Corporations Act 2001

CHAPTER 5 - EXTERNAL ADMINISTRATION  

PART 5.3B - RESTRUCTURING OF A COMPANY  

Division 7 - Other matters  

SECTION 458E   WHEN IS A COMPANY ELIGIBLE FOR TEMPORARY RESTRUCTURING RELIEF?   When is a company eligible for temporary restructuring relief?

458E(1)  
A company is eligible for temporary restructuring relief if:

(a)  before the end of the restructuring relief period, the directors of the company:


(i) make a declaration in writing that sets out the matters mentioned in paragraphs (b), (c) and (d) and, if there is a prescribed form for the declaration, is in the prescribed form; and

(ii) publish notice of the declaration in the prescribed manner; and

(b)  there are reasonable grounds to believe that:


(i) the company is insolvent, or is likely to become insolvent before the declaration under subparagraph (a)(i) expires; and

(ii) the eligibility criteria for restructuring would be met in relation to the company if a restructuring practitioner were appointed on the day on which notice of the declaration under subparagraph (a)(i) is published, or on any day afterwards on which the declaration has not expired; and

(c)  the board has resolved to the effect that a restructuring practitioner for the company should be appointed; and

(d)  there is no:


(i) restructuring practitioner for the company; or

(ii) restructuring practitioner for a restructuring plan made by the company that has not yet terminated; or

(iii) administrator of the company; or

(iv) administrator of a deed of company arrangement executed by the company that has not yet terminated; or

(v) liquidator or provisional liquidator of the company; and

(e)  the declaration under subparagraph (a)(i) has not expired; and

(f)  the company has not otherwise ceased to be eligible for temporary restructuring relief for any reason; and

(g)  the company has not previously been eligible for temporary restructuring relief that has ceased:


(i) because a previous declaration under subparagraph (a)(i) has expired; or

(ii) for any other reason.

458E(2)  
A declaration under subparagraph (1)(a)(i) in relation to a company expires:

(a)  3 months after notice of the declaration is first published in the prescribed manner (the initial relief period ); or

(b)  a further one month after the initial relief period if:


(i) paragraphs (1)(b), (c) and (d) continue to be satisfied in relation to the company; and

(ii) the directors of the company have taken all reasonable steps to appoint a restructuring practitioner but have been unable to do so; and

(iii) the directors of the company make a further declaration under subsection (3), and publish notice of that declaration in the prescribed manner; and

(iv) notice of the further declaration is published no later than 2 weeks before the end of the initial relief period.

458E(3)  
A declaration by the directors of a company under this subsection must:

(a)  state that paragraphs (1)(b), (c) and (d) continue to be satisfied in relation to the company; and

(b)  set out:


(i) the steps that the company has taken to appoint a restructuring practitioner; and

(ii) the steps that the company intends to take to appoint a restructuring practitioner before the declaration under subparagraph (1)(a)(i) expires, if extended under paragraph (2)(b); and

(c)  be in writing; and

(d)  if there is a prescribed form for the declaration - be in the prescribed form. Giving ASIC copies of declarations under this section

458E(4)  
If the directors of a company publish notice of a declaration as mentioned in subparagraph (1)(a)(ii) or (2)(b)(iii), they must give ASIC a copy of the declaration no later than 5 business days after doing so.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1) ).

When does a company cease to be eligible for temporary restructuring relief?

458E(5)  
A company ceases to be eligible for temporary restructuring relief if:

(a)  the declaration under subparagraph (1)(a)(i) under which the company was eligible for temporary restructuring relief expires; or

(b)  the directors of the company fail to comply with subsection (4); or

(c)  a small business restructuring practitioner for the company is appointed under section 453B ; or

(d)  an administrator of the company is appointed under section 436A , 436B or 436C ; or

(e)  a liquidator, or provisional liquidator, is appointed to wind up the company; or

(f)  the company publishes notice under subsection 458F(1) or (2) that the company is not, or is not to be treated as, eligible for temporary restructuring relief; or

(g)  the Court orders under section 458G that the company is not eligible for temporary restructuring relief.


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