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

Schedule 1   Improving outcomes for creditors

Part 1   Enhancing protection of employee entitlements

Corporations Act 2001

4   Before section 444E

Insert:

444DA Giving priority to eligible employee creditors

(1) A deed of company arrangement must contain a provision to the effect that, for the purposes of the application by the administrator of the property of the company coming under his or her control under the deed, any eligible employee creditors will be entitled to a priority at least equal to what they would have been entitled if the property were applied in accordance with sections 556, 560 and 561.

(2) However, the rule in subsection (1) does not apply if:

(a) at a meeting of eligible employee creditors held before the meeting convened under section 439A, the eligible employee creditors pass a resolution agreeing to the non-inclusion of such a provision; or

(b) the Court makes an order under subsection (5) approving the non-inclusion of such a provision.

Meeting of eligible employee creditors

(3) The administrator of the company must convene a meeting under paragraph (2)(a) by giving written notice of the meeting to as many of the eligible employee creditors as reasonably practicable at least 5 business days before the meeting.

(4) A notice under subsection (3) must be accompanied by a copy of a statement setting out:

(a) the administrator's opinion whether the non-inclusion of such a provision would be likely to result in the same or a better outcome for eligible employee creditors as a whole than would result from an immediate winding up of the company; and

(b) his or her reasons for that opinion; and

(c) such other information known to the administrator as will enable the eligible employee creditors to make an informed decision about the matter covered by paragraph (a).

Court approval

(5) The Court may approve the non-inclusion of such a provision if the Court is satisfied that the non-inclusion of the provision would be likely to result in the same or a better outcome for eligible employee creditors as a whole than would result from an immediate winding up of the company.

(6) The Court may only make an order under subsection (5) on the application of:

(a) the administrator, or proposed administrator, of the deed; or

(b) an eligible employee creditor; or

(c) any interested person.

(7) The Court may make an order under subsection (5) before or after the meeting convened under section 439A.

444DB Superannuation contribution debts not admissible to proof

Whole of superannuation contribution debt

(1) A deed of company arrangement must contain a provision to the effect that the administrator of the deed must determine that the whole of a debt by way of a superannuation contribution is not admissible to proof against the company if:

(a) a debt by way of superannuation guarantee charge:

(i) has been paid; or

(ii) is, or is to be, admissible to proof against the company; and

(b) the administrator of the deed is satisfied that the superannuation guarantee charge is attributable to the whole of the first-mentioned debt.

(2) If the administrator of a deed of company arrangement determines, under a provision covered by subsection (1), that the whole of a debt is not admissible to proof against the company, the whole of the debt is extinguished.

Part of superannuation contribution debt

(3) A deed of company arrangement must contain a provision to the effect that the administrator of the deed must determine that a particular part of a debt by way of a superannuation contribution is not admissible to proof against the company if:

(a) a debt by way of superannuation guarantee charge:

(i) has been paid; or

(ii) is, or is to be, admissible to proof against the company; and

(b) the administrator of the deed is satisfied that the superannuation guarantee charge is attributable to that part of the first-mentioned debt.

(4) If the administrator of a deed of company arrangement determines, under a provision covered by subsection (3), that a part of a debt is not admissible to proof against the company, that part of the debt is extinguished.

Definition

(5) In this section:

superannuation contribution has the same meaning as in section 556.