Corporate Insolvency and Restructuring Act, 2020 (ACT 1015)
This section states the Act’s purpose and says distressed companies may be put into administration or restructuring when they cannot pay debts as due or have negative net worth.
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- Act 1015
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Statute overview
About this statute
This section states the Act’s purpose and says distressed companies may be put into administration or restructuring when they cannot pay debts as due or have negative net worth. A company in administration must stop trading, unless continuing business is needed for the beneficial administration of the company. This section sets out who may appoint an administrator of a company and when appointment is blocked or limited. The Act allows one or three administrators to be appointed where it provides for an administrator, and a majority of them may act unless the appointing document says otherwise. An administrator may charge reasonable remuneration if the committee of creditors approves it, and the Court may resolve disputes about that remuneration.
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Legal text
Provisions of Corporate Insolvency and Restructuring Act, 2020 (ACT 1015)
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- 1 Verify source ↗
Purpose of this Act
AI-assisted research summary: This section states the Act’s purpose and says distressed companies may be put into administration or restructuring when they cannot pay debts as due or have negative net worth.
Section 1—Purpose of this Act (1) The purpose of this Act is to provide a legal regime for— (a) the administration of the business, property and affairs of a distressed company in a manner that provides an opportunity for the company to as much as possible continue in existence as a going concern; (b) the temporary management of the affairs, business and property of a distressed company; (c) the placing of a temporary freeze on the rights of creditors and other claimants against a distressed company; (d) the development and implementation of a restructuring plan which results in a better return for the creditors and shareholders of the company that would result from the immediate winding-up of a distressed company; (e) the official liquidation of a body corporate; (f) cross-border insolvency; (g) the regulation of insolvency services; and 9 (h) netting agreements. (2) A company shall be placed in administration or restructuring if— (a) the company is unable to pay the debts or current obligations of the company as the debts or obligations fall due even if the total assets of the company exceed the total liabilities of the company; or (b) the company has a negative net worth. (3) Subsection (1) does not apply to companies carrying on the business of banking, insurance or any other business which is subject to special legislation, except where the special legislation does not provide for a rescue provision. - 2 Verify source ↗
Period of administration Appointment of Administrator
AI-assisted research summary: A company in administration must stop trading, unless continuing business is needed for the beneficial administration of the company.
Section 2—Period of administration (1) The administration of a company begins when an administrator is appointed. (2) The administration of a company ends when (a) a restructuring agreement is executed by the company and the restructuring officer; (b) the creditors of the company resolve that the administration should end; (e) the creditors of the company appoint a liquidator by a resolution passed at a watershed meeting; or (d) any of the circumstances set out in subsection (3) occurs. (3) The administration of a company may end where (a) the Court orders for the administration to end because the Court is satisfied that the company is solvent, or that for any other sufficient reason the administration should cease, and the administration ends on the date specified in the order or, if no date is specified, when the order is made; (b) the convening period expires without a watershed meeting having been held or without an application having been made to extend the period; (c) an application is made to the Court to extend the convening period, and the application is dealt with without the convening period being extended; (d) a watershed meeting ends without a resolution that the company execute a restructuring agreement; (e) the company fails to execute a proposed restructuring agreement within the time permitted by subsection (2) of section 45; or (f) the Court appoints a liquidator. (4) A company shall, from the commencement of administration, suspend the business of the company except where the company is required to do so for the beneficial administration of the company. 10 Appointment of Administrator - 3 Verify source ↗
Appointment of administrator
AI-assisted research summary: This section sets out who may appoint an administrator of a company and when appointment is blocked or limited.
