided by CCH includes history notes and other value-added features which are subject to CCH copyright. No CCH material may be copied, reproduced, republished, uploaded, posted, transmitted, or distributed in any way, except that you may download one copy for your personal use only, provided you keep intact all copyright and other proprietary notices. In particular, the reproduction of any part of the information for sale or incorporation in any product intended for sale is prohibited without CCH's prior consent.