Insolvency Law Reform Act 2016 (11 of 2016)

Schedule 2 Amendments relating to the Insolvency Practice Schedule (Corporations)

Part 1 Insolvency Practice Schedule (Corporations)

Corporations Act 2001

2 Before Schedule 3

Insert:

Schedule 2 - Insolvency Practice Schedule (Corporations)

Note: See section 600K.

Part 1 - Introduction

Division 1 - Introduction

1-1 Object of this Schedule

(1) The object of this Schedule is to ensure that any person registered as a liquidator:

(a) has an appropriate level of expertise; and

(b) behaves ethically; and

(2) The object of this Schedule is also:

(a) to regulate the external administration of companies consistently, unless there is a clear reason to treat a matter that arises in relation to a particular kind of external administration differently; and

(b) to regulate the external administration of companies to give greater control to creditors.

1-5 Simplified outline of this Schedule

Registering liquidators

Under this Act, only a registered liquidator can perform certain roles, such as that of the receiver of the property of a corporation, the administrator of a company or of a deed of company arrangement, or the liquidator or provisional liquidator of a company.

Part 2 of this Schedule sets out the process for registering liquidators, and also deals with disciplining registered liquidators.

Consistently regulating the external administration of companies

Part 3 of this Schedule sets out provisions to regulate the external administration of companies consistently.

A company is under external administration if the company is under administration, is the subject of a deed of company arrangement or has had a liquidator or provisional liquidator appointed in relation to it. A company is not under external administration merely because a person has been appointed as a receiver, receiver and manager or other controller in relation to the property of the company.

Other provisions

There are other matters relevant to the external administration of a company regulated in Chapter 5.

This Schedule also gives authority for a legislative instrument, the Insolvency Practice Rules, to deal with some matters.

Many of the terms in this Schedule are defined. The Dictionary in section 5-5 contains a list of every term that is defined in this Schedule. Other terms are defined in section 9 of this Act.

Division 5 - Definitions

Subdivision A - Introduction

5-1 Simplified outline of this Division

Terms used in this Schedule are defined in the Dictionary. In some cases, the definition is a signpost to another provision of the Schedule in which the meaning of the term is explained.

Some of the key terms, the meaning of which is explained in this Division, are external administration of a company and external administrator of a company.

Subdivision B - The Dictionary

5-5 The Dictionary

In this Schedule:

adequate and appropriate fidelity insurance has a meaning affected by subsection 25-1(2).

adequate and appropriate professional indemnity insurance has a meaning affected by subsection 25-1(2).

administration account : see section 65-5.

annual administration return means the return required to be lodged under subsection 70-5(3).

annual liquidator return means the return required to be lodged under subsection 30-1(1).

approved form : a document is lodged in the approved form if it is lodged in accordance with section 100-6.

committee of inspection for a company means:

(a) a committee appointed under sections 80-10 to 80-25 in relation to the external administration of the company; or

(b) a committee that is taken to be a committee of inspection in relation to the external administration of the company under subsection 80-26(3) (the company is a member of a pooled group).

creditor , when used in relation to a company under external administration, means a creditor of the company.

current conditions : see section 5-10.

end of administration return means the return required to be lodged under subsection 70-6(2).

end of an external administration of a company means:

(a) in relation to a company under administration - the day worked out under paragraph 435C(1)(b); and

(b) in relation to a company subject to a deed of company arrangement - the day the deed is terminated; and

external administration of a company: see section 5-15.

external administrator of a company: see section 5-20.

financial interest : a person has a financial interest in the external administration of a company in the circumstances set out in section 5-30.

GST has the same meaning as in the A New Tax System (Goods and Services Tax) Act 1999.

Insolvency Practice Rules means the rules made by the Minister under section 105-1.

Insolvency Practice Schedule (Bankruptcy) means Schedule 2 to the Bankruptcy Act 1966, and includes rules made under section 105-1 of that Schedule.

March quarter means the period of 3 months beginning on 1 January.

maximum default amount for an external administrator of a company: see section 60-15.

member of a pooled group : see section 5-27.

pooled group : see section 5-27.

prescribed means prescribed by the Insolvency Practice Rules.

property has a meaning affected by section 5-26.

registered liquidator means an individual who is registered as a liquidator under Part 2 of this Schedule.

Register of Liquidators means the register established and maintained by ASIC under section 15-1.

related entity , in relation to an individual, has the same meaning as in the Bankruptcy Act 1966.

remuneration determination , for an external administrator of a company, means a determination made in accordance with section 60-10 in relation to the external administrator.

resolution : a resolution is passed by creditors or contributories of a company:

(a) in a meeting - in the circumstances prescribed under paragraph 75-50(2)(k); or

(b) without a meeting - in the circumstances prescribed under paragraph 75-40(5)(b).

reviewing liquidator means a registered liquidator who has been appointed under section 90-23 or 90-24 to conduct a review.

special resolution : a special resolution is passed by creditors or contributories of a company:

(a) in a meeting - in the circumstances prescribed under paragraph 75-50(2)(k); or

(b) without a meeting - in the circumstances prescribed under paragraph 75-40(5)(b).

start of an external administration of a company means:

(a) in relation to a company under administration - the day an administrator of the company is appointed under section 436A, 436B or 436C; and

(b) in relation to a company that is subject to a deed of company arrangement - the day the deed is executed; and

(c) in the case of a winding up of a company - the day the winding up of the company is taken to have begun under section 513A or 513B; and

(d) in relation to a company for which a provisional liquidator has been appointed - the day the provisional liquidator is appointed.

this Schedule includes the Insolvency Practice Rules.

Subdivision C - Other definitions

5-10 Meaning of current conditions

(1) Each of the following is a current condition imposed on a registered liquidator:

(a) a condition that a committee decides that the registered liquidator is to be subject to under subsection 20-20(5) or (6), subject to any variation that a committee has decided should be made to the condition under section 20-55;

(b) a condition imposed on all registered liquidators, or on registered liquidators of the liquidator's class, under section 20-35;

(d) a condition that a committee decides that the registered liquidator is to be subject to under paragraph 40-55(1)(f) or (g) (conditions as a result of disciplinary action), subject to any variation that a committee has decided should be made to the condition under section 20-55;

(e) a condition imposed on the registered liquidator by the Court under section 45-1.

(2) However, the current conditions imposed on a registered liquidator do not include:

(a) a condition that a committee has decided to remove under section 20-55; or

(b) a condition that is removed under subsection 40-15(4) (condition removed because a direction not to accept further appointments has been withdrawn); or

5-15 Meaning of external administration of a company

A company is taken to be under external administration if:

(a) the company is under administration; or

(b) a deed of company arrangement has been entered into in relation to the company; or

(d) a provisional liquidator has been appointed in relation to the company.

Note: A company is not under external administration for the purposes of this Schedule merely because a receiver, receiver and manager, or other controller has been appointed in relation to property of the company.

5-20 Meaning of external administrator of a company

A person is an external administrator of a company if the person is:

(a) the administrator of the company; or

(b) the administrator under a deed of company arrangement that has been entered into in relation to the company; or

(d) the provisional liquidator of the company.

Note: A person is not an external administrator of a company for the purposes of this Schedule merely because the person has been appointed as a receiver, receiver and manager, or controller in relation to property of the company.

5-25 References to the external administrator of a company

A reference in this Schedule to the external administrator of a company is to be read:

(a) in relation to a company in respect of which there are 2 or more joint external administrators - as a reference to all of the external administrators; and

(b) in relation to a company in respect of which there are 2 or more joint and several external administrators - as a reference to all of the external administrators or any one or more of the external administrators.

5-26 Property of a company

The 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).

5-27 Meaning of pooled group

If:

(a) a pooling determination is in force in relation to a group of 2 or more companies; or

(b) a pooling order is in force in relation to a group of 2 or more companies;

then:

(d) each of the companies is a member of the pooled group .

5-30 Persons with a financial interest in the external administration of a company

A person has a financial interest in the external administration of a company:

(a) if the person is one of the following:

(i) the company;

(ii) a creditor of the company;

(iii) an external administrator of the company;

(iv) in a members' voluntary winding up - a member of the company; or

(b) in any other circumstances prescribed.

Part 2 - Registering and disciplining practitioners

Division 10 - Introduction

10-1 Simplified outline of this Part

Registering liquidators

An individual may apply to ASIC to be registered as a liquidator. ASIC will refer the application to a committee who will consider the applicant's qualifications, conduct and fitness and whether the applicant will take out appropriate insurance. Registration may be subject to conditions, is for 3 years and may be renewed.

A registered liquidator must:

(a) lodge an annual return with ASIC that includes proof that the liquidator has appropriate insurance; and

(b) give ASIC notice if the liquidator's circumstances change or if certain other events happen.

Disciplining registered liquidators

If a registered liquidator fails to comply with certain requirements, such as the requirement to lodge a document or give information, ASIC may give directions that may result in the liquidator being unable to accept further appointments. ASIC may also seek a Court order.

ASIC may suspend or cancel a liquidator's registration in certain circumstances. ASIC may also give the liquidator a show-cause notice. If such a notice is given and no sufficient explanation is given, ASIC may take further disciplinary action on the decision of a committee.

Industry bodies may notify ASIC where they suspect there are grounds for disciplinary action.

Court powers

The Court has broad powers to make orders in relation to registered liquidators (including imposing conditions on registration).

10-5 Working cooperatively with the Inspector-General in Bankruptcy

In performing its functions and exercising its powers under this Act in relation to persons who are, have been or may become both registered liquidators under this Act and registered trustees under the Bankruptcy Act 1966, ASIC must work cooperatively with the Inspector-General in Bankruptcy.

Division 15 - Register of liquidators

15-1 Register of Liquidators

(1) ASIC must establish and maintain a Register of Liquidators.

(2) The Register of Liquidators may be kept in any form that ASIC considers appropriate.

(3) The Insolvency Practice Rules may provide for and in relation to the Register of Liquidators.

(4) Without limiting subsection (3), the Insolvency Practice Rules may provide for and in relation to:

(a) the details to be entered on the Register of Liquidators; and

(b) the parts of the Register that are to be made available to the public.

(5) Without limiting paragraph (4)(a), those details may include:

(a) details of any disciplinary action decided by a committee under section 40-55; and

(b) details of persons who have had their registration as a liquidator under this Act suspended or cancelled.

Division 20 - Registering liquidators

Subdivision A - Introduction

20-1 Simplified outline of this Division

An individual may apply to ASIC to be registered as a liquidator. The application will be referred to a committee, which will assess the application against specified criteria (the applicant's qualifications, conduct and fitness and whether the applicant will take out appropriate insurance). The committee will report its decision to ASIC and, if the committee decides that the applicant should be registered, ASIC will register the applicant as a liquidator.

A registration may be subject to conditions. Conditions may be imposed on a particular registered liquidator by the committee, or on all registered liquidators or a class of registered liquidators by the Insolvency Practice Rules. A registered liquidator may apply to ASIC to have a condition imposed by a committee removed or varied. That application will be referred to a committee.

Registration is for 3 years, but may be renewed. An application for renewal may be made to ASIC within specified time periods.

A decision of a committee about an application for registration or about a condition of registration is reviewable by the Administrative Appeals Tribunal (see Part 9.4A of this Act).

Subdivision B - Registration

20-5 Application for registration

(1) An individual may apply to ASIC to be registered as a liquidator.

(2) The application must be lodged with ASIC in the approved form.

Note: Fees for lodging documents may be imposed under the Corporations (Fees) Act 2001.

(3) The application is properly made if subsection (2) is complied with.

20-10 ASIC may convene a committee to consider

(1) ASIC may convene a committee for the purposes of considering an application, or applications, for registration as a liquidator.

(2) The committee must consist of:

(a) ASIC; and

(b) a registered liquidator chosen by a prescribed body; and

Note 1: Section 50-5 sets out the knowledge and experience that a prescribed body must be satisfied a person has before making an appointment under paragraph (2)(b).

Note 2: Section 50-10 sets out the matters of which the Minister must be satisfied before making an appointment under paragraph (2)(c).

20-15 ASIC must refer applications to a committee

(1) ASIC must refer an application for registration as a liquidator that is properly made to a committee convened under section 20-10 for consideration.

(2) ASIC must do so within 2 months after receiving the application.

20-20 Committee to consider applications

Committee must consider referred applications

(1) If an application for registration as a liquidator is referred to a committee, the committee must consider the application.

(2) For the purposes of considering the application, the committee:

(a) must interview the applicant; and

(b) may require the applicant to sit for an exam.

Decision of committee

(3) Within 45 business days after interviewing the applicant, the committee must decide whether the applicant should be registered as a liquidator or not.

(4) The committee must decide that the applicant should be registered as a liquidator if it is satisfied that the applicant:

(a) has the qualifications, experience, knowledge and abilities prescribed; and

(b) will take out:

(i) adequate and appropriate professional indemnity insurance; and

(ii) adequate and appropriate fidelity insurance;

against the liabilities that the applicant may incur working as a registered liquidator; and

(c) has not been convicted, within 10 years before making the application, of an offence involving fraud or dishonesty; and

(d) is not, and has not been within 10 years before making the application, an insolvent under administration; and

(e) has not had his or her registration as a liquidator under this Act cancelled within 10 years before making the application, other than in response to a written request by the applicant to have the registration cancelled; and

(f) has not had his or her registration as a trustee under the Bankruptcy Act 1966 cancelled within 10 years before making the application, other than in response to a written request by the applicant to have the registration cancelled; and

(g) is not disqualified from managing corporations under Part 2D.6 of this Act, or under a law of an external Territory or a law of a foreign country; and

(h) is otherwise a fit and proper person; and

(i) is resident in Australia or in another prescribed country.

(5) The committee may decide that the applicant should be registered even if the committee is not satisfied of a matter mentioned in paragraph (4)(a),(e), (f) or (i), provided the committee is satisfied that the applicant would be suitable to be registered as a liquidator if the applicant complied with conditions specified by the committee.

Registration may be subject to conditions

(6) The committee may decide that the applicant's registration is to be subject to any other conditions specified by the committee.

Spent convictions

(7) Nothing in this section affects the operation of Part VIIC of the Crimes Act 1914.

Note: Part VIIC of the Crimes Act 1914 includes provisions that, in certain circumstances, relieve persons from the requirement to disclose spent convictions and require persons aware of such convictions to disregard them.

20-25 Committee to report

The committee must give the applicant and ASIC a report setting out:

(a) the committee's decision on the application; and

(b) the committee's reasons for that decision; and

(c) if the committee decides under subsection 20-20(5) or (6) that the applicant should be registered subject to a condition:

(i) the condition; and

(ii) the committee's reasons for imposing the condition.

20-30 Registration

Registration as liquidator

(1) ASIC must register the applicant as a liquidator if:

(a) the committee has decided that the applicant should be registered; and

(b) the applicant has produced evidence in writing to ASIC that the applicant has taken out:

(i) adequate and appropriate professional indemnity insurance; and

(ii) adequate and appropriate fidelity insurance;

against the liabilities that the applicant may incur working as a registered liquidator.

Note: Fees may be imposed under the Corporations (Fees) Act 2001 for the doing of an act by ASIC.

(2) ASIC registers an applicant by entering on the Register of Liquidators the details relating to the applicant prescribed for the purposes of subsection 15-1(3).

Registration subject to current conditions

(3) The registration is subject to the current conditions imposed on the registered liquidator.

Certificate of registration

(4) After registering a person as a liquidator, ASIC must give the person a certificate of registration.

(5) The certificate may be given electronically.

Period of registration

(6) The registration has effect for 3 years.

20-35 Conditions imposed on all registered liquidators or a class of registered liquidators

(1) The Insolvency Practice Rules may impose conditions on all registered liquidators, or registered liquidators of a specified class.

(2) Without limiting subsection (1), a condition may be imposed limiting the kinds of activity in which a liquidator may engage, either for the duration of the registration or for a shorter period.

Subdivision C - Varying etc. conditions of registration

20-40 Application to vary etc. conditions of registration

(1) If a committee has decided under this Schedulethat a person's registration as a liquidator is to be subject to a condition, the person may apply to ASIC for the condition to be varied or removed.