Section 3—Appointment of administrator (1) A person may be appointed as an administrator of a company. (2) A person shall not be appointed as an administrator of a company if that person is not qualified under section 155 to be an insolvency practitioner. (3) A person shall not be appointed as an administrator unless— (a) that person has consented in writing and has not withdrawn the consent at the time of appointment; and (b) the consent of that person has been filed with the Registrar. (4) For the purposes of subsections (1), (2) and (3) which relate to the appointment of an administrator. "a person" means a natural person. (5) An administrator may be appointed by— (a) the company; (b) the liquidator, where the company is in liquidation; (c) a person holding a charge over the whole or substantially the whole of the property of the company or the receiver appointed by that person; or (d) the Court. (6) Where a company is already in administration, an administrator may be appointed only by (a) the creditors, as a replacement administrator for an administrator that the creditors have removed; or (b) the appointer of the first administrator, if that administrator has died, resigned or become disqualified. (7) A company may appoint an administrator where the directors resolve that— (a) the company is insolvent or is likely to become insolvent in the opinion of the directors voting for the resolution; and (b) an administrator of the company must be appointed. (8) A company shall not appoint an administrator if the company is already in liquidation. (9) The private liquidator of a company in a private liquidation may appoint an administrator if the liquidator thinks that the company is insolvent or is likely to become insolvent. (10) The appointment shall be in writing and shall state the— (a) date of the appointment; and 11 (b) the grounds that indicate the likelihood of a company becoming insolvent. (11) A secured creditor or a receiver appointed by the creditor shall not appoint an administrator where the company is already in liquidation. (12) The Court may appoint an administrator on the application of a creditor, the liquidator, if the company is in liquidation, the Registrar or where the Court is satisfied that— (a) the company is or may become insolvent; (b) the survival of the company and the assets as a going concern are reasonably capable of being achieved in the event of an administrator being appointed; (c) a more advantageous realisation of the assets of the company and any related company may be achieved than on an immediate winding-up; (d) the appointment of an administrator may achieve a more advantageous realisation or a more expeditious settlement of a duty or liability owed by any person to the company or any related company; or (e) it is just and equitable to do so. (13) The appointment of an administrator shall not be revoked, except where the administrator is removed by the Court or by the creditors. - 4 Verify source ↗
Appointment of one or three administrators
AI-assisted research summary: The Act allows one or three administrators to be appointed where it provides for an administrator, and a majority of them may act unless the appointing document says otherwise.
Section 4—Appointment of one or three administrators (1) One or three persons may be appointed as administrators in any case where this Act provides for the appointment of an administrator. (2) Where one or three persons are appointed as administrators of a company— (a) the functions of the administrator may be performed or exercised by a majority of the administrators unless the order, instrument or resolution that appoints the administrators provides otherwise; and (b) a reference in this Act to an administrator refers to the administrator or administrators as the case requires. - 5 Verify source ↗
Remuneration of administrator
AI-assisted research summary: An administrator may charge reasonable remuneration if the committee of creditors approves it, and the Court may resolve disputes about that remuneration.
Section 5—Remuneration of administrator (1) An administrator is entitled, with the approval of the committee of creditors, to charge reasonable remuneration for performing duties and exercising powers as an administrator. (2) Where there is a disagreement on the remuneration of an administrator, the Court may, on the application of an administrator, an officer of the company, a creditor or a shareholder review or fix the remuneration of the administrator at a level that is reasonable in the circumstances. - 6 Verify source ↗
Vacancy in office of administrator
AI-assisted research summary: An administrator’s office becomes vacant if the administrator dies, resigns, becomes disqualified, or is removed by the Court or creditors.
Section 6—Vacancy in office of administrator The office of an administrator becomes vacant where the administrator— 12 (a) dies; (b) resigns; (c) becomes disqualified; or (d) is removed by the Court or by creditors. - 7 Verify source ↗
Resignation and removal of administrator
AI-assisted research summary: An administrator may resign in writing, and may also be removed by the Court or by creditors if the stated notice, hearing, and replacement-administrator requirements are met.
