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 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.


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