(2) However, an application cannot be made:

(a) if the person's registration as a liquidator is suspended; or

(b) if the condition is of a prescribed kind; or

(3) The application must be lodged with ASIC in the approved form.

(4) The application is properly made if:

(a) an application can be made; and

(b) subsection (3) is complied with.

(5) A single application by a registered liquidator may deal with more than one condition.

20-45 ASIC may convene a committee to consider applications

(1) ASIC may convene a committee for the purposes of considering an application, or applications, made under section 20-40.

(2) The committee must consist of:

(a) ASIC; and

(b) a registered liquidator chosen by a prescribed body; and

Note 1: Section 50-5 sets out the knowledge and experience that a prescribed body must be satisfied a person has before making an appointment under paragraph (2)(b).

Note 2: Section 50-10 sets out the matters of which the Minister must be satisfied before making an appointment under paragraph (2)(c).

20-50 ASIC must refer applications to a committee

(1) ASIC must refer an application that is properly made under section 20-40 to acommittee convened under section 20-45 for consideration.

(2) ASIC must do so within 2 months after receiving the application.

20-55 Committee to consider applications

(1) If an application to vary or remove a condition of registration is referred to a committee, the committee must consider the application.

(2) Unless the applicant otherwise agrees, the committee must, for the purposes of considering the application, interview the applicant.

(3) The committee must, within 20 business days after interviewing the applicant or obtaining the agreement of the applicant as referred to in subsection (2):

(a) decide whether the condition to which the application relates should be varied or removed; and

(b) if a condition is to be varied - specify the way in which it is to be varied.

20-60 Committee to report

The committee must give the applicant and ASIC a report setting out:

(a) the committee's decision on the application; and

(b) the committee's reasons for that decision; and

20-65 Committee's decision given effect

If the committee decides that a condition imposed on a registered liquidator is to be varied or removed, the condition is varied or removed in accordance with that decision.

Subdivision D - Renewal

20-70 Application for renewal

(1) An individual may apply to ASIC to have the individual's registration as a liquidator renewed.

(2) The application must be lodged with ASIC in the approved form:

(a) if the Court makes an order under subsection (3) - on or before the time specified in the order; or

(b) otherwise - before the applicant's registration as a liquidator ceases to have effect.

Note: Fees for lodging documents and late lodgement fees may be imposed under the Corporations (Fees) Act 2001.

(3) The Court may, on application, extend the time within which the individual may apply to ASIC to have the individual's registration as a liquidator renewed.

(4) The application for renewal is properly made if subsection (2) is complied with.

20-75 Renewal

Renewal of registration

(1) On application under section 20-70, ASIC must renew the registration of the applicant as a liquidator if:

(a) the application is properly made; and

(b) the applicant has produced evidence in writing to ASIC that the applicant maintains:

(i) adequate and appropriate professional indemnity insurance; and

(ii) adequate and appropriate fidelity insurance;

against the liabilities that the applicant may incur working as a registered liquidator; and

(c) the applicant has complied with any condition dealing with continuing professional education to which the applicant is subject during the applicant's current registration.

(2) ASIC renews the registration of the applicant by entering, or maintaining, on the Register of Liquidators the details relating to the applicant prescribed for the purposes of subsection 15-1(3).

Registration subject to current conditions

(3) The renewed registration is subject to the current conditions imposed on the registered liquidator.

Certificate of registration

(4) After renewing the registration of a person as a liquidator, ASIC must give the person a certificate of registration.

(5) The certificate may be given electronically.

Period of registration

(6) The renewed registration has effect for 3 years, beginning on the day after the person's immediately preceding registration as a liquidator ceased to have effect.

Subdivision E - Offences relating to registration

20-80 False representation that a person is a registered liquidator

A person commits an offence if:

(a) the person makes a representation; and

(b) the representation is that the person is a registered liquidator; and

Penalty: 30 penalty units.

Division 25 - Insurance

25-1 Registered liquidators to maintain insurance

Registered liquidator must maintain insurance

(1) A registered liquidator must maintain:

(a) adequate and appropriate professional indemnity insurance; and

(b) adequate and appropriate fidelity insurance;

against the liabilities that the liquidator may incur working as a registered liquidator.

(2) ASIC may, by legislative instrument, determine what constitutes adequate and appropriate professional indemnity insurance, and adequate and appropriate fidelity insurance, in relation to either or both of the following:

(a) specified circumstances;

(b) one or more specified classes of registered liquidators.

Offence

(3) A person commits an offence if:

(a) the person is subject to a requirement under subsection (1); and

(b) the person intentionally or recklessly fails to comply with the requirement.

Penalty: 1,000 penalty units.

(4) A person commits an offence of strict liability if:

(a) the person is subject to a requirement under subsection (1); and

(b) the person fails to comply with the requirement.

Penalty: 60 penalty units.

Division 30 - Annual liquidator returns

30-1 Annual liquidator returns

Registered liquidator must lodge annual return

(1) A person who is a registered liquidator during all or part of a liquidator return year for the person must, within 1 month after the end of that year, lodge with ASIC a return that conforms with subsection (3).

(2) Each of the following is a liquidator return year for a person who is or was registered as a liquidator under section 20-30:

(a) the period of 12 months beginning on the day on which that registration first began;

(b) each subsequent period of 12 months.

(3) A return under subsection (1) must:

(a) be in the approved form; and

(b) include evidence that the person has, during the whole of any period of the year during which the person was registered as a liquidator, maintained:

(i) adequate and appropriate professional indemnity insurance; and

(ii) adequate and appropriate fidelity insurance;

against the liabilities that the person may incur working as a registered liquidator.

(4) ASIC may, on the application of the registered liquidator made before the end of the period for lodging a return under subsection (1), extend, or further extend, that period.

Offence

(5) A person commits an offence of strict liability if:

(a) the person is subject to a requirement under subsection (1); and

(b) the person fails to comply with the requirement.

Penalty: 5 penalty units.

Division 35 - Notice requirements

35-1 Notice of significant events

Registered liquidator must lodge notice

(1) A registered liquidator must lodge with ASIC a notice, in the approved form, if any of the following events occur:

(a) the liquidator becomes an insolvent under administration;

(b) a bankruptcy notice is issued under the Bankruptcy Act 1966 in relation to the liquidator as debtor, or a corresponding notice is issued in relation to the liquidator as debtor under a law of an external Territory or a law of a foreign country;

(d) the liquidator is disqualified from managing corporations under Part 2D.6 of this Act, or under a law of an external Territory or a law of a foreign country;

(e) the liquidator ceases to have:

(i) adequate and appropriate professional indemnity insurance; or

(ii) adequate and appropriate fidelity insurance;

against the liabilities that the liquidator may incur working as a registered liquidator;

(f) the liquidator is issued with a notice under section 40-40 of Schedule 2 to the Bankruptcy Act 1966 (a show-cause notice) in relation to the liquidator's registration as a trustee under that Act;

(g) the liquidator's registration as a trustee under the Bankruptcy Act 1966 is suspended or cancelled;

(h) any other event prescribed.

The notice must be lodged within 5 business days after the registered liquidator could reasonably be expected to be aware that the event has occurred.

Offence

(2) A person commits an offence if:

(a) the person is subject to a requirement under subsection (1); and

(b) the person intentionally or recklessly fails to comply with the requirement.

Penalty: 100 penalty units.

35-5 Notice of other events

Registered liquidator must lodge notice

(1) A registered liquidator must lodge with ASIC a notice, in the approved form, if any of the following events occur:

(a) information included in an annual liquidator return, an annual administration return or an end of administration return, prepared by or on behalf of the liquidator, is or becomes inaccurate in a material particular;

(b) any other event prescribed.

The notice must be lodged within 10 business days after the registered liquidator could reasonably be expected to be aware that the event has occurred.

Offence

(2) A person commits an offence if:

(a) the person is subject to a requirement under subsection (1); and

(b) the person intentionally or recklessly fails to comply with the requirement.

Penalty: 5 penalty units.

Division 40 - Disciplinary and other action

Subdivision A - Introduction

40-1 Simplified outline of this Division

Remedying failure to lodge documents or give information or documents

ASIC may direct a registered liquidator to comply with a requirement to lodge a document, or give any information or document, to ASIC. If the liquidator fails to comply with the direction, ASIC can direct that the liquidator accept no further appointments or seek an order from the Court directing the liquidator to comply.

Correcting and completing information given to ASIC

If ASIC reasonably suspects that information that a registered liquidator is required to give ASIC is incomplete or inaccurate, ASIC can direct the liquidator to confirm, complete or correct the information. ASIC can also direct the liquidator to tell someone about the defect in the information. If the liquidator fails to comply with a direction, ASIC can direct that the liquidator accept no further appointments or seek an order from the Court directing the liquidator to comply.

Other grounds for a direction not to accept further appointments

There are other grounds on which ASIC can issue a direction not to accept further appointments, for example, if the registered liquidator fails to comply with a direction to convene a meeting.

Suspending or cancelling registration

An individual's registration as a liquidator can be suspended or cancelled.

The registration is automatically cancelled if the registered liquidator becomes an insolvent under administration or dies.

In some circumstances, ASIC can suspend or cancel the registration of a person as a liquidator. ASIC can also give a registered liquidator notice to show-cause why the liquidator should continue to be registered. If ASIC is not satisfied with the answer, ASIC can refer the matter to a committee which will make a decision on what action should be taken.

An industry body can give ASIC notice of possible grounds for disciplinary action.

If a registration is suspended, the liquidator can apply to ASIC to have the suspension lifted or shortened.

A decision about the suspension or cancellation of the registration of a liquidator is reviewable by the Administrative Appeals Tribunal (see Part 9.4A of this Act).

Subdivision B - Direction to comply

40-5 Registered liquidator to remedy failure to lodge documents or give information or documents

Application of this section

(1) This section applies if a registered liquidator fails to comply with a requirement to lodge any document, or give any information or document, that the liquidator is required under this Act to lodge with or give to ASIC.

ASIC may give direction to comply

(2) ASIC may, in writing, direct the liquidator to comply with the requirement within 10 business days after the direction is given.

(3) ASIC may, on the application of a registered liquidator made before the end of the period referred to in subsection (2), extend, or further extend, that period.

Consequences for failing to comply

(4) If the liquidator does not comply within the period, ASIC may do either or both of the following:

(a) give a direction under subsection 40-15(1) (direction not to accept further appointments);

(b) apply to the Court for an order, under subsection 1274(11) (registers), section 45-1 of this Schedule or any other provision that is relevant, directing the liquidator to comply with the requirement within such time as is specified in the order.

Direction is not a legislative instrument

(5) A direction under subsection (2) is not a legislative instrument.

Relationship with other laws

(6) Nothing in this section limits the operation of any other provision of this Act, or any other law, in relation to a person who fails to comply with a requirement to lodge a document with, or give information or a document to, ASIC.

40-10 Registered liquidator to correct inaccuracies etc.

Application of this section

(1) This section applies if ASIC reasonably suspects that any information that a registered liquidator is required under this Act to give to ASIC (whether in a document lodged or given to ASIC or otherwise) is incomplete or incorrect in any particular.

ASIC may give direction to correct information etc.

(2) ASIC may, in writing, direct the liquidator to do one or more of the following within a period of 10 business days after the direction is given:

(a) confirm to ASIC that the information is complete and correct;

(b) complete or correct the information (as the case requires);

(3) ASIC may, on the application of a registered liquidator made before the end of the period referred to in subsection (2), extend, or further extend, that period.

Consequences for failing to comply

(4) If the liquidator does not comply within the period, ASIC may do either or both of the following:

(a) give a direction under subsection 40-15(1) (direction not to accept further appointments);

Direction is not a legislative instrument

(5) A direction under subsection (2) is not a legislative instrument.

Relationship with other laws

(6) Nothing in this section limits the operation of any other provision of this Act, or any other law, in relation to a person giving incomplete or incorrect information.

40-15 Direction not to accept further appointments

ASIC may give direction not to accept further appointments

(1) ASIC may, in writing, direct a registered liquidator not to accept any further appointments under Chapter 5 (external administration), or not to accept any further appointments under Chapter 5 during a period specified in the direction, if:

(a) the liquidator has failed to comply with a direction given to the liquidator under section 40-5 (direction to remedy failure to lodge documents, or give information or documents); or

(b) the liquidator has failed to comply with a direction given to the liquidator under section 40-10 (direction to correct inaccuracies); or

(c) a committee has decided under paragraph 40-55(1)(d) that ASIC should give the direction referred to in that paragraph; or

(d) the liquidator has failed to comply with a direction given to the liquidator under section 70-70 (direction to give relevant material); or

(e) the liquidator has failed to comply with a direction given to the liquidator under subsection 75-20(1) or (2), or subsection 80-27(1) (direction to convene a meeting of creditors or comply with requirements in relation to such a meeting).

Condition of registration to comply with direction

(2) If ASIC gives a direction to a registered liquidator under subsection (1), it is a condition of the liquidator's registration that the liquidator must comply with the direction.

Withdrawal of direction

(3) ASIC may withdraw a direction given under subsection (1).

(4) The condition is removed from the liquidator's registration if ASIC withdraws the direction.

Direction is not a legislative instrument

(5) A direction under subsection (1) is not a legislative instrument.

Relationship with other laws

(6) Nothing in this section limits the operation of any other provision of this Act, or any other law, in relation to:

(a) a person who fails to comply with a requirement to lodge a document with, or give information or a document to, ASIC; or

(b) a person giving incomplete or incorrect information; or

(7) Nothing in this section limits ASIC's power under this Act, or any other law, to apply to the Court for an order in relation to a failure to comply with a direction mentioned in subsection (1).

Subdivision C - Automatic cancellation

40-20 Automatic cancellation

(1) The registration of a person as a liquidator is cancelled if:

(a) the person becomes an insolvent under administration; or

(b) the person dies.

(2) The cancellation takes effect on the day the event mentioned in subsection (1) happens.

Subdivision D - ASIC may suspend or cancel registration

40-25 ASIC may suspend registration

(1) ASIC may suspend the registration of a person as a liquidator if:

(a) the person is disqualified from managing corporations under Part 2D.6 of this Act, or under a law of an external Territory or a law of a foreign country; or

(b) the person ceases to have:

(i) adequate and appropriate professional indemnity insurance; or

(ii) adequate and appropriate fidelity insurance;

against the liabilities that the person may incur working as a registered liquidator; or

(c) the person's registration as a trustee under the Bankruptcy Act 1966 has been cancelled or suspended, other than in compliance with a written request by the person to cancel or suspend the registration; or

(d) if the Court has made an order under section 90-15 that the person repay remuneration - the person has failed to repay the remuneration; or

(e) the person has been convicted of an offence involving fraud or dishonesty; or

(f) the person lodges a request with ASIC in the approved form to have the registration suspended.

(2) Nothing in this section affects the operation of Part VIIC of the Crimes Act 1914.

40-30 ASIC may cancel registration

(1) ASIC may cancel the registration of a person as a liquidator if:

(a) the person is disqualified from managing corporations under Part 2D.6 of this Act, or under a law of an external Territory or a law of a foreign country; or

(b) the person ceases to have:

(i) adequate and appropriate professional indemnity insurance; or

(ii) adequate and appropriate fidelity insurance;

against the liabilities that the person may incur working as a registered liquidator; or

(c) the person's registration as a trustee under the Bankruptcy Act 1966 has been cancelled, other than in compliance with a written request by the person to cancel the registration; or

(d) if the Court has made an order under section 90-15 that the person repay remuneration - the person has failed to repay the remuneration; or

(e) the person has been convicted of an offence involving fraud or dishonesty; or

(f) the person lodges a request with ASIC in the approved form to have the registration cancelled.

(2) Nothing in this section affects the operation of Part VIIC of the Crimes Act 1914.

40-35 Notice of suspension or cancellation

Application of this section

(1) This section applies if ASIC decides under section 40-25 or 40-30 to suspend or cancel the registration of a person as a liquidator.

ASIC must give notice of decision

(2) ASIC must, within 10 business days after making the decision, give the person a written notice setting out the decision, and the reasons for the decision.