Section 7—Resignation and removal of administrator (1) An administrator may resign by giving written notice to the company and to the appointer of the administrator. (2) An administrator may be removed— (a) by the Court, on the application of a creditor, the liquidator if the company is in liquidation or the Registrar; (b) by a resolution of creditors passed at the first meeting of the creditors; or (c) by a resolution of creditors at a meeting convened to consider whether to remove a replacement administrator. (3) The creditors shall not remove an administrator by a resolution passed at a meeting of creditors unless— (a) a notice of the meeting to remove the administrator has been given to the— (i) company, and (ii) administrator not less than fourteen days before the meeting at which the resolution is to be moved; (b) the administrator has been given the opportunity to be heard and, if desired, presents a written submission at the meeting; (e) the resolution also appoints a new administrator; and (d) the person named in the resolution as the new administrator has, before the resolution is considered, tabled at the meeting— (i) a signed, written consent to act as administrator; and (ii) a statement of interest. - 8 Verify source ↗
Appointment of administrator to fill vacancy
AI-assisted research summary: The appointer of an administrator, and the directors by resolution, may appoint someone to fill a vacancy in the office of administrator.
Section 8—Appointment of administrator to fill vacancy (1) The appointer of an administrator may appoint a person to fill a vacancy where the office of the administrator becomes vacant— (a) by the death of the administrator; (b) through the resignation of the administrator; (e) on the disqualification of the administrator; or 13 (d) by removal of the administrator by the Court or creditors. (2) The directors may, by resolution, appoint an administrator to fill a vacancy. - 9 Verify source ↗
Creditors to consider appointment of replacement administrator Effect of Appointment
AI-assisted research summary: A replacement administrator must call and arrange a creditors’ meeting, unless a court has appointed the replacement administrator.
Section 9—Creditors to consider appointment of replacement administrator (1) Unless a replacement administrator is appointed by the Court, a replacement administrator shall convene a meeting of the creditors at which the creditors may vote to remove the replacement administrator and appoint another person in place of the replacement administrator. (2) The meeting shall be held within seven days after the date on which the replacement administrator is appointed. (3) The replacement administrator shall convene the meeting by— (a) giving written notice of the meeting to the creditors of the company; and (b) publishing a notice of the meeting in a daily newspaper of national circulation. (4) The replacement administrator shall take the steps set out in subsection (3) within two working days before the meeting. (5) For the purpose of this section, "replacement administrator" means the person who is appointed to fill a vacancy in the office of administrator. Effect of Appointment - 10 Verify source ↗
Role of administrator
AI-assisted research summary: The administrator controls the company, investigates its affairs, may manage or dispose of business/property, and must file reports and financial statements on schedule.
Section 10—Role of administrator (1) The administrator, in the course of the administration, (a) shall have control of the business, property and affairs of the company; (b) is required to investigate the affairs of the company and consider possible ways of salvaging the business of the company in the interests of creditors. employees and shareholders; (c) shall carry on the business of the company and manage the property and affairs of the company with the object of salvaging the business of the company in the interests of creditors, employees and shareholders; (d) may terminate or dispose of the whole or part of the business of the company, and may dispose of any of the properties of the company; and (e) may perform any other function, and exercise any other power, that the company or any of the officers of the company could perform or exercise if the company were not in administration. (2) The administrator shall file financial statements and report with the Registrar and submit copies to the directors of the company for each of the following periods: 14 (a) the period of six months or shorter as the administrator may determine with effect from the date on which the administrator was appointed; (b) each subsequent period of six months during which the administrator holds office; and (c) the period between the latter period of the type referred to in paragraph (b) and the date on which the administrator vacates office. (3) The administrator shall file the financial statements and report within twenty-eight days after the end of the period specified in paragraphs (a), (b) or (c) of subsection (2). (4) The financial statements and report shall be in the prescribed form and shall show— (a) for each period, the receipts and payments of tile administrator; and (b) for each period except the first, the aggregate of the receipts and payments of the administrator since the day on which the administrator was appointed. (5) A payment made, transaction entered into, or any other action taken, in good faith, by or with the consent of the administrator of a company in administration— (a) is valid and effectual for the purpose of this Act; and (b) shall not be set aside, if the company is placed in liquidation. (6) For the purposes of this section, "administrator" includes a restructuring officer. - 11 Verify source ↗
Powers of administrator
AI-assisted research summary: An administrator may perform the administrator’s functions and duties, sue and defend proceedings, run the company’s business as needed for the administration, and appoint others to act on the administrator’s behalf.
