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 2 - Restructuring  

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.