A T O home
Legal Database
Search   
for 
 
Access the database 
Browse database
Searches  
View last document
Quick access 
View legislation
View a document
Email Cross Reference Material Previous/Next Section Contents Previous/Next Result
Printable version
Printable
version

CORPORATIONS ACT 2001

CHAPTER 5 - EXTERNAL ADMINISTRATION  

PART 5.7B - RECOVERING PROPERTY OR COMPENSATION FOR THE BENEFIT OF CREDITORS OF INSOLVENT COMPANY  

Division 1 - Preliminary  

SECTION 588E  PRESUMPTIONS TO BE MADE IN RECOVERY PROCEEDINGS  

588E(1)  

 View history reference
In this section:

recovery proceeding , in relation to a company, means:


(a) an application under section 588FF by the company ' s liquidator; or


(b) proceedings begun under subsection 588FH(2) by the company ' s liquidator; or


(c) proceedings, in so far as they relate to the question whether a security interest created by the company is void to any extent, as against the company ' s liquidator, because of subsection 588FJ(2) ; or


(d) proceedings begun under subsection 588FJ(6) by the company ' s liquidator; or


(e) proceedings for a contravention of subsection 588G(2) in relation to the incurring of a debt by the company (including proceedings under section 588M in relation to the incurring of the debt but not including proceedings for an offence); or


(f) proceedings under section 588W in relation to the incurring of a debt by the company.

588E(2)  

Subsections (3) to (9), inclusive, have effect for the purposes of a recovery proceeding in relation to a company.

588E(3)  

If:


(a) the company is being wound up; and


(b) it is proved, or because of subsection (4) or (8) it must be presumed, that the company was insolvent at a particular time during the 12 months ending on the relation-back day;

it must be presumed that the company was insolvent throughout the period beginning at that time and ending on that day.

588E(4)  

Subject to subsections (5) to (7), if it is proved that the company:


(a) has failed to keep financial records in relation to a period as required by subsection 286(1) ; or


(b) has failed to retain financial records in relation to a period for the 7 years required by subsection 286(2) ;

the company is to be presumed to have been insolvent throughout the period.

588E(5)  

Paragraph (4)(a) does not apply in relation to a contravention of subsection 286(1) that is only minor or technical.

588E(6)  

Subsection (4) does not have effect, in so far as it would prejudice a right or interest of a person for the company to be presumed insolvent because of a contravention of subsection 286(2) , if it is proved that:


(a) the contravention was due solely to someone destroying, concealing or removing financial records of the company; and


(b) none of those financial records was destroyed, concealed or removed by the first-mentioned person; and


(c) the person was not in any way, by act or omission, directly or indirectly, knowingly or recklessly, concerned in, or party to, destroying, concealing or removing any of those financial records.

588E(7)  

If the recovery proceeding is an application under section 588FF , subsection (4) of this section does not have effect for the purposes of proving, for the purposes of the application, that an unfair preference given by the company to a creditor of the company is an insolvent transaction, unless it is proved, for the purposes of the application, that a related entity of the company was a party to the unfair preference.

588E(8)  

If, for the purposes of another recovery proceeding in relation to the company, there has been proved:


(a) if the other proceeding is of the kind referred to in paragraph (1)(a) of this section - a matter of the kind referred to in a paragraph of section 588FC or of subsection 588FG(2) ; or


(b) if the other proceeding is of the kind referred to in paragraph (1)(b) of this section - a matter of the kind referred to in a paragraph of section 588FC or of subsection 588FG(2) or 588FH(1) , or a defence under subsection 588FH(3) ; or


(c) if the other proceeding is of the kind referred to in paragraph (1)(c) or (d) of this section - a matter of the kind referred to in subsection 588FJ(3) ; or


(d) if the other proceeding is of the kind referred to in paragraph (1)(e) of this section - a matter of the kind referred to in a paragraph of section 588G , or a defence under section 588H ; or


(e) if the other proceeding is of the kind referred to in paragraph (1)(f) of this section - a matter of the kind referred to in a paragraph of subsection 588V(1) , or a defence under section 588X ;

it must be presumed that that matter was the case, or that the matters constituting that defence were the case.

588E(8A)  

 View history reference
If, for the purposes of another recovery proceeding in relation to the company, evidence has been adduced or pointed to that suggests a reasonable possibility of:


(a) subsection 588GA(1) applying in relation to a person and a debt; or


(b) subsection 588WA(1) applying in relation to a corporation and a debt;

it must be presumed that that reasonable possibility exists.

[ CCH Note: No 112 of 2017, Sch 1[6] contains the following Application of amendments (effective 19 September 2017):

6 Application of amendments   The amendments made by this Part apply in relation to:


(a) courses of action developed or taken before, at or after the commencement of this Part; and


(b) debts incurred at or after that commencement.

]

588E(9)  

A presumption for which this section provides operates except so far as the contrary is proved for the purposes of the proceeding concerned.

 



This information is provided by CCH Australia Limited. View the disclaimer and notice of copyright.
Top of page
More information on page