CORPORATIONS ACT 2001

CHAPTER 5 - EXTERNAL ADMINISTRATION  

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

Division 8 - Employee entitlements contribution orders  

SECTION 588ZA   EMPLOYEE ENTITLEMENTS CONTRIBUTION ORDERS  

Making of employee entitlements contribution order

588ZA(1)  
The Court may make an order under subsection (2) (an employee entitlements contribution order ) in relation to an entity (the contributing entity ) if the Court is satisfied that:


(a) a company (the insolvent company ) is being wound up; and


(b) an amount (the unpaid entitlements amount ) of the entitlements of one or more employees (within the meaning of Part 5.8A) of the insolvent company that are protected under Part 5.8A has not been paid; and


(c) the contributing entity is a member of the same contribution order group (see subsection (6)) as the insolvent company; and


(d) the contributing entity has benefited, directly or indirectly, from work done by those employees; and


(e) that benefit exceeds the benefit that would be reasonable in the circumstances if the insolvent company and the contributing entity were dealing at arm ' s length; and


(f) it is just and equitable to make the order.

Note 1: For the people who may apply to the Court for an employee entitlements contribution order, see section 588ZB .

Note 2: A reference in Part 5.8A to an employee of a company is a reference to a current or former employee, and includes a reference to another person to whom an entitlement of an employee is owed (see section 596AA ).

588ZA(2)  
For the purposes of subsection (1), the Court may order the contributing entity to pay to the liquidator of the insolvent company an amount that:


(a) reflects the value of the excess referred to in paragraph (1)(e); and


(b) does not, together with any other payments required to be made in respect of the unpaid entitlements amount by the order, exceed the unpaid entitlements amount.

588ZA(3)  
The payment of an amount in accordance with an employee entitlements contribution order is not to be taken to be an advance of money for the purposes of section 560 .

588ZA(4)  
In determining whether it is just and equitable to make an employee entitlements contribution order, the Court may have regard to the following matters:


(a) the size of the excess referred to in paragraph (1)(e);


(b) the nature of the relationship between the contributing entity and the insolvent company;


(c) any efforts made by the contributing entity, or officers of the contributing entity, and officers of the insolvent company to pay or to provide for the payment of the unpaid entitlements amount;


(d) if the contributing entity is solvent - whether the order is likely to result in the contributing entity becoming insolvent;


(e) the extent (if any) to which the order is likely to result in the contributing entity becoming unable to pay the entitlements of its employees or make distributions to creditors;


(f) any other matters that the Court considers appropriate.

588ZA(5)  
If the Court makes an employee entitlements contribution order, the Court may do the following:


(a) if the contributing entity is a company - order that the obligation to pay an amount under the order has the priority of a debt or claim covered by any of paragraph 556(1)(e) , (f), (g) or (h) in the winding up of the contributing entity (whether or not the contributing entity is being wound up when the order is made);


(b) make any other orders, and give any directions, that the Court considers appropriate for the purposes of giving effect to the employee entitlements contribution order. Contribution order group

588ZA(6)  
For the purposes of subsection (1), 2 entities are members of the same contribution order group if:


(a) one of the entities is, or has been, a related body corporate of the other entity; or


(b) one of the entities is, or has been, a related body corporate of a body corporate that is, or has been, a related body corporate of the other entity; or


(c) one of the entities is, or has been, controlled by the other entity or a related body corporate of the other entity; or


(d) both of the entities represent, or have represented, to the public that they are related to one another; or


(e) both entities are, or have been, part of the same consolidated entity; or


(f) both entities are, or have been, part of a collection of entities that, as a matter of economic and commercial substance, functions or functioned as a single entity.


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