When decision comes into effect

(3) The decision comes into effect on the day after the notice is given to the person.

Failure to give notice does not affect validity of decision

(4) A failure by ASIC to give the notice under subsection (2) within 10 business days does not affect the validity of the decision.

Subdivision E - Disciplinary action by committee

40-40 ASIC may give a show-cause notice

(1) ASIC may give a registered liquidator notice in writing asking the liquidator to give ASIC a written explanation why the liquidator should continue to be registered, if ASIC believes that:

(a) the liquidator no longer has the qualifications, experience, knowledge and abilities prescribed under paragraph 20-20(4)(a); or

(b) the liquidator has committed an act of bankruptcy, within the meaning of the Bankruptcy Act 1966 or a corresponding law of an external Territory or a foreign country; or

(c) the liquidator is disqualified from managing corporations under Part 2D.6 of this Act, or under a law of an external Territory or a law of a foreign country; or

(d) the liquidator has ceased to have:

(i) adequate and appropriate professional indemnity insurance; or

(ii) adequate and appropriate fidelity insurance;

against the liabilities that the person may incur working as a registered liquidator; or

(e) the liquidator has breached a current condition imposed on the liquidator; or

(f) the liquidator has contravened a provision of this Act; or

(g) the liquidator has been appointed to act as a reviewing liquidator under Subdivision C of Division 90 of this Schedule, and has failed to properly exercise the powers or perform the duties of a reviewing liquidator; or

(h) the liquidator's registration as a trustee under the Bankruptcy Act 1966 has been cancelled or suspended, other than in compliance with a written request by the liquidator to cancel or suspend the registration; or

(i) if the Court has made an order under section 90-15 that the liquidator repay remuneration - the liquidator has failed to repay the remuneration; or

(j) the liquidator has been convicted of an offence involving fraud or dishonesty; or

(k) the liquidator is permanently or temporarily unable to perform the functions and duties of a liquidator because of physical or mental incapacity; or

(l) the liquidator has failed to carry out adequately and properly (whether in Australia or in an external Territory or in a foreign country):

(i) the duties of a liquidator; or

(ii) any other duties or functions that a registered liquidator is required to carry out under a law of the Commonwealth or of a State or Territory, or the general law; or

(m) the liquidator is not a fit and proper person; or

(n) the liquidator is not resident in Australia or in another prescribed country.

(2) A notice under subsection (1) is not a legislative instrument.

(3) Nothing in this section affects the operation of Part VIIC of the Crimes Act 1914.

40-45 ASIC may convene a committee

(1) ASIC may convene a committee to make a decision of a kind mentioned in section 40-55 in relation to a registered liquidator, or registered liquidators.

(2) The committee must consist of:

(a) ASIC; and

(b) a registered liquidator chosen by a prescribed body; and

Note 1: Section 50-5 sets out the knowledge and experience that a prescribed body must be satisfied a person has before making an appointment under paragraph (2)(b).

Note 2: Section 50-10 sets out the matters of which the Minister must be satisfied before making an appointment under paragraph (2)(c).

40-50 ASIC may refer matters to the committee

ASIC may refer a registered liquidator to a committee convened under section 40-45 if ASIC:

(a) gives the liquidator a notice under section 40-40 (a show-cause notice); and

(b) either:

(i) does not receive an explanation within 20 business days after the notice is given; or

(ii) is not satisfied by the explanation.

40-55 Decision of the committee

(1) If a registered liquidator is referred to a committee under section 40-50, the committee must decide one or more of the following:

(a) that the liquidator should continue to be registered;

(b) that the liquidator's registration should be suspended for a period, or until the occurrence of an event,specified in the decision;

(d) that ASIC should direct the liquidator not to accept any further appointments as liquidator, or not to accept any further appointments as liquidator during the period specified in the decision;

(e) that the liquidator should be publicly admonished or reprimanded;

(f) that a condition specified in the decision should be imposed on the liquidator;

(g) that a condition should be imposed on all other registered liquidators that they must not allow the liquidator to carry out any of the functions or duties, or exercise any of the powers, of a registered liquidator on their behalf (whether as employee, agent, consultant or otherwise) for a period specified in the decision of no more than 10 years;

(h) that ASIC should publish specified information in relation to the committee's decision and the reasons for that decision.

(2) Without limiting paragraph (1)(f), conditions imposed under that paragraph may include one or more of the following:

(a) a condition that the liquidator engage in, or refrain from engaging in, specified conduct;

(b) a condition that the liquidator engage in, or refrain from engaging in, specified conduct except in specified circumstances;

(d) a condition that the liquidator notify a specified person or class of persons of specified information;

(e) a condition that the liquidator publish a specified statement;

(f) a condition that the liquidator make a specified statement to a specified person or class of persons.

(3) In making its decision, the committee may have regard to:

(a) any information provided to the committee by ASIC; and

(b) any explanation given by the liquidator; and

(d) if the liquidator is or was also a registered trustee under the Bankruptcy Act 1966 - any information in relation to the liquidator given to the committee by the Inspector-General in Bankruptcy or a committee convened under the Insolvency Practice Schedule (Bankruptcy); and

(e) any other matter that the committee considers relevant.

40-60 Committee to report

The committee must give the registered liquidator and ASIC a report setting out:

(a) the committee's decision in relation to the liquidator; and

(b) the committee's reasons for that decision; and

(c) if the committee decides under paragraph 40-55(1)(f) that the liquidator should be registered subject to a condition:

(i) the condition; and

(ii) the committee's reasons for imposing the condition; and

(d) if the committee decides under paragraph 40-55(1)(g) that a condition should be imposed on all other registered liquidators in relation to the liquidator:

(i) the condition; and

(ii) the committee's reasons for imposing the condition.

40-65 ASIC must give effect to the committee's decision

ASIC must give effect to the committee's decision.

Subdivision F - Lifting or shortening suspension

40-70 Application to lift or shorten suspension

Application of this section

(1) This section applies if a person's registration as a liquidator has been suspended.

Suspended liquidator may apply to ASIC

(2) The person may apply to ASIC:

(a) for the suspension to be lifted; or

(b) for the period of the suspension to be shortened.

(3) The application must be lodged with ASIC in the approved form.

(4) The application is properly made if subsection (3) is complied with.

40-75 ASIC may convene a committee to consider applications

(1) ASIC may convene a committee for the purposes of considering an application, or applications, made under section 40-70.

(2) The committee must consist of:

(a) ASIC; and

(b) a registered liquidator chosen by a prescribed body; and

Note 1: Section 50-5 sets out the knowledge and experience that a prescribed body must be satisfied a person has before making an appointment under paragraph (2)(b).

Note 2: Section 50-10 sets out the matters of which the Minister must be satisfied before making an appointment under paragraph (2)(c).

40-80 ASIC must refer applications to a committee

(1) ASIC must refer an application that is properly made under section 40-70 to acommittee convened under section 40-75 for consideration.

(2) ASIC must do so within 2 months after receiving the application.

40-85 Committee to consider applications

(1) If an application is referred to a committee, the committee must consider the application.

(2) Unless the applicant otherwise agrees, the committee must interview the applicant for the purposes of considering the application.

(3) Within 10 business days after interviewing the applicant or obtaining the agreement of the applicant as referred to in subsection (2), the committee must:

(a) decide whether the suspension should be lifted, or the period of the suspension shortened; and

(b) if the period of the suspension is to be shortened - specify when the suspension is to end.

40-90 Committee to report

The committee must give the applicant and ASIC a report setting out:

(a) the committee's decision on the application; and

(b) the committee's reasons for that decision; and

40-95 Committee's decision given effect

If the committee decides that a suspension is to be lifted or shortened, the suspension is lifted or shortened in accordance with the decision.

Subdivision G - Action initiated by industry body

40-100 Notice by industry bodies of possible grounds for disciplinary action

Industry body may lodge notice

(1) An industry body may lodge with ASIC a notice in the approved form (an industry notice ):

(a) stating that the body reasonably suspects that there are grounds for ASIC:

(i) to suspend the registration of a registered liquidator under section 40-25; or

(ii) to cancel the registration of a registered liquidator under section 40-30; or

(iii) to give a registered liquidator a notice under section 40-40 (a show-cause notice); or

(iv) to impose a condition on a registered liquidator under another provision of this Schedule; and

(b) identifying the registered liquidator; and

ASIC must consider information and documents

(2) ASIC must consider the information and the copies of any documents included with the industry notice.

ASIC must give notice if no action to be taken

(3) If, after such consideration, ASIC decides to take no action in relation to the matters raised by the industry notice, ASIC must give the industry body written notice of that fact.

45 business days to consider and decide

(4) The consideration of the information and the copies of any documents included with the industry notice must be completed and, if ASIC decides to take no action, a notice under subsection (3) given, within 45 business days after the industry notice is lodged.

ASIC not precluded from taking action

(5) ASIC is not precluded from:

(a) suspending the registration of a registered liquidator under section 40-25; or

(b) cancelling the registration of a registered liquidator under section 40-30; or

(d) imposing a condition on a registered liquidator under another provision of this Schedule;

wholly or partly on the basis of information or a copy of a document included with the industry notice, merely because ASIC has given a notice under subsection (3) in relation to the matters raised by the industry notice.

Notice to industry body if ASIC takes action

(6) If ASIC does take action of the kind mentioned in subsection (5) wholly or partly on the basis of information or a copy of a document included with the industry notice, ASIC must give the industry body notice of that fact.

Notices are not legislative instruments

(7) A notice under subsection (3) or (6) is not a legislative instrument.

40-105 No liability for notice given in good faith etc.

(1) An industry body is not liable civilly, criminally or under any administrative process for giving a notice under subsection 40-100(1) if:

(a) the body acted in good faith in giving the notice; and

(b) the suspicion that is the subject of the notice is a reasonable suspicion.

(2) A person who, in good faith, makes a decision as a result of which the industry body gives a notice under subsection 40-100(1) is not liable civilly, criminally or under any administrative process for making the decision.

(3) A person who, in good faith, gives information or a document to an industry body that is included, or a copy of which is included, in a notice under subsection 40-100(1) is not liable civilly, criminally or under any administrative process for giving the information or document.

40-110 Meaning of industry bodies

The Insolvency Practice Rules may prescribe industry bodies for the purposes of this section.

Subdivision H - Consequences of certain disciplinary and other action

40-111 Appointment of another liquidator if liquidator's registration is suspended or cancelled

(1) If:

(a) the registration of a liquidator is suspended or cancelled under this Division; and

(b) the liquidator is conducting the external administration of a company at the time the registration is suspended or cancelled;

ASIC may, in writing, appoint another registered liquidator to conduct the external administration of the company.

(2) If:

(a) a liquidator fails to renew his or her registration as a liquidator before that registration ceases to have effect; and

(b) no order has been made by the Court under subsection 20-70(3) extending the period during which the liquidator may apply for renewal; and

(c) the liquidator is conducting the external administration of a company at the time his or her registration as a liquidator ceases to have effect;

ASIC may, in writing, appoint another registered liquidator to conduct the external administration of the company.

(3) Subsections (1) and (2) do not apply to:

(a) a liquidator appointed by the Court; or

(b) a winding up ordered by ASIC under section 489EA; or

Note: For court-appointed liquidators, see section 473A. For a winding up ordered by ASIC, see section 489EA. For a members' voluntary winding up, see section 495.

(4) An appointment of a registered liquidator by ASIC under subsection (1) must not be made without the written consent of the liquidator.

Division 45 - Court oversight of registered liquidators

45-1 Court may make orders in relation to registered liquidators

(1) The Court may make such orders as it thinks fit in relation to a registered liquidator.

(2) The Court may exercise the power under subsection (1):

(a) on its own initiative, during proceedings before the Court; or

(b) on application under subsection (3).

(3) Each of the following persons may apply for an order under subsection (1):

(a) the registered liquidator;

(b) ASIC.

(4) Without limiting the matters which the Court may take into account when making orders, the Court may take into account:

(a) whether the registered liquidator has faithfully performed, or is faithfully performing, the registered liquidator's duties; and

(b) whether an action or failure to act by the registered liquidator is in compliance with this Act and the Insolvency Practice Rules; and

(d) whether any person has suffered, or is likely to suffer, loss or damage because of an action or failure to act by the registered liquidator; and

(e) the seriousness of the consequences of any action or failure to act by the registered liquidator, including the effect of that action or failure to act on public confidence in registered liquidators as a group.

(5) This section does not limit the Court's powers under any other provision of this Act, or under any other law.

45-5 Court may make orders about costs

(1) Without limiting section 45-1, the Court may make orders in relation to a registered liquidator that deal with the costs of a matter considered by the Court.

(2) Those orders may include an order that:

(a) the registered liquidator is personally liable for some or all of those costs; and

(b) the registered liquidator is not entitled to be reimbursed by a company or its creditors in relation to some or all of those costs.

(3) This section does not limit the Court's powers under any other provision of this Act, or under any other law.

Division 50 - Committees under this Part

50-1 Simplified outline of this Division

This Division sets out common rules for committees established under this Part.

If a prescribed body appoints a person to a committee, that person must have the prescribed knowledge or experience or, if no knowledge or experience is prescribed, the knowledge and experience necessary to carry out the functions to be performed. If the Minister appoints a person to a committee, that person must have knowledge or experience in a field such as business, law (including the law of corporate insolvency) or public policy relating to corporate insolvency.

A single committee may consider more than one matter. The consideration of a matter is not affected by a change in the membership of the committee. A matter may be adjourned or transferred to another committee. The Insolvency Practice Rules may prescribe procedures and make other rules for committees.

The use and disclosure of information given to a committee is restricted to listed purposes.

50-5 Prescribed body appointing a person to a committee

Application of this section

(1) This section applies if a prescribed body is to appoint a person to a committee under this Part.

Prescribed body must only appoint a person with appropriate knowledge and experience

(2) The prescribed body is to appoint a person as a member of the committee only if the prescribed body is satisfied that the person has:

(a) if any knowledge or experience is prescribed in relation to appointments of the kind to be made - that knowledge or experience; or

(b) if no knowledge or experience is prescribed in relation to appointments of the kind to be made - the knowledge and experience necessary to carry out the person's functions as a member of the committee if appointed.

50-10 Minister appointing a person to a committee

Application of this section

(1) This section applies if the Minister is to appoint a person to a committee under any of the following paragraphs:

(a) paragraph 20-10(2)(c);

(b) paragraph 20-45(2)(c);

(d) paragraph 40-75(2)(c).

Matters of which the Minister must be satisfied before appointing

(2) The Minister is to appoint a person as a member of the committee only if the Minister is satisfied that the person is qualified for appointment by virtue of his or her knowledge of, or experience in, one or more of the following fields:

(a) business;

(b) law, including the law relating to corporate insolvency;

(d) accounting;

(e) public policy relating to corporate insolvency;

(f) administration of companies, including insolvent companies.

Minister must not appoint member or staff member of ASIC

(3) The Minister must not appoint:

(a) a member of ASIC (within the meaning of section 9 of the Australian Securities and Investments Commission Act 2001); or

(b) a staff member of ASIC;

to be a member of the committee.

Delegation of power to appoint

(4) The Minister may, in writing, delegate the Minister's powers to appoint a person to a committee to:

(a) ASIC; or

(b) a member of ASIC (within the meaning of section 9 of the Australian Securities and Investments Commission Act 2001); or

(i) is an SES employee or acting SES employee; or

(ii) is an APS employee who holds, or is acting in, an Executive Level 2 position; or

(iii) holds, or is acting in, an office or position that is equivalent to an SES employee, or an Executive Level 2.

(5) In exercising powers under a delegation, the delegate must comply with any directions of the Minister.

50-15 Single committee may consider more than one matter

A single committee may be convened under this Part to consider one or more of the following:

(a) a matter or matters relating to one applicant for registration as a liquidator;

(b) a matter or matters relating to more than one applicant for registration as a liquidator;

(d) a matter or matters relating to more than one registered liquidator.