Section 11—Powers of administrator (1) An administrator has the power to perform the functions and discharge the duties of an administrator under this Act. (2) Without limiting subsection (1), the power of the administrator includes the power to (a) begin, continue, discontinue and defend legal proceedings; (b) carry on the business of the company to the extent necessary for the administration; and (c) appoint any other person to act on behalf of the administrator pursuant to paragraph (a). (3) An administrator is the agent of the company when performing a function or exercising a power under subsection (2). (4) For purposes of paragraph (a) of subclause (2), an administrator shall sue in the name of the company. - 12 Verify source ↗
Effect on company officers
AI-assisted research summary: An administrator’s appointment does not remove company directors from office, but a director of a company in administration must not carry out company management or officer functions unless the administrator gives prior written approval or the Act expressly اجازت permits it.
Section 12—Effect on company officers (1) The appointment of an administrator does not result in the removal of the directors of the company from office. (2) A director of a company that is in administration shall not exercise a power, perform a function, be responsible for managing the affairs of the company or purport to do so as an officer of the company except— 15 (a) with the prior, written approval of the administrator; or (b) as expressly permitted under this Act. - 13 Verify source ↗
Effect on employees
AI-assisted research summary: An administrator does not automatically end employee contracts, must pay accrued wages or salary for pre-appointment employment contracts during the administration, and may avoid that payment only by giving due notice of termination within 21 days after appointment.
Section 13—Effect on employees (1) The appointment of an administrator does not automatically terminate an employment agreement to which the company is a party. (2) The administrator shall pay the wages or salary that has accrued to an employee during the administration of the company as a result of any contract of employment entered into by the company before the appointment of the administrator unless the administrator has given due notice of the termination of the contract within twenty-one days after the appointment of the administrator. (3) The Court may, on the application of the administrator, extend the period of twenty-one days within which notice of termination is to be given, on terms that the Court considers appropriate. - 14 Verify source ↗
Effect on dealing with property of company
AI-assisted research summary: Deals with company property during administration are void unless approved by the administrator, made by court order, or entered by the administrator on the company’s behalf.
Section 14—Effect on dealing with property of company (1) A transaction or dealing by a company in administration or by a person on behalf of the company, that affects the property of the company is void unless the transaction or dealing was entered into— (a) by the administrator, on behalf of the company; (b) with the prior written consent of the administrator; or (c) in pursuance of an order of a Court. (2) Subsection (1) does not apply to a payment made by a bank— (a) out of an account kept by the company with the bank; (b) in good faith and in the ordinary course of the business of the bank; and (c) on or before the day on which the bank was notified in writing by the administrator that the administration had begun or before the bank had reason to believe that the company was in administration, whichever was earlier. - 15 Verify source ↗
Effect on transfer of shares
AI-assisted research summary: A person generally must not transfer shares in a company in administration or change a shareholder’s rights or liabilities, unless the administrator consents or the Court orders it.
Section 15—Effect on transfer of shares (1) Subject to subsections (2) and (3), a person shall not— (a) transfer a share in a company in administration; or (b) alter the rights or liabilities of a shareholder of a company in administration. (2) An administrator may consent to the transfer of a share in a company in administration where the administrator is satisfied that the transfer is in the best interests of the shareholders and creditors of the company. (3) The Court may make an order for— 16 (a) the transfer of a share of a company in administration, where the consent of the administrator has been sought and the administrator has refused or failed to respond within fourteen days; or (b) the alteration of the rights and liabilities of a shareholder in a company in administration. - 16 Verify source ↗
Investigation of affairs of company
AI-assisted research summary: The administrator must investigate the company’s business, property, affairs, and finances, and decide whether creditors’ interests favor a restructuring agreement, ending the administration, or appointing a liquidator.
