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CORPORATIONS ACT 2001

CHAPTER 5 - EXTERNAL ADMINISTRATION  

PART 5.1 - ARRANGEMENTS AND RECONSTRUCTIONS  

SECTION 415C  

415C  ORDER UNDER SECTION 415A DOES NOT AFFECT ACT ALREADY DONE PURSUANT TO RESOLUTION  

An act done pursuant to a resolution as in force before the making, under section 415A , 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.

[ CCH Note 1: Regulation 10.25.02(4) (which was effective 1 March 2017) provides that the amendments made by No 11 of 2016, s 3, Sch 2[90] apply in relation to Part 5.1 bodies on and after 1 September 2017.]

[ CCH Note 2: S 415D - 415G will be inserted by No 112 of 2017, s 3, Sch 1 [ 7] (effective 1 July 2018). S 415D - 415G will read:

SECTION 415D STAY ON ENFORCING RIGHTS MERELY BECAUSE OF A PROCEEDING UNDER THIS PART ETC.  

Stay on enforcing rights


415D(1) A right cannot be enforced against a body for:


(a) the reason that the body, if it is a disclosing entity, has publicly announced that it will be making an application under section 411 for the purpose of avoiding being wound up in insolvency; or


(b) the reason that the body is the subject of an application under section 411 ; or


(c) the reason that the body is the subject of a compromise or arrangement approved under this Part as a result of an application under section 411 ; or


(d) the body ' s financial position, if the body is the subject of such an announcement, application, compromise or arrangement; or


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


(i) the making, or possible making, of such an announcement, application, compromise or arrangement about the body; or

(ii) the body ' s financial position;

if such an announcement, application, compromise or arrangement is later made about the body; or


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

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

Note: This result is subject to subsections (5), (6) and (8), and to any order under section 415E .

Example: A right to terminate a contract will not be enforceable to the extent that those rights are triggered by the body becoming the subject of such an announcement, application, compromise or arrangement.

Period of the stay


415D(2) The right cannot be enforced as described in subsection (1) during the period (the stay period ) that:


(a) starts:


(i) if the body makes an announcement referred to in paragraph (1)(a) - when the announcement is made; or

(ii) otherwise - when the application under section 411 is made; and


(b) ends:


(i) if the body makes an announcement referred to in paragraph (1)(a), and fails to make the announced application within the next 3 months or within any period ordered under subsection (3) for the body - at the end of the longer of those periods; or

(ii) when the application under section 411 is withdrawn or when the Court dismisses the application; or

(iii) unless subparagraph (iv) applies - at the end of any compromise or arrangement approved under this Part as a result of the application under section 411 ; or

(iv) if such a compromise or arrangement ends because of a resolution or order for the body to be wound up - when the body ' s affairs have been fully wound up.


415D(3) The Court may order a longer period than the 3 months otherwise applying under subparagraph (2)(b)(i) for the body if the Court is satisfied that the longer period is appropriate having regard to the interests of justice.

Enforcing rights after the stay for reasons relating to earlier circumstances


415D(4) The right is unenforceable against the body indefinitely after the end of the stay period to the extent that a reason for seeking to enforce the right:


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


(b) is the body having been the subject of any of the following before the end of the stay period:


(i) an announcement referred to in paragraph (1)(a);

(ii) an application under section 411 ;

(iii) a compromise or arrangement approved under this Part as a result of an application under section 411 ; or


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


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

Application must be made to avoid insolvency


415D(5) However, subsection (1) does not apply, and is taken never to have applied, if the application under section 411 fails to state that it is being made for the purpose of the body avoiding being wound up in insolvency.

Rights not subject to the stay


415D(6) Subsection (1) does not apply to the right if it is:


(a) a right under a contract, agreement or arrangement entered into after the day the order (if any) approving under this Part a compromise or arrangement as a result of the application takes effect; or


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


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

(ii) declared under paragraph (7)(a); or


(c) a right of a kind declared under paragraph (7)(b); or


(d) a right of a kind declared under paragraph (7)(c), and the circumstances specified in that declaration exist.

Note: For paragraph (a), subsection 411(10) sets out when the order takes effect.