50-20 Ongoing consideration of matters by committee

If a committee is convened under this Part to consider a matter:

(a) the committee's powers, functions and duties in relation to the matter are not affected by a change in the membership of the committee; and

(b) the committee may adjourn its consideration of the matter, and may do so more than once; and

(c) the matter may be transferred to another committee with powers, functions and duties under this Part in relation to matters of that kind.

50-25 Procedure and other rules relating to committees

The Insolvency Practice Rules may provide for and in relation to:

(a) the manner in which the committees convened under this Part are to perform their functions, including:

(i) meetings of committees; and

(ii) the number of committee members required to constitute a quorum; and

(iii) disclosure of interests in a matter before a committee; and

(iv) the manner in which questions are to be decided by the committee; and

(b) the reconstitution of a committee; and

50-30 Remuneration of committee members

(1) A member of a committee convened under this Part is entitled to receive the remuneration that is determined by the Remuneration Tribunal. If no determination of that remuneration by the Tribunal is in operation, the member is entitled to receive such remuneration as the Minister determines in writing.

(2) A member is entitled to receive such allowances as the Minister determines in writing.

(3) This section has effect subject to the Remuneration Tribunal Act 1973.

50-35 Committee must only use information etc. for purposes for which disclosed

Offence

(1) A person commits an offence if:

(a) the person is or was a member of a committee convened under this Part; and

(b) information or a document is or was disclosed to the person for the purposes of exercising powers or performing functions as a member of the committee; and

Penalty: 50 penalty units.

Exception - information or document disclosed to the Inspector-General in Bankruptcy or another committee etc.

(2) Subsection (1) does not apply if the information or document:

(a) is used or disclosed by the person for the purposes of exercising powers or performing functions as a member of the committee mentioned in subsection (1); or

(b) is disclosed:

(i) to the Inspector-General in Bankruptcy to assist the Inspector-General to exercise his or her powers or perform his or her functions under the Bankruptcy Act 1966; or

(ii) to a committee convened under Part 2 of the Insolvency Practice Schedule (Bankruptcy)to assist the committee to exercise its powers or perform its functions under that Part; or

(iii) to another committee convened under this Part to assist the committee to exercise its powers or perform its functions under this Part; or

(iv) to enable or assist a body prescribed for the purposes of this paragraph to perform its disciplinary function in relation to its members; or

(v) in order to enable or assist an authority or person in a State or Territory, or a foreign country, to perform or exercise a function or power that corresponds, or is analogous, to any of the committee's or ASIC's functions and powers; or

(vi) to a court or tribunal in relation to proceedings before the court or tribunal.

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

Part 3 - General rules relating to external administrations

Division 55 - Introduction

55-1 Simplified outline of this Part

This Part sets out requirements for conducting the external administration of a company.

The main provisions deal with:

(a) the remuneration of the external administrator; and

(b) the duties of the external administrator in handling the money and other property of the company; and

(d) the duties of the external administrator to keep appropriate records, to report to ASIC and to give information, documents and reports to creditors, members of the company and others; and

(e) creditor and company meetings; and

(f) the creation and conduct of a committee to monitor the external administration (called a committee of inspection); and

(g) the rights of creditors to review the external administration; and

(h) the rights of creditors to remove the external administrator and appoint another; and

(i) the review of the external administration by the Court.

There are additional rules that apply to companies under external administration in Chapter 5 (for example, about appointment of external administrators) of this Act.

Companies in receivership are not covered in this Part (see generally Part 5.2 of this Act).

Division 60 - Remuneration and other benefits received by external administrators

Subdivision A - Introduction

60-1 Simplified outline of this Division

Remuneration

The external administrator of a company is entitled to receive remuneration for necessary work properly performed by the external administrator in relation to the external administration.

The amount of remuneration will usually be set under a remuneration determination. Remuneration determinations are made by:

(a) in a members voluntary winding up - the members; and

(b) in most other cases - the creditors or the committee of inspection (if there is one).

However, if there is no remuneration determination, the external administrator will be entitled to receive a reasonable amount for the work. The maximum amount that the external administrator may receive in this way is $5,000 (exclusive of GST and indexed).

The remuneration of provisional liquidators is, in most cases, determined by the Court.

The Court may review the remuneration of the external administrator of a company and may also make orders under Division 90 about remuneration (including ordering repayment of remuneration).

Other benefits

The external administrator of a company must not:

(a) employ a related entity, unless certain requirements are met;

(b) purchase any assets of the company; or

Subdivision B - Remuneration of external administrators - general rules

60-2 Application of this Subdivision

This Subdivision applies in relation to an external administrator of a company other than:

(a) a provisional liquidator; or

(b) a liquidator appointed by ASIC under section 489EC (winding up by ASIC).

Note: For the remuneration of provisional liquidators, see Subdivision C of this Division. For the remuneration of liquidators appointed by ASIC under section 489EC, see Subdivision D of this Division.

60-5 External administrator's remuneration

Remuneration in accordance with remuneration determinations

(1) An external administrator of a company is entitled to receive remuneration for necessary work properly performed by the external administrator in relation to the external administration, in accordance with the remuneration determinations (if any) for the external administrator (see section 60-10).

Remuneration for external administrators if no remuneration determination made

(2) If no remuneration determination is made in relation to necessary work properly performed by the external administrator of a company in relation to the external administration, the administrator is entitled to receive reasonable remuneration for the work. However, that remuneration must not exceed the maximum default amount.

60-10 Remuneration determinations

Remuneration determinations

(1) A determination, specifying remuneration that an external administrator of a company (other than an external administrator in a members' voluntary winding up) is entitled to receive for necessary work properly performed by the external administrator in relation to the external administration, may be made:

(a) by resolution of the creditors; or

(b) if there is a committee of inspection and a determination is not made under paragraph (a) - by the committee of inspection; or

Note: For determinations made by the Court, see also section 60-12 (matters to which the Court must have regard).

(2) A determination, specifying remuneration that an external administrator of a company in a members' voluntary winding up is entitled to receive for necessary work properly performed by the external administrator in relation to the external administration, may be made:

(a) by resolution of the company at a general meeting; or

(b) if a determination is not made under paragraph (a) - by the Court.

Note: For determinations made by the Court, see also section 60-12 (matters to which the Court must have regard).

(3) A determination under this section may specify remuneration that the external administrator is entitled to receive in either or both of the following ways:

(a) by specifying an amount of remuneration;

(b) by specifying a method for working out an amount of remuneration.

Remuneration on a time-cost basis

(4) If a determination under this section specifies that the external administrator is entitled to receive remuneration worked out wholly or partly on a time-cost basis, the determination must include a cap on the amount of remuneration worked out on a time-cost basis that the external administrator is entitled to receive.

More than one remuneration determination may be made

(5) To avoid doubt, more than one determination under this section may be made in relation to a particular external administrator of a company and a particular external administration of a company.

60-11 Review of remuneration determinations

Review on application

(1) Any of the following may apply to the Court for a review of a remuneration determination for an external administrator of a company:

(a) ASIC;

(b) a person with a financial interest in the external administration of the company;

(2) Paragraph (1)(c) has effect despite section 198G.

Note: Section 198G deals with powers of officers etc. while a company is under external administration.

(3) On application under subsection (1), the Court may, if it considers it appropriate to do so, review the remuneration determination.

Note: See also section 60-12 (matters to which the Court must have regard).

Court must affirm, vary or set aside remuneration determination

(4) After reviewing the remuneration determination, the Court must:

(a) affirm the remuneration determination; or

(b) vary the remuneration determination; or

Exception

(5) Subsection (1) does not apply to a remuneration determination made by the Court.

60-12 Matters to which the Court must have regard

In making a remuneration determination under paragraph 60-10(1)(c) or (2)(b), or reviewing a remuneration determination under section 60-11, the Court must have regard to whether the remuneration is reasonable, taking into account any or all of the following matters:

(a) the extent to which the work by the external administrator was necessary and properly performed;

(b) the extent to which the work likely to be performed by the external administrator is likely to be necessary and properly performed;

(d) the quality of the work performed, or likely to be performed, by the external administrator;

(e) the complexity (or otherwise) of the work performed, or likely to be performed, by the external administrator;

(f) the extent (if any) to which the external administrator was, or is likely to be, required to deal with extraordinary issues;

(g) the extent (if any) to which the external administrator was, or is likely to be, required to accept a higher level of risk or responsibility than is usually the case;

(h) the value and nature of any property dealt with, or likely to be dealt with, by the external administrator;

(i) the number, attributes and conduct, or the likely number, attributes and conduct, of the creditors;

(j) if the remuneration is worked out wholly or partly on a time-cost basis - the time properly taken, or likely to be properly taken, by the external administrator in performing the work;

(k) whether the external administrator was, or is likely to be, required to deal with one or more controllers, or one or more managing controllers;

(l) if:

(i) a review has been carried out under Subdivision C of Division 90 (review by another registered liquidator) into a matter that relates to the external administration; and

(ii) the matter is, or includes, remuneration of the external administrator;

the contents of the report on the review that relate to that matter;

(m) any other relevant matters.

60-15 Maximum default amount

Maximum default amount

(1) The maximum default amount for an external administrator of a company is an amount (exclusive of GST) worked out as follows:

(a) if the external administrator is appointed in relation to the external administration of the company during the financial year beginning on 1 July 2016 - $5,000;

(b) if the external administrator is appointed in relation to the external administration of the company during a financial year beginning on or after 1 July 2017 - the greater of:

(i) the amount worked out by multiplying the indexation factor for the financial year (worked out under subsections (3) and (4)) by the maximum default amount for an external administrator appointed during the previous financial year; and

(ii) the amount (if any) prescribed for the purposes of this subparagraph.

Rounding

(2) Amounts worked out under subsection (1) must be rounded to the nearest whole dollar (rounding 50 cents upwards).

Indexation factor

(3) Subject to subsection (4), the indexation factor for a financial year is the number worked out by dividing the index number for the March quarter immediately preceding that financial year by the index number for the March quarter immediately preceding that first-mentioned March quarter.

(4) If an indexation factor worked out under subsection (3) would be less than 1, the indexation factor is to be increased to 1.

Changes to CPI index reference period and publication of substituted index numbers

(5) In working out the indexation factor:

(a) use only the index numbers published in terms of the most recently published index reference period for the Consumer Price Index; and

(b) disregard index numbers published in substitution for previously published index numbers (except where the substituted numbers are published to take account of changes in the index reference period).

Definition - index number

(6) In this section:

index number , in relation to a quarter, means the All Groups Consumer Price Index number, being the weighted average of the 8 capital cities, published by the Australian Statistician in respect of that quarter.

Subdivision C - Remuneration of provisional liquidators

60-16 Remuneration of provisional liquidators

(1) A provisional liquidator is entitled to receive such remuneration, by way of percentage or otherwise, as is:

(a) determined by the Court; or

(b) if:

(i) no determination by the Court is in force; and

(ii) there is a committee of inspection;

determined by agreement between the liquidator and the committee of inspection; or

(i) no determination by the Court is in force; and

(ii) there is no committee of inspection or the liquidator and the committee of inspection fail to agree;

determined by resolution of the creditors.

(2) Sections 60-11 and 60-12 (Court review) apply in relation to a determination mentioned in this section in the same way as they apply to a remuneration determination made under section 60-10.

Subdivision D - Remuneration of liquidators in winding up by ASIC

60-17 Remuneration of liquidators in winding up by ASIC

If ASIC orders under section 489EA that a company be wound up, ASIC may determine the remuneration that the liquidator is entitled to receive.

Subdivision E - Duties of external administrators relating to remuneration and benefits etc.

60-20 External administrator must not derive profit or advantage from the administration of the company

Deriving profit or advantage from the company

(1) An external administrator of a company must not directly or indirectly derive any profit or advantage from the external administration of the company.

Circumstances in which profit or advantage is taken to be derived

(2) To avoid doubt, an external administrator of a company is taken to derive a profit or advantage from the external administration of the company if:

(a) the external administrator directly or indirectly derives a profit or advantage from a transaction (including a sale or purchase) entered into for or on account of the company; or

(b) the external administrator directly or indirectly derives a profit or advantage from a creditor or member of the company; or

(c) a related entity of the external administrator directly or indirectly derives a profit or advantage from the external administration of the company.

Exceptions

(3) Subsection (1) does not apply to the extent that:

(a) another provision of this Act, or of another law, requires or permits the external administrator to derive the profit or advantage; or

(b) the Court gives leave to the external administrator to derive the profit or advantage.

Note: Subsection (1) would not, for example, prevent the external administrator from recovering remuneration for necessary work properly performed by the external administrator in relation to the external administration of the company, as the external administrator is permitted to do so under other provisions of this Act.

(4) Despite paragraph (2)(c), subsection (1) does not apply to the extent that:

(a) the profit or advantage arises because the external administrator employs or engages a person to provide services in connection with the external administration of the company; and

(b) the person is a related entity of the external administrator; and

(i) the external administrator does not know, and could not reasonably be expected to know, that the person employed or engaged is a related entity of the external administrator;

(ii) the creditors, by resolution, agree to the related entity being employed or engaged;

(iii) it is not reasonably practicable in all the circumstances to obtain the agreement, by resolution, of the creditors to the related entity being employed or engaged and the cost of employing the related entity is reasonable in all the circumstances.

(5) Subsection (1) does not apply to the extent that the profit or advantage is a payment that:

(a) is made to the external administrator by or on behalf of the Commonwealth or an agency or authority of the Commonwealth; and

(b) is of a kind prescribed.

Offence

(6) A person commits an offence of strict liability if:

(a) the person is subject to a requirement under subsection (1); and

(b) the person fails to comply with the requirement.

Penalty: 50 penalty units.

Note: A defendant bears an evidential burden in relation to the matters in subsections (3), (4) and (5) (see subsection 13.3(3) of the Criminal Code).

Effect of contravention of this section

(7) A transaction or any other arrangement entered into in contravention of this section may be set aside by the Court.

Division 65 - Funds handling

65-1 Simplified outline of this Division

The external administrator of a company has duties to:

(a) promptly pay all company money into an account (called an administration account); and

(b) promptly deposit instruments such as securities with a bank; and

(d) only pay money out of the account if it is for a legitimate purpose.

The external administrator of a company may keep a single account for a group of related companies (called a pooled group).

People with a financial interest in the external administration of a company (such as creditors) may ask the Court to give directions to the external administrator about the way money and other property of the company is to be handled.

If the external administrator of a company does not comply with this Division, the external administrator may have to pay penalties, be paid less remuneration or be removed as external administrator.

65-5 External administrator must pay all money into an administration account

External administrator must pay money into the administration account

(1) The external administrator of a company must pay all money received by the external administrator on behalf of, or in relation to, the company into an administration account for the company within 5 business days after receipt.

Exception

(2) If the Court gives a direction that is inconsistent with subsection (1), that subsection does not apply to the extent of the inconsistency.

Offence

(3) A person commits an offence of strict liability if:

(a) the person is subject to a requirement under subsection (1); and

(b) the person fails to comply with the requirement.

Penalty: 50 penalty units.

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

65-10 Administration accounts

(1) A bank account is an administration account for a company if:

(a) the account is maintained in relation to the external administration of the company; and

(b) if any requirements are prescribed in relation to the administration accounts of companies under external administration, the account complies with those requirements.

(2) A bank account is an administration account for a member of a pooled group of companies if:

(a) the account is maintained in relation to the external administration of the pooled group of companies; and

(b) if any requirements are prescribed in relation to the administration accounts of companies under external administration, the account complies with those requirements.

65-15 External administrator must not pay other money into the administration account

External administrator must not pay other money into the administration account

(1) The external administrator of a company must not pay any money into an administration account for the company if it is not received by the external administrator on behalf of, or in relation to:

(a) the company; or

(b) if the company is a member of a pooled group - another member of the pooled group.

Exception

(2) If the Court gives a direction that is inconsistent with subsection (1), that subsection does not apply to the extent of the inconsistency.

Offence

(3) A person commits an offence of strict liability if:

(a) the person is subject to the requirement under subsection (1); and

(b) the person fails to comply with the requirement.

Penalty: 50 penalty units.