Section 16—Investigation of affairs of company The administrator shall within twenty-one days after the administration of a company commences. (a) investigate the business, property, affairs and financial circumstances of the company; and (b) form an opinion as to whether it will be in the interest of the creditors for— (i) the company to execute a restructuring agreement; (ii) the administration to end; or (iii) a liquidator to be appointed. - 17 Verify source ↗
Statement of directors
AI-assisted research summary: After an administrator is appointed, directors must submit the company’s financial statements within 7 days. The administrator may extend the deadline by 7 more days and must table the statements at the relevant creditors meeting. A director who misses the deadline may have to pay an administrative penalty of 250 penalty units to the Registrar.
Section 17—Statement of director (1) After the appointment of an administrator. the directors shall, within seven days, submit to the administrator, financial statements in relation to the company including— (a) statement of financial position; (b) statement of comprehensive income; (c) statement of changes in equity; (d) statement of cash flows; and (e) description of significant accounting policies and explanatory notes to the financial statements prepared in compliance with International Financial Reporting Standards approved or adopted by the Institute of Chartered Accountants or any other standards approved or adopted by the Institute. (2) The administrator may extend the time for compliance with subsection (1) for a further seven days. (3) The administrator shall table the financial statements of the directors— (a) at the first meeting of the creditors; or (b) at the watershed meeting where the administrator has extended the time for compliance by the directors under subsection (2). (4) A director who fails to submit financial statements— (a) under subsection (1); or (b) within the time determined by the administrator under subsection (2), 17 is liable to pay to the Registrar, an administrative penalty of two hundred and fifty penalty units. - 18 Verify source ↗
Right to obtain documents and information
AI-assisted research summary: An administrator may use the liquidator’s section 97 powers to access documents and information.
Section 18—Right to obtain documents and information An administrator may exercise any of the powers vested in a liquidator under section 97 with respect to access to documents and information. - 19 Verify source ↗
Report by administrator
AI-assisted research summary: An administrator must report matters to the Registrar and provide help and documents when reasonably required.
Section 19—Report by administrator (1) An administrator shall lodge a report with the Registrar and specify any matter that, in the opinion of the administrator, should be brought to the notice of the Registrar. (2) The administrator shall report to the Registrar as soon as practicable, where the administrator believes that— (a) a past or present officer or shareholder of the company may have committed an offence involving dishonesty or an offence in contravention of the Companies Act, 2019 (Act 992); or (b) a person who has taken part in the formation, promotion, administration. management or liquidation of the company— (i) may have misapplied or retained or become liable or accountable for the money or property of the company in Ghana or elsewhere; or (ii) may have been guilty of negligence, default or breach of duty or trust in relation to the company. (3) Where the administrator makes a report to the Registrar under subsections (1) and (2), the administrator shall give the Registrar the assistance the Registrar may reasonably require by way of— (a) provision of information; (b) access to documents; and (c) facilities to inspect and copy documents. (4) Where the Court is satisfied on the application of an interested person, that there is a need for the administrator to make a report and the administrator has not done so, the Court may direct the administrator to make the report. (5) For the purpose of subsection (4), an "interested person" means a creditor or a past or present officer or shareholder of the company. - 20 Verify source ↗
Administrator to call meetings of creditors
AI-assisted research summary: The administrator must call specified creditors’ meetings, chair meetings when held, and has a casting vote. Related companies may hold joint creditors’ meetings only with every creditor’s consent, and an objection deadline must be set within 14 days.