415D(7) For the purposes of subsection (6), the Minister may, by legislative instrument:


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


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


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


415D(8) If the application under section 411 results in the approval under this Part of a compromise or arrangement, subsection (1) does not apply to the right to the extent that:


(a) the person appointed to administer the compromise or arrangement; or


(b) if a liquidator of the body is appointed after the start of the stay period - the liquidator;

has consented in writing to the enforcement of the right.

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


415D(9) If:


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


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

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

SECTION 415E LIFTING THE STAY  


415E(1) The Court may order that subsection 415D(1) does not apply for one or more rights against a body if the Court is satisfied:


(a) that the relevant compromise or arrangement:


(i) to be applied for; or

(ii) applied for; or

(iii) approved;

under this Part is not for the purpose of the body avoiding being wound up in insolvency; or


(b) that this is appropriate in the interests of justice.


415E(2) The order may also provide that the holder of those rights may choose to enforce those rights from the earlier of:


(a) the day any announcement referred to in paragraph 415D(1)(a) was made by the body; and


(b) the day any application under section 411 was made for the compromise or arrangement.


415E(3) An application for the order may be made by the holder of those rights.

SECTION 415F ORDER FOR RIGHTS TO BE ENFORCEABLE ONLY WITH LEAVE OF THE COURT  

Orders


415F(1) The Court may order that one or more rights under a contract, agreement or arrangement are enforceable against a body only:


(a) with the leave of the Court; and


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

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


415F(2) The Court may make the order (the stay order ) if:


(a) the body is the subject of any of the following:


(i) an announcement referred to in paragraph 415D(1)(a) ;

(ii) an application under section 411 (the section 411 application );

(iii) a compromise or arrangement approved under this Part as a result of a section 411 application; and


(b) the Court is satisfied that:


(i) the rights are being exercised; or

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

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

because of one or more reasons referred to in paragraphs 415D(1)(a) to (f); and


(c) an application for the stay order is:


(i) if the body has made an announcement referred to in paragraph 415D(1)(a) , but not yet a section 411 application - made by the body; or

(ii) if the body has made a section 411 application, but a resulting compromise or arrangement is yet to be approved under this Part - included in the section 411 application; or

(iii) if a compromise or arrangement has been approved under this Part as a result of the section 411 application - made by the person appointed to administer the compromise or arrangement; and


(d) in a case where the body has made a section 411 application - the section 411 application states it is being made for the purpose of the body avoiding being wound up in insolvency.


415F(3) A stay order must specify the period for which it applies. In working out the period, the Court must have regard to:


(a) subsections 415D(2) , (3) and (4) ; and


(b) the interests of justice.


415F(4) Subsection (1) does not apply to a right referred to in subsection 415D(6) or (8) .

Interim orders


415F(5) Before deciding an application for a stay order, the Court may grant an interim order for one or more rights under a contract, agreement or arrangement not to be enforced against a body.


415F(6) The Court must not require an applicant for a stay order to give an undertaking as to damages as a condition of granting an interim order.

SECTION 415FA SELF-EXECUTING PROVISIONS  


415FA(1) The object of subsection (2) is to ensure that a self-executing provision:


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


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


415FA(2) Sections 415D to 415F also apply in relation to a self-executing provision in a corresponding way to the way they apply in relation to a right. For this purpose, assume those sections apply with such modifications as are necessary, including any prescribed by the regulations for the purposes of this subsection.

Note 1: This subsection achieves the object in subsection (1) by extending the application of all of the outcomes, exceptions and powers in sections 415D to 415F .

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

(a) a reference that a right cannot be enforced (however described) as including a reference that a self-executing provision cannot start to apply; and
(b) the words " if the right arises for that reason by express provision (however described) of a contract, agreement or arrangement " as being omitted from subsection 415D(1); and
(c) a reference that one or more rights are enforceable as including a reference that one or more self-executing provisions can start to apply; and
(d) paragraph 415F(2)(b) as alternatively providing that the Court is satisfied that one or more reasons referred to in paragraphs 415D(1)(a) to (f) can cause the self-executing provisions to start to apply.


415FA(3) In this section:

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


(a) for one or more reasons; and


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

SECTION 415G WHEN OTHER LAWS PREVAIL - CERTAIN OTHER COMMONWEALTH ACTS  
415G  If there is any inconsistency between sections 415D to 415FA and one of the following Acts, that Act prevails to the extent of the inconsistency:


(a) the Payment Systems and Netting Act 1998 ;


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

]

 



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