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

65-20 Consequences for failure to pay money into administration account

Application of this section

(1) This section applies if:

(a) an external administrator of a company:

(i) is subject to a requirement under subsection 65-5(1) (paying money into administration account); and

(ii) fails to comply with the requirement in relation to an amount of money; and

(b) the amount exceeds:

(i) $50; or

(ii) if another amount is prescribed - that other amount.

Exception

(2) Subsection (1) does not apply if, on the application of the external administrator of the company, the Court is satisfied that the external administrator had sufficient reason for failing to comply with the requirement in relation to the amount.

External administrator must pay penalty on excess

(3) The external administrator must, as a penalty, pay interest to the Commonwealth on the excess, worked out:

(a) at the rate of 20% per year; or

(b) if another rate is prescribed - at that other rate;

for the period during which the external administrator fails to comply with the requirement.

(4) The external administrator is personally liable for, and is not entitled to be reimbursed out of the property of the company in relation to, the payment of that interest.

65-25 Paying money out of administration account

Money only to be paid out of administration account in accordance with this Act etc.

(1) An external administrator of a company must not pay any money out of the administration account for the company otherwise than:

(a) for purposes related to the external administration of the company; or

(b) in accordance with this Act; or

Offence

(2) A person commits an offence of strict liability if:

(a) the person is subject to a requirement under subsection (1); and

(b) the person fails to comply with the requirement.

Penalty: 50 penalty units.

65-40 Handling securities

Securities must be deposited with administration account bank

(1) An external administrator of a company must deposit in a bank:

(a) the negotiable instruments; and

(b) any other securities;

payable to the company or the external administrator as soon as practicable after they are received by the external administrator.

Exception

(2) If the Court gives a direction that is inconsistent with subsection (1), that subsection does not apply to the extent of the inconsistency.

Offence

(3) A person commits an offence of strict liability if:

(a) the person is subject to a requirement under subsection (1); and

(b) the person fails to comply with the requirement.

Penalty: 5 penalty units.

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

Delivery of securities

(4) The negotiable instruments or other security must be delivered out on the signed request of the external administrator.

65-45 Handling of money and securities - Court directions

(1) The Court may, on application, give directions regarding the payment, deposit or custody of:

(a) money; and

(b) negotiable instruments and other securities;

that are payable to, or held by, an external administrator of a company.

(2) The Court may, on application, give directions authorising the external administrator of a company to make payments into and out of a special bank account.

(3) Without limiting subsection (2), the Court may:

(a) authorise the payments for the time and on the terms it thinks fit; and

(b) if the Court thinks the account is no longer required - at any time order it to be closed.

(4) A copy of an order under paragraph (3)(b) must be served by the external administrator on the bank with which the special bank account was opened.

(5) An application under this section may be made by:

(a) any person with a financial interest in the external administration of the company; or

(b) an officer of the company.

(6) Paragraph (5)(b) has effect despite section 198G.

Note: Section 198G deals with powers of officers etc. while a company is under external administration.

65-50 Rules in relation to consequences for failure to comply with this Division

The Insolvency Practice Rules may provide for and in relation to:

(a) the payment by an external administrator of a company of interest at such rate, on such amount and in respect of such period as is prescribed; and

(b) disallowance of all or of such part as is prescribed of the remuneration of an external administrator of a company; and

(d) the payment by an external administrator of a company of any expenses occasioned by reason of his or her default;

in cases where an external administrator contravenes or fails to comply with this Division (including Insolvency Practice Rules made under this Division).

Division 70 - Information

Subdivision A - Introduction

70-1 Simplified outline of this Division

The external administrator of a company must:

(a) give annual reports of the administration (called annual administrative returns) to ASIC; and

(b) give a report of the administration to ASIC when the administration ends; and

(d) allow those books to be audited if required to do so; and

(e) allow access to those books by creditors; and

(f) give creditors, members and others requested information, documents and reports relating to the administration.

The committee of inspection (if there is one) may also request information, documents and reports from the external administrator under Division 80.

If the external administrator does not comply with a request, ASIC may direct the external administrator to do so. If the external administrator does not comply with the direction, ASIC may ask the Court to order compliance. Alternatively, the person who requested the information may ask the Court to order compliance with the request.

Subdivision B - Administration returns

70-5 Annual administration return

Application of this section

(1) This section applies if a person is the external administrator of a company during all or part of an administration return year for the external administrator for the company.

(2) However, this section does not apply if:

(a) the external administration of the company ends during the administration return year; and

(b) the person is the external administrator of the company when the external administration of the company ends.

Note: If a person is the external administrator of a company when the external administration of the company ends, the person must instead lodge a return under section 70-6.

Annual administration return to be lodged

(3) The person must lodge a return in relation to the external administration of the company by the person during the year or part of the year (as the case requires).

(4) The return must:

(a) be in the approved form; and

(b) be lodged with ASIC within 3 months after the end of the year.

Note: Fees for lodging documents and late lodgement fees may be imposed under the Corporations (Fees) Act 2001.

Meaning of administration return year

(5) Each of the following is an administration return year for an external administrator for a company:

(a) the period of 12 months beginning on the day on which the person first began to be an external administrator of the company;

(b) each subsequent period of 12 months.

Notice of lodgement to be given

(6) The person must give notice that the return has been lodged:

(a) in a members' voluntary winding up - to the members of the company; and

(b) in a creditors' voluntary winding up - to the creditors; and

(d) if the external administrator is appointed as a provisional liquidator - to the Court; and

(e) if the company is under administration or has executed a deed of company arrangement - to the company;

when next forwarding any report, notice of meeting, notice of call or dividend.

Note: For notification, see section 600G.

Returns for pooled groups

(7) If 2 or more companies are members of a pooled group, then the returns under subsection (3) for those companies may be set out in the same document.

70-6 End of administration return

Application of this section

(1) This section applies if the external administration of a company ends.

End of administration return to be lodged

(2) The person who is the external administrator of the company when the external administration of the company ends (the last external administrator ) must lodge a return in relation to the external administration of the company.

(3) The return must:

(a) be in the approved form; and

(b) be lodged with ASIC within 1 month after the end of the external administration of the company.

Note 1: Fees for lodging documents and late lodgement fees may be imposed under the Corporations (Fees) Act 2001.

Note 2: ASIC must deregister the company 3 months after the end of administration return is lodged (see section 509).

Notice of lodgement to be given

(4) The last external administrator must give notice that the return has been lodged to a person mentioned in subsection (6), if that person requests in writing that the last external administrator give the person such a notice.

Note: For notification, see section 600G.

(5) The persons who may request such a notice are:

(a) in a members' voluntary winding up - the members of the company; and

(b) in a creditors' voluntary winding up - the creditors; and

(d) if the external administrator is appointed as a provisional liquidator - the Court; and

(e) if the company is under administration or has executed a deed of company arrangement - the company.

Note: For notification, see section 600G.

Returns for pooled groups

(6) If 2 or more companies are members of a pooled group, then the returns under subsection (2) for those companies may be set out in the same document.

Subdivision C - Record-keeping

70-10 Administration books

External administrator must keep proper books

(1) An external administrator of a company mustkeep proper books in which the external administrator must cause to be made:

(a) entries or minutes of proceedings at meetings relating to the external administration of the company; and

(b) such other entries as are necessary to give a complete and correct record of the external administrator's administration of the company's affairs.

(2) The external administrator must:

(a) ensure that the books are available at the external administrator's office for inspection; and

(b) permit a creditor or contributory, or another person acting on the creditor's or contributory's behalf, to inspect the books at all reasonable times.

Exception

(3) Subsections (1) and (2) do not apply if the external administrator has a reasonable excuse.

Offence

(4) A person commits an offence of strict liability if:

(a) the person is subject to a requirement under subsection (1) or (2); and

(b) the person fails to comply with the requirement.

Penalty: 5 penalty units.

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

70-15 Audit of administration books - ASIC

ASIC may cause books to be audited

(1) ASIC may cause the books referred to in section 70-5 (annual administration return), 70-6 (end of administration return) or 70-10 (administration books) to be audited by a registered company auditor.

Audit on the ASIC's initiative or on request

(2) The audit may be conducted:

(a) on ASIC's own initiative; or

(b) at the request of the company; or

(d) at the request of any other person prescribed.

Auditor must prepare a report

(3) The auditor must prepare a report on the audit.

ASIC must give a copy of the report

(4) If ASIC causes books to be audited under subsection (1):

(a) ASIC must give a copy of the report prepared by the auditor to:

(i) the external administrator of the company; and

(ii) the person who requested the report (if any); and

(b) subsection 1289(5) applies in relation to the report prepared by the auditor as if it were a document required to be lodged.

Costs of an audit

(5) The costs of an audit under this section must be determined by ASIC and form part of the expenses of the external administration of the company.

70-20 Audit of administration books - on order of the Court

(1) The Court may order that an audit of the books referred to in section 70-5 (annual administration return), 70-6 (end of administration return) or 70-10 (administration books) be conducted by a registered company auditor.

(2) The order may be made on application of:

(a) any person with a financial interest in the external administration of the company; or

(b) an officer of the company.

(3) Paragraph (2)(b) has effect despite section 198G.

Note: Section 198G deals with powers of officers etc. while a company under external administration.

(4) The Court may make such orders in relation to the audit as it thinks fit, including:

(a) the preparation and provision of a report on the audit; and

(b) orders as to the costs of the audit.

70-25 External administrator to comply with auditor requirements

Application of this section

(1) This section applies if books are audited under section 70-15 or 70-20.

External administrator must give assistance etc.

(2) The external administrator must give the auditor such books, information and assistance as the auditor reasonably requires.

Exception

(3) Subsection (2) does not apply if the external administrator has a reasonable excuse.

Offence

(4) A person commits an offence of strict liability if:

(a) the person is subject to a requirement under subsection (2); and

(b) the person fails to comply with the requirement.

Penalty: 5 penalty units.

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

70-30 Transfer of books to new administrator

Application of this section

(1) This section applies if:

(a) a person (the former administrator ) ceases to be the external administrator of a company; and

(b) ASIC has not issued a notice to the former administrator under section 70-31; and

Transfer of books to new administrator

(2) The former administrator must transfer to the new administrator, within the handover period, possession or control of any books relating to the external administration of the company that are in the former administrator's possession or control.

(3) The handover period is:

(a) the period of 10 business days beginning on the day after the new administrator is appointed; or

(b) if another period is agreed between the former administrator and the new administrator - that other period.

(4) The former administrator may take a copy of any part of the books before transferring possession or control of them to the new administrator.

New administrator must accept the books

(5) The new administrator must take possession or accept control of any books relating to the external administration of the company.

New administrator must allow inspection etc.

(6) After possession or control of the books is transferred, the new administrator must allow the former administrator to inspect them at any reasonable time and take a copy of any part of the books.

Offence

(7) A person commits an offence if:

(a) the person is subject to a requirement under subsection (2), (5) or (6); and

(b) the person intentionally or recklessly fails to comply with the requirement.

Penalty: 50 penalty units.

Lien against books not prejudiced

(8) If the new administrator is entitled to take possession or control of the books under this section:

(a) a person is not entitled, as against the new administrator, to claim a lien on the books; and

(b) such a lien is not otherwise prejudiced.

70-31 Transfer of books to ASIC etc.

Transfer of books to ASIC

(1) If a person ceases to be the external administrator of a company, ASIC may, by written notice given to the person, require the person to:

(a) if the person has books relating to the external administration of the company in his or her possession or control - transfer possession or control of those books to ASIC within the period specified in the notice; or

(b) otherwise - notify ASIC, within the period and in the manner specified in the notice, that the person does not have books relating to the external administration of the company in the person's possession or control.

Offence

(2) A person commits an offence if:

(a) the person is subject to a requirement under subsection (1); and

(b) the person intentionally or recklessly fails to comply with the requirement.

Penalty: 50 penalty units.

ASIC must transfer books to new external administrator

(3) If:

(a) possession or control of books relating to an external administration of a company is transferred to ASIC under this section; and

(b) the books are in ASIC's possession or control; and

ASIC must, as soon as practicable, transfer possession or control of those books to the new administrator.

ASIC must transfer books to company

(4) If:

(a) possession or control of books relating to a company is transferred to ASIC under this section; and

(b) the books are in ASIC's possession or control; and

ASIC must, as soon as practicable, transfer possession or control of those books to the company.

Lien against books not prejudiced

(5) If asic is entitled to take possession or control of the books under this section:

(a) a person is not entitled, as against ASIC, to claim a lien on the books; and

(b) such a lien is not otherwise prejudiced.

(6) If ASIC is required to give possession or control of the books to the new administrator under this section:

(a) a person is not entitled, as against the new administrator, to claim a lien on the books; and

(b) such a lien is not otherwise prejudiced.

Notice is not a legislative instrument

(7) A notice under subsection (1) is not a legislative instrument.

Retention period for books

(8) ASIC must retain all books of the company, and of the external administration of the company:

(a) that are relevant to affairs of the company; and

(b) possession or control of which is transferred to ASIC under this section; and

for a period (the retention period ) of 2 years after the end of the external administration of the company.

Destruction of books at end of retention period

(9) ASIC may destroy the books at the end of the retention period.

Relationship with other laws

(10) Subsections (8) and (9) do not apply to the extent that ASIC is under an obligation to retain the books, or a part of the books, under another provision of this Act or under any other law.

70-35 Retention and destruction of books

Retention period for books

(1) The last external administrator of a company must retain all books of the company, and of the external administration of the company, that:

(a) are relevant to affairs of the company; and

(b) are in the external administrator's possession or control at the end of the external administration;

for a period (the retention period ) of 5 years from the end of the external administration.

Exception - reasonable excuse

(2) Subsection (1) does not apply if the external administrator has a reasonable excuse.

Exception - consent of ASIC etc.

(3) Despite subsection (1), the books may be destroyed within the retention period:

(a) in the case of a members' voluntary winding up - as the company by resolution directs; and

(b) in the case of a creditor's voluntary winding up or a court-ordered winding up:

(i) if there is a committee of inspection - as the committee directs; and

(ii) otherwise - as the creditors by resolution direct; and

if ASIC consents to the destruction.

Destruction of books at end of retention period

(4) The external administrator may destroy the books at the end of the retention period.

Offence

(5) A person commits an offence if:

(a) the person is subject to a requirement under subsection (1); and

(b) the person intentionally or recklessly fails to comply with the requirement.

Penalty: 50 penalty units.

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

Relationship with other laws

(6) Subsections (3) and (4) do not apply to the extent that the external administrator is under an obligation to retain the books, or a part of the books, under another provision of this Act or under any other law.

70-36 Books of company in external administration - evidence

If a company is in external administration, all books of the company, and of the external administrator of the company, that are relevant to affairs of the company at or after the start of the external administration are, as between the contributories of the company, prima facie evidence of the truth of all matters purporting to be recorded in those books.

Subdivision D - Giving information etc. to creditors and others

70-40 Right of creditors to request information etc. from external administrator

(1) The creditors may by resolution request the external administrator of a company to:

(a) give information; or

(b) provide a report; or

to the creditors.

(2) The external administrator must comply with the request unless:

(a) the information, report or document is not relevant to the external administration of the company; or

(b) the external administrator would breach his or her duties in relation to the external administration of the company if the external administrator complied with the request; or

(3) The Insolvency Practice Rules may prescribe circumstances in which it is, or is not, reasonable for an external administrator of a company to comply with a request of a kind mentioned in subsection (1).

70-45 Right of individual creditor to request information etc. from external administrator

(1) A creditor may request the external administrator of a company to:

(a) give information; or

(b) provide a report; or

to the creditor.

(2) The external administrator must comply with the request unless:

(a) the information, report or document is not relevant to the external administration of the company; or

(b) the external administrator would breach his or her duties in relation to the external administration of the company if the external administrator complied with the request; or

70-46 Right of members to request information etc. from external administrator in a members' voluntary winding up

(1) This section applies in relation to a members' voluntary winding up.

(2) The members of the company may by resolution request the external administrator of the company to:

(a) give information; or

(b) provide a report; or

to the members.

(3) The external administrator must comply with the request unless:

(a) the information, report or document is not relevant to the external administration of the company; or

(b) the external administrator would breach his or her duties in relation to the external administration of the company if the external administrator complied with the request; or

(4) The Insolvency Practice Rules may prescribe circumstances in which it is, or is not, reasonable for an external administrator of a company to comply with a request of a kind mentioned in subsection (2).