Section 20—Administrator to call meetings of creditor (1) An administrator shall call— (a) the first meeting of creditors; (b) a watershed meeting; and 18 (c) other meetings of creditors that are required by the committee of creditors or the administrator. (2) At a meeting of creditors or class of creditors held, a resolution shall be adopted if the resolution is supported by the votes of creditors or class of creditors holding at least fifty-one percent of the value of the debt owed to the creditors or class of creditors voting in person or by proxy vote or by postal vote. (3) The administrator or a nominee of the administrator shall— (a) chair a meeting of creditors, and (b) have a casting vote. (4) The administrators of related companies may call meetings of creditors of the respective companies to be held at the same time and place, but only with the consent of every creditor. (5) In the case of a joint meeting, a creditor of a company in administration may vote only on a resolution that relates to the administration of the company of which that person is a creditor. (6) For the purpose of subsection (4), a creditor is taken to have consented to the joint meeting where— (a) written notice that complies with subsection (7) accompanies the notice of meeting; and (b) the creditor has not objected to the joint meeting within the time and in the manner specified in the written notice. (7) The notice shall— (a) be in writing; and (b) state (i) the postal, electronic mail, business and residential addresses of the administrator; (ii) the names of the related companies in respect of which the joint meeting is to be held; (iii) that the creditor to whom the notice is sent may object to the joint meeting by sending a written objection to the administrator at the postal, electronic mail, business or residential address of the administrator within the time specified in the notice; and (iv) that the creditor will be taken to have agreed to the joint meeting unless the creditor objects in accordance with the notice. (8) For the purpose of subparagraph (iii) of paragraph (b) of subsection (7), the administrator shall within fourteen days, determine the time for receipt of an objection. - 21 Verify source ↗
First meeting of creditors 2
AI-assisted research summary: The administrator must call and arrange the first meeting of creditors, give notice, publish notice, table an interests statement, and make reasonable inquiries about it.
Section 21—First meeting of creditors (1) The administrator shall call the first meeting of creditors to— (a) establish a committee of creditors where necessary; or 19 (b) determine whether to replace the administrator. (2) The meeting shall be held within ten days after the date on which the administration begins. (3) The administrator shall call the first meeting of creditors by (a) giving written notice of the meeting to the creditors of the company on record as disclosed by the records kept by the company. as is reasonably practicable; and (b) the publication of a notice of the meeting in a daily newspaper of national circulation. (4) The administrator shall take the steps set out in subsection (3), not less than seven days before the meeting. (5) The administrator shall table at the first meeting of creditors referred to in paragraph (b) of subsection (2) of section 7, an interests statement that complies with subsection (6). (6) The interests statement shall disclose whether the administrator, or a firm of which the administrator is a partner, has a relationship, whether professional, business or personal, with the company in administration or any of the officers of the company, shareholders or creditors. (7) The administrator shall make the inquiries that are reasonably necessary to ensure that the interests statement is complete before tabling the interests statement. - 22 Verify source ↗
Functions of committee of creditors
AI-assisted research summary: The committee of creditors may advise, receive and consider reports, and approve the administrator’s remuneration and engagement terms. The administrator must report on administration matters when reasonably required, and the committee must not give directions to the administrator.
Section 22—Functions of committee of creditors (1) The functions of the committee of creditors of a company in administration include— (a) advising the administrator about matters that relate to the administration; (b) receiving and considering reports by the administrator; and (c) approving the remuneration and other terms of engagement of the administrator. (2) The administrator shall report to the committee, matters that relate to the administration as and when the committee reasonably requires. (3) Despite subsection (2), the committee shall not give directions to the administrator. - 23 Verify source ↗
Membership of committee of creditors
AI-assisted research summary: A person may join the committee of creditors only if they are a creditor, a creditor’s agent under power of attorney, or a creditor-authorised person in writing.
Section 23—Membership of committee of creditors (1) A person may be a member of the committee of creditors only if that person is— (a) a creditor of the company; (b) an agent of a creditor under a power of attorney; or (c) authorised in writing by a creditor to be a member. (2) Members of the committee of creditors shall not be less than three and more than five in number. - 24 Verify source ↗
Watershed meeting
AI-assisted research summary: The administrator must call a watershed meeting after the convening period, give notice to creditors and in a national newspaper, and provide required reports and statements with the notice.
