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CORPORATIONS ACT 2001

CHAPTER 5 - EXTERNAL ADMINISTRATION  

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

Division 17 - Miscellaneous  

SECTION 451D  

451D  TIME FOR DOING ACT DOES NOT RUN WHILE ACT PREVENTED BY THIS PART  

Where:


(a) for any purpose (for example, the purposes of a law, agreement or instrument) an act must or may be done within a particular period or before a particular time; and


(b) this Part prevents the act from being done within that period or before that time;

the period is extended, or the time is deferred, because of this section, according to how long this Part prevented the act from being done.

[CCH Note 1: The next section is s 459A.]

[CCH Note 2: S 451E will be inserted by No 112 of 2017, s 3, Sch 1[14] (effective 1 July 2018). S 451E will read:

SECTION 451E STAY ON ENFORCING RIGHTS MERELY BECAUSE THE COMPANY IS UNDER ADMINISTRATION ETC.  

Stay on enforcing rights


451E(1) A right cannot be enforced against a company for:


(a) the reason that the company has come or is under administration; or


(b) the company's financial position, if the company is under administration; or


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


(i) the company coming, or possibly coming, under administration; or

(ii) the company's financial position;

if the company later comes under administration; or


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

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

Note: This result is subject to subsections (5) and (7), and to any order under section 451F.

Example: A right to terminate a contract will not be enforceable to the extent that those rights are triggered by the company coming under administration.

Period of the stay


451E(2) The right cannot be enforced as described in subsection (1) during the period (the stay period) starting when the company comes under administration and ending at the latest of the following:


(a) when the administration ends;


(b) if one or more orders are made under subsection (3) for the company as the result of an application made before the administration ends - when the last made of those orders ceases to be in force;


(c) if the administration ends because of a resolution or order for the company to be wound up - when the company's affairs have been fully wound up.


451E(3) The Court:


(a) may order an extension of the period otherwise applying under subsection (2) for the company if the Court is satisfied that the extension is appropriate having regard to the interests of justice; and


(b) before deciding an application for an order under paragraph (a), may grant an interim order, but must not require the applicant to give an undertaking as to damages as a condition for doing so.

Enforcing rights after the stay for reasons relating to earlier circumstances


451E(4) The right is unenforceable against the company indefinitely after the end of the stay period to the extent that a reason for seeking to enforce the right:


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


(b) is the company having come or been under administration before the end of the stay period; or


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


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

Rights not subject to the stay


451E(5) Subsection (1) does not apply to the right if it is:


(a) a right under a contract, agreement or arrangement entered into after the company comes under administration; 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 (6)(a); or


(c) a right of a kind declared under paragraph (6)(b); or


(d) a right of a kind declared under paragraph (6)(c), and the circumstances specified in that declaration exist.

Note: Subsection (1) also does not apply to certain secured creditors (see Subdivision B of Division 7).


451E(6) For the purposes of subsection (5), the Minister may, by legislative instrument:


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


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


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


451E(7) Subsection (1) does not apply to the right to the extent that:


(a) the administrator of the company; or


(b) if a liquidator of the company is appointed after the administration ends - the liquidator;

has consented in writing to the enforcement of the right.

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


451E(8) If:


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


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

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

SECTION 451F LIFTING THE STAY  


451F(1) The Court may order that subsection 451E(1) does not apply for one or more rights against a company if the Court is satisfied that this is appropriate in the interests of justice.


451F(2) An application for the order may be made by the holder of those rights.

SECTION 451G ORDER FOR RIGHTS TO BE ENFORCEABLE ONLY WITH LEAVE OF THE COURT  

Orders


451G(1) The Court may order that one or more rights under a contract, agreement or arrangement are enforceable against a company 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.


451G(2) The Court may make the order if:


(a) the company is under administration; 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 451E(1)(a) to (d); and


(c) an application for the order is made by the administrator of the company.


451G(3) An order under subsection (1) must specify the period for which it applies. In working out the period, the Court must have regard to:


(a) subsections 451E(2), (3) and (4); and


(b) the interests of justice.


451G(4) Subsection (1) does not apply to a right referred to in subsection 451E(5) or (7).

Note: An order under subsection (1) also does not restrict certain secured creditors (see Subdivision B of Division 7).

Interim orders


451G(5) Before deciding an application for an order under subsection (1), the Court may grant an interim order for one or more rights under a contract, agreement or arrangement not to be enforced against a company.


451G(6) The Court must not require an applicant for an order under subsection (1) to give an undertaking as to damages as a condition of granting an interim order.

SECTION 451GA SELF-EXECUTING PROVISIONS  


451GA(1) The object of subsection (2) is to ensure that a self-executing provision:


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


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


451GA(2) Sections 451E to 451G 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 451E to 451G.

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 451E(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 451G(2)(b) as alternatively providing that the Court is satisfied that one or more reasons referred to in paragraphs 451E(1)(a) to (d) can cause the self-executing provisions to start to apply.


451GA(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 451H WHEN OTHER LAWS PREVAIL - CERTAIN OTHER COMMONWEALTH ACTS  
451H If there is any inconsistency between sections 451E to 451GA 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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