70-47 Right of individual member to request information etc. from external administrator in a members' voluntary winding up

(1) This section applies in relation to a members' voluntary winding up.

(2) A member of the company may request the external administrator of a company to:

(a) give information; or

(b) provide a report; or

to the member.

(3) The external administrator must comply with the request unless:

(a) the information, report or document is not relevant to the external administration of the company; or

(b) the external administrator would breach his or her duties in relation to the external administration of the company if the external administrator complied with the request; or

70-50 Reporting to creditors and members

(1) The Insolvency Practice Rules may provide for and in relation to the obligations of external administrators of companies:

(a) to give information; and

(b) to provide reports; and

to creditors or members.

(2) Without limiting subsection (1), the Insolvency Practice Rules may provide for and in relation to:

(a) other circumstances in which the external administrator of a company must give information, provide a report or produce a document to a creditor or member; and

(b) the manner and form in which information is to be given, a report provided or a document produced; and

(d) who is to bear the cost of giving information, providing a report or producing a document.

(3) The Insolvency Practice Rules may:

(a) make different provision in relation to different kinds of external administration; and

(b) provide that specified requirements imposed under the Insolvency Practice Rules may be replaced or modified, by resolution, by:

(i) the creditors; or

(ii) the members; or

(iii) if there is a committee of inspection - the committee.

Subdivision E - Other requests for information etc.

70-55 Commonwealth may request information etc.

Application of this section

(1) This section applies if either:

(a) a former employee of a company under external administration has made a claim for financial assistance from the Commonwealth in relation to unpaid employment entitlements; or

(b) the Commonwealth considers that such a claim is likely to be made.

Commonwealth may request information etc.

(2) The Commonwealth may request the external administrator of the company to provide specified information, reports or documents in relation to the external administration.

(3) The external administrator must comply with the request.

(4) The Insolvency Practice Rules may provide for and in relation to who is to bear the cost of providing the information, reports or documents.

Subdivision F - Reporting to ASIC

70-60 Insolvency Practice Rules may provide for reporting to ASIC

(1) The Insolvency Practice Rules may provide for and in relation to the obligations of an external administrator of a company:

(a) to give information; and

(b) to provide reports; and

to ASIC.

(2) Without limiting subsection (1), the Insolvency Practice Rules may provide for and in relation to:

(a) the manner and form in which information is to be given, a report provided or a document produced; and

(b) the timeframes in which information is to be given, a report provided or a document produced; and

(3) The Insolvency Practice Rules may make different provision in relation to different kinds of external administration.

Note: A failure to give information, provide a report or produce a document to ASIC in accordance with the Insolvency Practice Rules may lead to disciplinary action under Subdivision B of Division 40 of Part 2 of this Schedule.

Subdivision G - External administrator may be compelled to comply with requests for information etc.

70-65 Application of this Subdivision

(1) This Subdivision applies if the external administrator of a company refuses a request made by a person under:

(a) Subdivision D; or

(b) a rule made under section 70-50;

(d) section 80-40;

to give information, provide a report or produce a document.

(2) In this Subdivision:

(a) the information, report or document is referred to as the relevant material ; and

(b) the request is referred to as the request for relevant material ; and

(c) giving the information, providing the report or producing the document is referred to as giving the relevant material.

70-70 ASIC may direct external administrator to comply with the request for relevant material

(1) ASIC may, in writing, direct the external administrator to give all or part of the relevant material to the person or persons who made the request for the relevant material within 5 business days after the direction is given.

(2) A direction under subsection (1) is not a legislative instrument.

70-75 ASIC must notify external administrator before giving a direction under section 70-70

(1) Before giving the external administrator a direction under section 70-70, ASIC must give the external administrator notice in writing:

(a) stating that ASIC proposes to give the external administrator a direction under that section; and

(b) identifying:

(i) the relevant material, or the part of the relevant material, that ASIC proposes to direct be given; and

(ii) the person or persons to whom ASIC proposes to direct that the relevant material, or that part of the relevant material, be given; and

(c) inviting the external administrator to make a written submission to ASIC within 10 business days after the notice is given, stating:

(i) whether the external administrator has any objection to giving the relevant material, or that part of the relevant material, to a person or persons as proposed; and

(ii) if the external administrator has such an objection - the reasons for that objection.

(2) If the external administrator objects to giving the relevant material, or part of the relevant material, to a person, ASIC must take into account the reasons for that objection when deciding whether to direct that the relevant material, or that part of the relevant material, be given to the person.

(3) A notice under subsection (1) is not a legislative instrument.

70-80 ASIC must not direct external administrator to give the relevant material if external administrator entitled not to comply with the request

ASIC must not give a direction under section 70-70 to give the relevant material, or part of the relevant material, to a person if ASIC is satisfied that the external administrator was entitled, under a provision of this Act or any other law, not to comply with the request for the relevant material, or that part of the relevant material, to the person.

70-85 ASIC may impose conditions on use of the relevant material

ASIC may, by notice, impose conditions

(1) ASIC may, by notice in writing to the person or persons to whom the relevant material is to be given, impose conditions on the use and disclosure of the relevant material, or part of the relevant material, by the person or persons.

Offence

(2) A person commits an offence if:

(a) ASIC directs that the relevant material, or part of the relevant material, be given to the person; and

(b) ASIC has given the person notice under subsection (1) imposing a condition in relation to the use or disclosure of that material by the person; and

Penalty: 10 penalty units or imprisonment for 3 months, or both.

Notice is not a legislative instrument

(3) A notice under subsection (1) is not a legislative instrument.

70-90 Court may order relevant material to be given

(1) The person or persons who made the request for the relevant material may apply to the Court for an order that the external administrator give the person or persons all or part of the relevant material.

(2) If:

(a) ASIC gives the external administrator a direction under section 70-70 in relation to all or part of the relevant material; and

(b) the external administrator does not comply with the direction;

ASIC may apply to the Court for an order that the external administrator comply with the direction.

(3) On application under subsection (1) or (2), the Court may:

(a) order the external administrator to give the person, or any or all of the persons, who made the request for the relevant material all or part of that material; and

(b) make such other orders, including orders as to costs, as it thinks fit.

Division 75 - Meetings

75-1 Simplified outline of this Division

The external administrator of a company may convene creditor or company meetings at any time and must convene them in particular circumstances, for example when directed to do so by certain creditors or by ASIC.

Under Chapter 5 of this Act, there are other instances in which an external administrator must hold a meeting.

Requirements for convening and holding meetings (including notice, agenda, quorum, voting on proposals and costs) are set out in the Insolvency Practice Rules.

There is a mechanism for resolving a matter without holding a meeting.

75-5 Other obligations to convene meetings not affected

Nothing in this Division limits the operation of any other provision of this Act, or any other law, imposing an obligation to convene a meeting in relation to a company, or the external administration of a company.

75-10 External administrator may convene meetings

The external administrator of a company may convene:

(a) a meeting of the creditors; or

(b) in the case of a members' voluntary winding up - a general meeting of the company;

at any time.

75-15 External administrator must convene meeting in certain circumstances

(1) The external administrator of a company must convene a meeting of the creditors if:

(a) where there is a committee of inspection - the committee of inspection directs the external administrator to do so; or

(b) the creditors direct the external administrator to do so by resolution; or

(d) both of the following are satisfied:

(i) less than 25%, but more than 10%, in value of the creditors direct the external administrator to do so in writing;

(ii) security for the cost of holding the meeting is given to the external administrator before the meeting is convened; or

(e) all of the following are satisfied:

(i) the company is being wound up under a creditors' voluntary winding up;

(ii) less than 25%, but more than 5%, in value of the creditors direct the external administrator to do so in writing;

(iii) none of the creditors who give the direction is a related entity in relation to the company;

(iv) the direction is given no more than 20 business days after the resolution for the voluntary winding up of the company is passed.

(2) However, the external administrator need not comply with the direction if the direction is not reasonable.

(3) The Insolvency Practice Rules may prescribe circumstances in which a direction is, or is not, reasonable.

(4) For the purposes of paragraphs (1)(c), (d) and (e), the value of the creditors is to be worked out by reference to the value of the creditors' claims against the company that are known at the time the direction is given.

(5) This section does not apply if:

(a) the external administrator is a provisional liquidator of the company; or

(b) the external administrator is the administrator of the company and the company is under administration.

75-20 External administrator must convene meeting if required by ASIC

(1) ASIC may, in writing, direct an external administrator of a company to convene a meeting of the creditors.

(2) ASIC may include in the direction requirements to be complied with by the external administrator in notifying the creditors of the meeting and in conducting the meeting.

(3) The external administrator must comply with a direction given under subsection (1), and any requirements included in the direction under subsection (2).

(4) A direction given under subsection (1) is not a legislative instrument.

75-25 External administrator's representative at meetings

(1) The external administrator of a company may, in writing, appoint a person to represent the external administrator at a meeting.

(2) Subsection (1) does not apply to a meeting of a kind prescribed.

(3) If the external administrator is not personally present at a meeting, then a reference in a provision of this Act to the external administrator of a company, in respect of matters occurring at or in connection with the meeting, is a reference to a person appointed to represent the external administrator at the meeting.

75-30 ASIC may attend meetings

(1) ASIC is entitled to attend any meeting of creditors or contributories held under this Act.

(2) Subject to any provision of this Act (including any provision in relation to voting), ASIC is entitled to participate in any meeting of creditors held under this Act.

75-35 Commonwealth may attend certain meetings etc.

Application of this section

(1) This section applies if:

(a) a company is under external administration; and

(b) either:

(i) a former employee of the company has made a claim for financial assistance from the Commonwealth in relation to unpaid employment entitlements; or

(ii) the Commonwealth considers that such a claim is likely to be made.

Commonwealth may nominate representative for meetings

(2) The Commonwealth is entitled to nominate a representative to attend any meeting of creditors or contributories held in relation to the external administration.

75-40 Proposals to creditors or contributories without meeting

Proposal by notice to creditors

(1) The external administrator of a company may at any time put a proposal to the creditors or contributories by giving notice, in writing, under this section.

Content and service of notice

(2) The notice must:

(a) contain a single proposal; and

(b) include a statement of the reasons for the proposal and the likely impact it will have on creditors or contributories, as the case may be (if it is passed); and

(c) be given to each creditor or contributory, as the case may be, who would be entitled to receive notice of a meeting of creditors or contributories, as the case may be; and

(d) invite the creditor or contributory, as the case may be, to either:

(i) vote Yes or No on the proposal; or

(ii) object to the proposal being resolved without a meeting of creditors or contributories, as the case may be; and

(e) specify a reasonable time by which replies must be received by the external administrator (in order to be taken into account).

Evidentiary certificate relating to proposals

(3) A certificate signed by the external administrator of the company stating any matter relating to a proposal under this section is prima facie evidence of the matter.

Insolvency Practice Rules relating to proposals

(4) The Insolvency Practice Rules may provide for and in relation to proposals without meeting under this section.

(5) Without limiting subsection (4), the Insolvency Practice Rules may provide for and in relation to:

(a) the circumstances in which a proposal is taken to be passed; and

(b) whether a proposal, if passed, is to be taken to have been passed as a resolution or a special resolution; and

75-41 Outcome of voting at creditors' meeting determined by related entity - Court powers

Application of this section

(1) This section applies if, on the application of a creditor of a company under external administration, the external administrator of the company or ASIC, the Court is satisfied of the following matters:

(a) a proposal has been voted on by creditors (either at a meeting of the creditors or under section 75-40 without a meeting);

(b) if the vote or votes that a particular related creditor, or particular related creditors, of the company cast on the proposal had been disregarded for the purposes of determining whether or not the proposal was passed, the proposal:

(i) if it was in fact passed - would not have been passed; or

(ii) if in fact it was not passed - would have been passed;

or the question would have had to be decided on a casting vote;

(i) is contrary to the interests of the creditors as a group or of that class of creditors as a group, as the case may be; or

(ii) has prejudiced, or is reasonably likely to prejudice, the interests of the creditors who voted against the proposal, or for it, as the case may be, to an extent that is unreasonable having regard to the matters in subsection (2).

Unreasonable prejudice to interests of creditors - matters to be taken into account

(2) For the purposes of subparagraph (1)(c)(ii), the matters are:

(a) the benefits resulting to the related creditor, or to some or all of the related creditors, from the proposal if passed, or from the failure to pass the proposal, as the case may be; and

(b) the nature of the relationship between the related creditor and the company, or of the respective relationships between the related creditors and the company; and

Court may make orders

(3) The Court may make one or more of the following:

(a) an order that the proposal be considered and voted on at a meeting of the creditors convened and held as specified in the order;

(b) an order directing that the related creditor is not, or such of the related creditors as the order specifies are not, entitled to vote on:

(i) the proposal; or

(ii) a resolution to amend or vary the proposal;

(d) such other orders as the Court thinks fit.

Definition - related creditor

(4) In this section:

related creditor , for the purposes of a vote, in relation to a company, means a person who, when the vote was cast, was a related entity, and a creditor, of the company.

75-42 Creditors' resolution passed because of casting vote - Court review

Application of this section

(1) This section applies if:

(a) a resolution is passed at a meeting of creditors of a company under external administration; and

(b) the resolution is passed because the person presiding at the meeting exercises a casting vote.

Application to the Court

(2) ASIC may apply to the Court for an order setting aside or varying the resolution.

(3) A person (other than ASIC) may apply to the Court for an order setting aside or varying the resolution, but only if:

(a) the person voted against the resolution in some capacity (even if the person voted for the resolution in another capacity); or

(b) a person voted against the resolution on the first-mentioned person's behalf.

Court may make orders

(4) On application under subsection (2) or (3), the Court may:

(a) by order set aside or vary the resolution; and

(b) if it does so - make such further orders, and give such directions, as it thinks fit.

(5) On and after the making of an order varying the resolution, the resolution has effect as varied by the order.

75-43 Proposed creditors' resolution not passed because of casting vote - Court's powers

Application of this section

(1) This section applies if:

(a) a resolution is not passed at a meeting of creditors of a company under external administration; and

(b) the resolution is not passed because the person presiding at the meeting exercises a casting vote, or refuses or fails to exercise such a vote.

Application to the Court

(2) ASIC may apply to the Court for an order under subsection (4).

(3) A person (other than ASIC) may apply to the Court for an order under subsection (4), but only if:

(a) the person voted for the proposed resolution in some capacity (even if the person voted against the proposed resolution in another capacity); or

(b) a person voted for the proposed resolution on the first-mentioned person's behalf.

Court may make orders

(4) On application under subsection (2) or (3), the Court may:

(a) order that the proposed resolution is taken to have been passed at the meeting; and

(b) if it does so - make such further orders, and give such directions, as it thinks fit.

(5) If an order is made under paragraph (4)(a), the proposed resolution:

(a) is taken for all purposes (other than those of subsection (1)) to have been passed at the meeting; and

(b) is taken to have taken effect:

(i) if the order specifies a time when the proposed resolution is taken to have taken effect - at that time, even if it is earlier than the making of the order; or

(ii) otherwise - on the making of the order.

75-44 Interim order on application under section 75-41, 75-42 or 75-43

(1) If:

(a) an application under section 75-41, 75-42 or 75-43 has not yet been determined; and

(b) the Court is of the opinion that it is desirable to do so;

the Court may make such interim orders as it thinks fit

(2) An interim order must be expressed to apply until the application is determined, but may be varied or discharged.

75-45 Order under section 75-41 or 75-42 does not affect act already done pursuant to resolution

An act done pursuant to a resolution as in force before the making, under section 75-41 or 75-42, of an order setting aside or varying the resolution is as valid and binding on and after the making of the order as if the order had not been made.

75-50 Rules relating to meetings

(1) The Insolvency Practice Rules may provide for and in relation to meetings concerning companies under external administration.

(2) Without limiting subsection (1), the Insolvency Practice Rules may provide for and in relation to:

(a) the circumstances in which meetings must or may be convened; and

(b) notice for convening meetings; and

(d) information to be given in connection with meetings; and

(e) who is to preside at meetings; and

(f) the number of creditors or contributoriesrequired to constitute a quorum; and

(g) proxies and attorneys; and

(h) motions; and

(i) voting (including casting votes); and

(j) the circumstances in which a resolution must or may be put to creditors or contributories in a meeting; and

(k) the circumstances in which a resolution or a special resolution put to creditors or contributories in a meeting is passed; and

(l) facilities, including electronic communication facilities, to be available at meetings; and

(m) minutes; and

(n) costs in relation to meetings and security for those costs.

Division 80 - Committees of inspection

80-1 Simplified outline of this Division

Creditors of a company under external administration may decide that there is to be a committee of inspection to monitor the administration and to give assistance to the external administrator.

Appointing the committee

Each of the following have rights to appoint members to the committee (and to remove those members and fill the vacancy):

(a) the creditors by resolution;

(b) a single creditor who is owed, or a group of creditors who together are owed, a large amount;

Once a person exercises a right in one capacity to appoint a member, the person cannot exercise a right in another capacity to do so. A person can exercise the right in a particular capacity to appoint only one person (unless the person is filling a vacancy in that appointment).

If a company is in a related group of companies (called a pooled group), creditors of all the companies may decide together that there is to be a committee of inspection for the group and appoint members of the committee.

Procedures and powers

This Division also deals with the procedures and powers of committees of inspection (including requesting information, documents and reports from the external administrator and obtaining specialist advice).

An external administrator of a company must have regard to directions of the committee but is not obliged to comply.

Review

The Court may inquire into and make orders about the conduct of committees of inspection.

80-5 Application of sections 80-10 to 80-25

(1) The rules in sections 80-10 to 80-25 apply if the external administrator of a company convenes a meeting of creditors for the purpose of determining either or both of the following:

(a) whether there is to be a committee of inspection for the company;

(b) if there is, or is to be, a committee of inspection - who are to be appointed members of the committee.

(2) However, those rules do not apply if the company is a member of a pooled group.

Note: Committees of inspection for pooled groups are dealt with in sections 80-26 and 80-27.

80-10 Committee of inspection - company not a member of a pooled group

The creditors of a company may, by resolution, determine that there is to be a committee of inspection in relation to the external administration of the company.

80-15 Appointment and removal of members of committee of inspection by creditors generally

(1) The creditors of a company may, by resolution, appoint members of a committee of inspection in relation to the external administration of the company.

(2) The creditors of a company may by resolution:

(a) remove a person appointed as a member of the committee under this section; and

(b) appoint another person to fill a vacancy in the office of a member of the committee of inspection appointed under this section.

(3) A person is not entitled to vote on a resolution to appoint or remove a member of a committee of inspection under this section if:

(a) the person, acting either alone or with others, appoints a person as a member of the committee under section 80-20; or

(b) the person, acting either alone or with others, appoints a person as a member of the committee under section 80-25.

80-20 Appointment of committee member by large creditor

(1) A creditor representing at least 10% in value of the creditors, or a group of creditors who together represent at least 10% in value of the creditors, of a company may appoint a person as a member of a committee of inspection in relation to the external administration of the company.

(2) If a creditor or a group of creditors appoints a person as a member of a committee of inspection under this section, the creditor or group of creditors may:

(a) remove the person as a member of the committee; and

(b) appoint another person to fill a vacancy in the office of that member of the committee.

(3) A creditor, acting either alone or with others, is not entitled to appoint a person as a member of a committee of inspection under subsection (1) if:

(a) the creditor votes on a resolution to appoint or remove a member of the committee under section 80-15; or

(b) the creditor, acting either alone or with others, appoints a member of the committee under subsection 80-25(1); or

(c) the creditor, acting either alone or with others, has already appointed a member of the committee under subsection (1) of this section.

80-25 Appointment of committee member by employees

(1) Either:

(a) an employee of the company; or

(b) employees of the company;

representing at least 50% in value of entitlements owed to or in respect of employees by the company may appoint a person as a member of the committee of inspection to represent the employees.

(2) If an employee or a group of employees appoints a person as a member of a committee of inspection under this section, the employee or group of employees may:

(a) remove the person as a member of the committee; and

(b) appoint another person to fill a vacancy in the office of that member of the committee.

(3) An employee, acting either alone or with others, is not entitled to appoint a person as a member of a committee of inspection under subsection (1) if:

(a) the employee votes on a resolution to appoint or remove a member of the committee under section 80-15; or

(b) the employee, acting either alone or with others, appoints a member of the committee under subsection 80-20(1); or

(c) the employee, acting either alone or with others, has already appointed a member of the committee under subsection (1) of this section.

(4) In this section:

employee of a company has the same meaning as in Part 5.8A.

entitlements of an employee of a company has the same meaning as in Part 5.8A.

80-26 Committee of inspection - pooled groups

Application of this section

(1) This section applies if each company that is a member of a pooled group is being wound up.

Meeting to form a committee of inspection for a pooled group

(2) The external administrator or external administrators must, if directed to do so under section 80-27,convene a meeting, on a consolidated basis, of the creditors of all of the companies for the purposes of determining either or both of the following:

(a) whether there is to be a committee of inspection for the pooled group;

(b) if there is, or is to be, a committee of inspection for the pooled group - who are to be appointed members of the committee.

Committee of inspection for a pooled group becomes the committee of inspection for each member of the pooled group

(3) A committee of inspection for a pooled group is taken to be a committee of inspection for each company that is a member of the pooled group.

Existing committee of inspection for a member of a pooled group ceases to exist

(4) If:

(a) at the meeting, it is resolved that there is to be a committee of inspection for the pooled group; and

(b) immediately before the meeting, a committee of inspection was in existence for a company that is a member of the pooled group;

the committee mentioned in paragraph (b) ceases to exist when the resolution mentioned in paragraph (a) is passed.

Rules relating to companies under external administration who are members of a pooled group

(5) The Insolvency Practice Rules may provide for and in relation to meetings in relation to the external administration of companies that are members of a pooled group ( pooled group meetings ).

(6) Without limiting subsection (5), the Insolvency Practice Rules may provide for and in relation to:

(a) other circumstances in which pooled group meetings must or may be convened; and

(b) voting (including casting votes) at pooled group meetings; and

(c) the circumstances in which a resolution or a special resolution put to creditors or contributories in a pooled group meeting is passed; and

(d) costs in relation to pooled group meetings and security for those costs.

80-27 External administrator must convene meeting in certain circumstances

(1) The external administrator, or the external administrators, of the members of a pooled group must convene a meeting under section 80-26 if:

(a) where there is a committee of inspection for a member of the pooled group - the committee of inspection directs the external administrator, or external administrators, to do so; or

(b) the creditors of one of the members of the pooled group direct the external administrator, or external administrators, to do so, by resolution; or

(c) at least 25% in value of the creditors of one of the members of the pooled group, direct the external administrator, or external administrators, to do so in writing; or

(d) both of the following are satisfied:

(i) less than 25%, but more than 10%, in value of the creditors of one of the members of the pooled group direct the external administrator, or external administrators, to do so in writing;

(ii) security for the cost of holding the meeting is given to the external administrator, or external administrators, before the meeting is convened; or

(e) all of the following are satisfied:

(i) the members of the pooled group are each being wound up under a creditors' voluntary winding up;

(ii) less than 25%, but more than 5%, in value of the creditors of one of the members of the pooled group direct the external administrator, or external administrators, to do so in writing;

(iii) none of the creditors who give the direction is a related entity in relation to that member of the pooled group;

(iv) the direction is given no more than 20 business days after the last resolution for the voluntary winding up of the members of the pooled group is passed.

(2) However, the external administrator, or external administrators, need not comply with the direction if the direction is not reasonable.

(3) The Insolvency Practice Rules may prescribe circumstances in which a direction is, or is not, reasonable.

(4) For the purposes of paragraphs (1)(c), (d) and (e), the value of the creditors is to be worked out by reference to the value of the creditors' claims (that are known at the time the direction is given) against the member of the pooled group.

(5) This section does not apply if:

(a) one of the external administrators is a provisional liquidator of a member of the pooled group; or

(b) one of the external administrators is the administrator of a member of the pooled group and the member is under administration.

80-30 Committees of inspection - procedures etc.

(1) Subject to subsection (2), a committee of inspection is to determine its own procedures.

(2) The Insolvency Practice Rules may provide for and in relation to committees of inspection.

(3) Without limiting subsection (2), the Insolvency Practice Rules may provide for and in relation to:

(a) eligibility to be appointed as a member of a committee of inspection; and

(b) the convening of, conduct of, and procedure and voting at, meetings; and

(d) vacancies in membership.

80-35 Functions of committee of inspection

(1) A committee of inspection has the following functions:

(a) to advise and assist the external administrator of the company;

(b) to give directions to the external administrator of the company;

(d) such other functions as are conferred on the committee by this Act;

(e) to do anything incidental or conducive to the performance of any of the above functions.

(2) An external administrator of a company must have regard to any directions given to the external administrator by the committee of inspection, but the external administrator is not required to comply with such directions.

(3) If an external administrator of a company does not comply with a direction, the external administrator must make a written record of that fact, along with the external administrator's reasons for not complying with the direction.

80-40 Committee of inspection may request information etc.

(1) A committee of inspection may request the external administrator of a company to:

(a) give information; or

(b) provide a report; or

to the committee.

(2) The external administrator must comply with the request unless:

(a) the information, report or document is not relevant to the external administration of the company; or

(b) the external administrator would breach his or her duties in relation to the external administration of the company if the external administrator complied with the request; or

80-45 Reporting to committee of inspection

(1) The Insolvency Practice Rules may provide for and in relation to the obligations of external administrators of companies:

(a) to give information; and

(b) to provide reports; and

to committees of inspection.

(2) Without limiting subsection (1), the Insolvency Practice Rules may provide for and in relation to:

(a) other circumstances in which the external administrator of a company must give information, provide a report or produce a document to a committee of inspection; and

(b) the manner and form in which information is to be given, a report provided or a document produced; and

(d) who is to bear the cost of giving information, providing a report or producing a document.

(3) The Insolvency Practice Rules may:

(a) make different provision in relation to different classes of company or external administration of a company; and

(b) provide that specified requirements imposed under the Insolvency Practice Rules may be replaced or modified, by resolution, by:

(i) the creditors; or

(ii) the committee of inspection.

80-50 Committee of inspection may obtain specialist advice or assistance

(1) A committee of inspection may resolve that a member of the committee obtain, on behalf of the committee, such advice or assistance as the committee considers desirable in relation to the conduct of the external administration.

(2) The committee of inspection must obtain the approval of the external administrator of the company or the Court before expenses are incurred in obtaining the advice or assistance.

(3) To avoid doubt, an expense incurred under subsection (2) is to be taken to be an expense incurred by a person as a member of the committee, unless the Court orders otherwise.

80-55 Obligations of members of committee of inspection

Deriving profit or advantage from the company

(1) A member of a committee of inspection must not directly or indirectly derive any profit or advantage from the external administration of the company.

Circumstances in which profit or advantage is taken to be derived

(2) To avoid doubt, a member of a committee of inspection is taken to derive a profit or advantage from the external administration of the company if:

(a) the member directly or indirectly derives a profit or advantage from a transaction (including a sale or purchase) entered into for or on account of the company; or

(b) the member directly or indirectly derives a profit or advantage from a creditor of the company; or

(c) a related entity of the member directly or indirectly derives a profit or advantage from the external administration of the company.

Exceptions

(3) Subsection (1) does not apply if the creditors resolve otherwise.

(4) The member of the committee is not entitled to vote on the resolution referred to in subsection (3).

(5) Subsection (1) does not apply to the extent that:

(a) another provision of this Act, or of another law, requires or permits the member of the committee of inspection to derive the profit or advantage; or

(b) the Court gives leave to the member of the committee to derive the profit or advantage.

Note: Subsection (1) would not, for example, prevent a creditor from recovering debts proved in a winding up, as this is permitted under Part 5.6 of Chapter 5.

(6) Despite paragraph (2)(c), subsection (1) does not apply to the extent that:

(a) the profit or advantage arises because the external administrator employs or engages a person to provide services in connection with the external administration of the company; and

(b) the person is a related entity of a member of the committee of inspection; and

(i) the member does not know, and could not reasonably be expected to know, that the external administrator has employed or engaged a related entity of the member;

(ii) the creditors, by resolution, agree to the related entity being employed or engaged.

Offence

(7) A person commits an offence of strict liability if:

(a) the person is subject to a requirement under subsection (1); and

(b) the person fails to comply with the requirement.

Penalty: 50 penalty units.

Note: A defendant bears an evidential burden in relation to the matters in subsections (3), (5) and (6) (see subsection 13.3(3) of the Criminal Code).

Effect of contravention of this section

(8) A transaction or any other arrangement entered into in contravention of this section may be set aside by the Court.

80-60 Obligations of creditor appointing a member of committee of inspection

Application of this section

(1) This section applies if a creditor representing at least 10% in value of the creditors of a company appoints a person under section 80-20 as a member of a committee of inspection in relation to the external administration of the company.

(2) The creditor must not directly or indirectly become the purchaser of any part of the property of the company.

Exceptions

(3) Subsection (2) does not apply if the creditors resolve otherwise.

(4) The creditor is not entitled to vote on the resolution referred to in subsection (3).

(5) Subsection (2) does not apply to the extent that:

(a) another provision of this Act, or of another law, requires or permits the creditor to purchase the property; or

(b) the Court gives leave to the creditor to purchase the property.

Offence

(6) A person commits an offence of strict liability if:

(a) the person is subject to a requirement under subsection (2); and

(b) the person fails to comply with the requirement.

Penalty: 50 penalty units.

Note: A defendant bears an evidential burden in relation to the matters in subsections (3) and (5) (see subsection 13.3(3) of the Criminal Code).

Effect of contravention of this section

(7) A transaction or any other arrangement entered into in contravention of this section may be set aside by the Court.

80-65 ASIC may attend committee meetings

ASIC is entitled to attend any meeting of a committee of inspection.

80-70 The Court may inquire into conduct of the committee

The Court may inquire into the conduct of a committee of inspection and make such orders as it thinks fit to ensure the proper conduct of the committee.

Division 85 - Directions by creditors

85-1 Simplified outline of this Division

The external administrator of a company must have regard to directions given to the administrator by the creditors of the company but is not obliged to comply with those directions.

85-5 External administrator to have regard to directions given by creditors

(1) The creditors of a company under external administration (other than a members' voluntary winding up) may, by resolution, give directions to the external administrator of the company in relation to the external administration.

(2) An external administrator of a company must have regard to any directions mentioned in subsection (1), but the external administrator is not required to comply with such directions.

(3) If the external administrator does not comply with a direction, the external administrator must make a written record of that fact, along with the external administrator's reasons for not complying with the direction.

(4) If there is a conflict between directions given by the creditors under subsection (1) and by the committee of inspection under section 80-35, directions given by the creditors override any directions given by the committee.

Division 90 - Review of the external administration of a company

Subdivision A - Introduction

90-1 Simplified outline of this Division

Review by the Court

The Court may inquire into the external administration of a company either on its own initiative or on the application of the company, the external administrator, ASIC or a person with a financial interest in the external administration of the company (such as a creditor of the company).

The Court has wide powers to make orders, including orders replacing the external administrator or dealing with losses resulting from a breach of duty by the external administrator.

Review by another registered liquidator

ASIC, the Court, creditors or members of a company may appoint a registered liquidator to review the external administration of the company. Such a review may look at a range of matters, including whether the remuneration of the external administrator is reasonable and whether costs and expenses have been properly incurred.

The Insolvency Practice Rules may set the powers and duties of a registered liquidator conducting such a review and may deal with issues relating to the review process.

If a provisional liquidator has been appointed for the company, review by another registered liquidator is not available.

Removal of external administrator by creditors

The creditors of a company under external administration (other than a company for which a provisional liquidator has been appointed) may remove the external administrator of the company and appoint another. However, the external administrator may apply to the Court to be reappointed.

Subdivision B - Court powers to inquire and make orders

90-5 Court may inquire on own initiative

(1) The Court may, on its own initiative during proceedings before the Court, inquire into the external administration of a company.

(2) The Court may, for the purposes of such an inquiry, require a person who is or has at any time been the external administrator of the company to:

(a) give information; or

(b) provide a report; or

to the Court in relation to the external administration of the company.

(3) This section does not limit the Court's powers under any other provision of this Act, or under any other law.

90-10 Court may inquire on application of creditors etc.

(1) The Court may, on the application of a person mentioned in subsection (2), inquire into the external administration of a company.

(2) Each of the following persons may make an application for an inquiry:

(a) a person with a financial interest in the external administration of the company;

(b) an officer of the company;

(d) ASIC.

(3) Paragraph (2)(b) has effect despite section 198G.

Note: Section 198G deals with powers of officers etc. while a company is under external administration.

(4) The Court may, for the purposes of such an inquiry, require a person who is or has at any time been the external administrator of the company to:

(a) give information; or

(b) provide a report; or

to the Court in relation to the external administration of the company.

(5) If an application is made by a person referred to in paragraph (2)(c), the reasonable expenses associated with the application are to be taken to be expenses incurred by a person as a member of the committee unless otherwise ordered by the Court.

(6) This section does not limit the Court's powers under any other provision of this Act, or under any other law.

90-15 Court may make orders in relation to external administration

Court may make orders

(1) The Court may make such orders as it thinks fit in relation to the external administration of a company.

Orders on own initiative or on application

(2) The Court may exercise the power under subsection (1):

(a) on its own initiative, during proceedings before the Court; or

(b) on application under section 90-20.

Examples of orders that may be made

(3) Without limiting subsection (1), those orders may include any one or more of the following:

(a) an order determining any question arising in the external administration of the company;

(b) an order that a person cease to be the external administrator of the company;

(d) an order in relation to the costs of an action (including court action) taken by the external administrator of the company or another person in relation to the external administration of the company;

(e) an order in relation to any loss that the company has sustained because of a breach of duty by the external administrator;

(f) an order in relation to remuneration, including an order requiring a person to repay to a company, or the creditors of a company, remuneration paid to the person as external administrator of the company.

Matters that may be taken into account

(4) Without limiting the matters which the Court may take into account when making orders, the Court may take into account:

(a) whether the liquidator has faithfully performed, or is faithfully performing, the liquidator's duties; and

(b) whether an action or failure to act by the liquidator is in compliance with this Act and the Insolvency Practice Rules; and

(d) whether the company or any other person has suffered, or is likely to suffer, loss or damage because of an action or failure to act by the liquidator; and

(e) the seriousness of the consequences of any action or failure to act by the liquidator, including the effect of that action or failure to act on public confidence in registered liquidators as a group.

Costs orders

(5) Without limiting subsection (1), an order mentioned in paragraph (3)(d) in relation to the costs of an action may include an order that:

(a) the external administrator or another person is personally liable for some or all of those costs; and

(b) the external administrator or another person is not entitled to be reimbursed by the company or its creditors in relation to some or all of those costs.

Orders to make good loss sustained because of a breach of duty

(6) Without limiting subsection (1), an order mentioned in paragraph (3)(e) in relation to a loss may include an order that:

(a) the external administrator is personally liable to make good some or all of the loss; and

(b) the external administrator is not entitled to be reimbursed by the company or creditors in relation to the amount made good.

Section does not limit Court's powers

(7) This section does not limit the Court's powers under any other provision of this Act, or under any other law.

90-20 Application for Court order

(1) Each of the following persons may apply for an order under section 90-15:

(a) a person with a financial interest in the external administration of the company;

(b) if the committee of inspection (if any) so resolves - a creditor, on behalf of the committee;

(d) an officer of the company;

(e) if the application is in relation to a company that is a friendly society within the meaning of the Life Insurance Act 1995 and which may be wound up voluntarily under subsection 180(2) of that Act - APRA.

(2) Paragraph (1)(d) has effect despite section 198G.

Note: Section 198G deals with powers of officers etc. while a company is under external administration.

(3) If an application is made by a person referred to in paragraph (1)(b), the reasonable expenses associated with the application are to be taken to be expenses incurred by a person as a member of the committee.

90-21 Meetings to ascertain wishes of creditors or contributories

(1) The Court may, as to all matters relating to the external administration of a company, have regard to the wishes of the creditors or contributories as proved to it by any sufficient evidence.

(2) The Court may, if it thinks fit for the purpose of ascertaining those wishes, direct meetings of the creditors or contributories to be convened, held and conducted in such manner as the Court directs, and may appoint a person to act as chair of any such meeting and to report the result of the meeting to the Court.

(3) In the case of creditors, regard is to be had to the value of each creditor's debt.

(4) In the case of contributories, regard is to be had to the number of votes conferred on each contributory by this Act or the company's constitution.

Subdivision C - Review by another registered liquidator

90-22 Application of this Subdivision

This Subdivision applies in relation to a company that is under external administration, other than a company in relation to which a provisional liquidator has been appointed.

90-23 Appointment of reviewing liquidator by ASIC or the Court

Appointment by ASIC

(1) A registered liquidator may be appointed by ASIC to carry out a review into a matter that relates to the external administration of the company, if ASIC considers it appropriate to do so.

(2) ASIC may exercise the power under subsection (1):

(a) on its own initiative; or

(b) on application by a person with a financial interest in the external administration of the company; or

(3) An application under paragraph (2)(b) or (c) must be lodged with ASIC in the approved form.

(4) Paragraph (2)(c) has effect despite section 198G.

Note: Section 198G deals with powers of officers etc. while a company under external administration.

(5) If ASIC appoints a registered liquidator to carry out a review, ASIC must specify:

(a) the matters in relation to the external administration of the company which the liquidator is appointed to review; and

(b) the way in which the cost of carrying out the review is to be determined.

Appointment by the Court

(6) A registered liquidator may be appointed by the Court to carry out a review into a matter that relates to the external administration of the company.

(7) The Court may exercise the power under subsection (6):

(a) on application under subsection (8); and

(b) if the Court considers it appropriate to do so.

(8) Either of the following may make an application under this subsection:

(a) ASIC;

(b) a person with a financial interest in the external administration of the company.

(9) If the Court appoints a registered liquidator to carry out a review, the Court must specify:

(a) the matters in relation to the external administration of the company which the liquidator is appointed to review; and

(b) the way in which the cost of carrying out the review is to be determined.

Appointments by ASIC or by the Court - limit

(10) A matter referred to in paragraph (5)(a) or (9)(a) must not relate to remuneration which an external administrator of the company is entitled to receive under subsection 60-5(2) (remuneration if no remuneration determinations made).

90-24 Appointment of reviewing liquidator by creditors etc.

Appointment to carry out review

(1) A registered liquidator may be appointed to carry out a review into either or both of the following matters:

(a) remuneration of the external administrator of the company;

(b) a cost or expense incurred by the external administrator of the company.

Appointment by resolution

(2) The appointment may be made by resolution of:

(a) the creditors; or

(b) if the company is being wound up under a members' voluntary winding up - the company;

(3) If the appointment is made by resolution, the resolution must specify:

(a) the remuneration, costs or expenses which the liquidator is appointed to review; and

(b) the way in which the cost of carrying out the review is to be determined.

Appointment by one or more creditors or members

(4) The appointment may be made by:

(a) one or more of the creditors; or

(b) if the company is being wound up under a members' voluntary winding up - one or more of the members.

(5) However, an appointment may only be made under subsection (4) if the external administrator of the company agrees to the appointment.

(6) The agreement must:

(a) be in accordance with the Insolvency Practice Rules; and

(b) specify:

(i) the remuneration, costs or expenses which the liquidator is appointed to review; and

(ii) the way in which the cost of carrying out the review is to be determined.

Appointments by creditors etc. - limit

(7) Despite subsection (1), a registered liquidator appointed under this section has no power to review the remuneration to which the external administrator of a company is entitled under subsection 60-5(2) (remuneration if no remuneration determinations made).

90-25 Reviewing liquidator must consent to appointment

A registered liquidator cannot be appointed under this Subdivision as a reviewing liquidator in relation to a matter unless:

(a) the liquidator has consented in writing to the appointment; and

(b) as at the time of the appointment, the liquidator has not withdrawn the consent.

90-26 Review

Review - general

(1) If a reviewing liquidator is appointed under this Subdivision in relation to a matter, the reviewing liquidator must carry out a review into that matter.

Reviews relating to remuneration, costs or expenses

(2) If the matter is, or includes, remuneration of the external administrator of the company, the review may (but need not) include an assessment of whether the remuneration is reasonable.

(3) If the matter is, or includes, a cost or expense incurred by the external administrator of the company, the review must include an assessment of whether the cost or expense was properly incurred by the external administrator.

Note: Insolvency Practice Rules made under section 90-29 may provide for the meaning of properly incurred .

(4) A reviewing liquidator must not review:

(a) remuneration of an external administrator of the company that relates to a period; or

(b) a cost or expense incurred by the external administrator of the company incurred during a period;

unless the period is:

(c) for a reviewing liquidator appointed by the Court under paragraph 90-28(2)(c) or (3)(b) - the period determined by the Court; or

(d) otherwise - the prescribed period.

Report of review

(5) A reviewing liquidator must prepare a report on the review.

90-27 Who pays for a review?

(1) The cost of carrying out a review under this Subdivision:

(a) in the case of a reviewing liquidator appointed with the agreement of the external administrator of the company under subsection 90-24(5) - is to be borne by the creditors or members referred to in that subsection; or

(b) in any other case - forms part of the expenses of the external administration of the company.

(2) Subsection (1) has effect subject to an order of the Court under section 90-28.

90-28 Court orders in relation to review

Application of this section

(1) This section applies if:

(a) a reviewing liquidator has been appointed under this Subdivision in relation to one or more matters; and

(b) the review has not been completed.

Court orders on application by the reviewing liquidator

(2) On application by the reviewing liquidator, the Court may make any or all of the following orders in relation to the review:

(a) requiring the external administrator of the company or any other person to provide books, information or assistance to the reviewing liquidator;

(b) requiring the reviewing liquidator to carry out a review of one or more matters that relate to the external administration of the company and that are specified in the order instead of, or in addition to, the matters referred to in paragraph (1)(a);

(c) accepting the resignation of the reviewing liquidator, and appointing another registered liquidator as reviewing liquidator for the matter or matters;

(d) any other order that the Court thinks fit.

Court orders on application by a person with a financial interest

(3) On application by a person mentioned in subsection (4), the Court may make any or all of the following orders in relation to the review:

(a) requiring the reviewing liquidator to carry out a review of one or more matters that relate to the external administration and that are specified in the order instead of, or in addition to, the matters referred to in paragraph (1)(a) of this section;

(b) removing from office the reviewing liquidator, and appointing another registered liquidator as reviewing liquidator for the matter or matters;

(4) The persons who may make an application under subsection (3) are:

(a) a person with a financial interest in the external administration of the company; or

(b) an officer of the company.

(5) Paragraph (4)(b) has effect despite section 198G.

Note: Section 198G deals with powers of officers etc. while a company is under external administration.

90-29 Rules about reviews

(1) The Insolvency Practice Rules may provide for and in relation to reviews under this Subdivision.

(2) Without limiting subsection (1), the Insolvency Practice Rules may provide for and in relation to any or all of the following matters:

(a) the giving of notice to the external administrator of a company before appointing, or making an application for the appointment of, a reviewing liquidator under this Subdivision;

(b) the meaning, for the purposes of section 90-26, of properly incurred in relation to costs or expenses incurred by an external administrator of a company;

(c) the appointment of reviewing liquidators, including requirements as to who may be appointed and the provision of declarations of relevant relationships;

(d) the powers and duties of reviewing liquidators in carrying out a review;

(e) the form and content of reports by reviewing liquidators;

(f) the preparation and provision of reports by reviewing liquidators.

Subdivision D - Removal by creditors

90-30 Application of this Subdivision

This Subdivision applies in relation to a company that is under external administration, other than a company in relation to which a provisional liquidator has been appointed.

90-35 Removal by creditors

Creditors may remove external administrator and appoint another

(1) The creditors may:

(a) by resolution at a meeting, remove the external administrator of a company; and

(b) by resolution at the same or a subsequent meeting, appoint another person as the external administrator of the company.

Note: For the general rules relating to meetings, see Division 75.

(2) However, the creditors may not do so unless at least 5 business days' notice of the meeting is given to all persons who are entitled to receive notice of creditors' meetings.

(3) The removal of an external administrator does not take effect until another person is appointed as external administrator of the company.

Former administrator may apply to Court to be reappointed

(4) A person (the former administrator ) who has been removed as external administrator of the company by resolution of the creditors may apply to the Court to be reappointed as external administrator of the company.

(5) However, if the former administrator makes such an application, the former administrator must:

(a) record all costs incurred by the former administrator and the company in relation to the application; and

(b) do so in a way that separates those costs from the costs incurred by the former administrator and the company in relation to other matters.

(6) The Court may order that the former administrator be reappointed as external administrator of the company if the Court is satisfied that the removal of the former administrator was an improper use of the powers of one or more creditors.

(7) The Court may make such other orders in relation to the application as it thinks fit including orders in relation to:

(a) the costs of the application; and

(b) the remuneration of the former administrator.

Part 4 - Other matters

Division 95 - Introduction

95-1 Simplified outline of this Part

This Part deals with a variety of matters:

(a) an external administrator of a company may assign a right to sue; and

(b) forms are approved by ASIC (provision is made for what may be required in the form or to accompany the form); and

Division 100 - Other matters

100-5 External administrator may assign right to sue under this Act

(1) Subject to subsections (2) and (3), an external administrator of a company may assign any right to sue that is conferred on the external administrator by this Act.

(2) If the external administrator's action has already begun, the external administrator cannot assign the right to sue unless the external administrator has the approval of the Court.

(3) Before assigning any right under subsection (1), the external administrator must give written notice to the creditors of the proposed assignment.

(4) If a right is assigned under this section, a reference in this Act to the external administrator in relation to the action is taken to be a reference to the person to whom the right has been assigned.

100-6 Approved forms

(1) A document that this Schedule requires to be lodged with ASIC in an approved form must:

(a) be in the form approved by ASIC for the document; and

(b) include the information, statements, explanations or other matters required by the form; and

(2) A reference in this Schedule to a document that has been lodged (being a document to which subsection (1) applies), includes a reference to any other material lodged with the document as required by the relevant form.

(3) If:

(a) this Schedule requires a document to be lodged with ASIC in an approved form; and

(b) a provision of this Schedule specifies information, statements, explanations or other matters that must be included in the document, or other material that must accompany the document;

that other provision is not taken to exclude or limit the operation of subsection (1) in relation to the approved form (and so the approved form may also require information etc. to be included in the form or material to accompany the form).

(4) The Insolvency Practice Rules may provide for and in relation to:

(a) methods of verifying any information required by or in approved forms; and

(b) the manner in which, the persons by whom, and the directions or requirements in accordance with which, approved forms are required or permitted to be signed, prepared, or completed.

Division 105 - The Insolvency Practice Rules

105-1 The Insolvency Practice Rules

(1) The Minister may, by legislative instrument, make rules providing for matters:

(a) required or permitted by this Schedule to be provided by the rules; or

(b) necessary or convenient to be provided in order to carry out or give effect to this Schedule.

(2) Rules made under subsection (1) may include offences.

(3) The penalties for offences described in subsection (2) must not be more than 50 penalty units for an individual or 250 penalty units for a body corporate.

(4) To avoid doubt, the rules may not do the following:

(a) create a civil penalty;

(b) provide powers of:

(i) arrest or detention; or

(ii) entry, search or seizure;

(d) set an amount to be appropriated from the Consolidated Revenue Fund under an appropriation in this Act;

(e) directly amend the text of this Act.

(5) Rules that are inconsistent with the regulations have no effect to the extent of the inconsistency, but rules are taken to be consistent with the regulations to the extent that the rules are capable of operating concurrently with the regulations.

(6) Despite subsection 1345A(1), the Minister's power to make rules under this section may not be delegated to any other person.

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