Section 24—Watershed meeting 20 (1) The administrator shall convene a watershed meeting after the convening period. (2) The convening period is the extension of the period between the date of the appointment of the administrator and the twenty-eighth day after the date of the appointment, and includes any period under subsection (3). (3) The Court may extend the convening period on the application of the administrator. (4) Despite subsection (3), the Court shall not extend the convening period if the application is made after the convening period has expired, unless the Court is satisfied that a substantial injustice will result if the convening period is not extended. (5) The administrator shall convene the watershed meeting by— (a) giving written notice of the watershed meeting to the creditors of the company; and (b) the publication of notice of the watershed meeting in a daily newspaper of national circulation. (6) The administrator shall take the steps set out in subsection (5) not less than seven days before the meeting. (7) The notice required under subsection (5) shall be accompanied with— (a) a report by the administrator in respect of— (i) the business, properly, affairs and financial statements of the company pursuant to section 16; and (ii) any other matter material to the decisions of the creditors to be considered at the meeting; (b) a statement that sets out the opinion of the administrator, with reasons for that opinion, about whether it is in the interest of the creditors of the company— (i) to execute a restructuring agreement; (ii) for the administration to end; or (iii) for the company to be placed in liquidation; and (c) a statement that sets out. the details of the proposed agreement, if a restructuring agreement is proposed. (8) The watershed meeting shall be held within seven days after the end of the convening period or extended convening period, as the case may be. (9) Subject to subsection (10), the directors of the company shall attend the watershed meeting, including any occasion to which the meeting is adjourned, but shall not be required to answer questions at the meeting. (10) A director is not required to attend the watershed meeting where— (a) the director has a valid reason for not attending; or 21 (b) the administrator or the creditors by resolution have the director from attending. (11) A director who attends the watershed meeting shall take leave for the entire or pan of the meeting if required by a resolution of the creditors to do so. (12) The administrator and the directors of the company under administration shall inform the meeting of any voting agreement of which the administrator or a director, as the case may be is aware, that requires one or more creditors to vote in a particular way on any resolution that will or may be voted on by the meeting, before the meeting votes on any resolution. - 25 Verify source ↗
Power of Court regarding meeting of creditors
AI-assisted research summary: A dissatisfied creditor or administrator may apply to the Court about a creditors’ meeting, and the Court may set aside the resolution, order a new meeting, restrict a related creditor’s vote, or make another appropriate order.
Section 25—Power of Court regarding meeting of creditors (1) A creditor or an administrator that is dissatisfied with the outcome of proceedings regarding a meeting of creditors, may apply to the Court for an appropriate order. (2) Where the Court is satisfied that— (a) a resolution at a meeting of creditors was passed, rejected required to be decided by a casting vote as the case may be, (b) the resolution referred to in paragraph (a) would not have been passed, rejected or required to be decided by a casting vote if the vote cast by a particular related creditor was disregarded, and (c) the passing of the resolution, or the failure to pass the resolution— (i) is contrary to the interests of the creditors or a class of creditors as a whole, or (ii) has prejudiced or is likely to prejudice, the interests of the creditor that voted for or against the resolution to an extent that is unreasonable, the Court may make any of the orders specified in subsection (4). (3) For the purpose of subparagraph (ii) of paragraph (c) of subsection (2), the Court may determine whether a resolution is unreasonable having regard to— (a) the benefits accruing to the related creditor, or to any of the related creditors, from the resolution, or from the failure to pass the resolution; (b) the nature of the relationship between the related creditor and the company, or between the related creditors and the company; and (c) any other related matter. (4) The Court may (a) order that the resolution be set aside, (b) order that a new meeting be held to consider and vote on the resolution, (c) order that a specified related creditor shall not vote on the resolution or on a resolution to vary or amend the resolution, or 22 (d) make any other order that the Court considers appropriate on the application of a creditor or the administrator. (5) In this section— (a) "promoter" (i) means a person who is instrumental in the formulation of a plan or programme in accordance with which securities are offered to the public; (ii) includes each person who is a director of the company where a company is a promoter; (iii) does not include a director or officer of the issuer of the securities or a person acting solely in a professional capacity; (b) "related creditor" means a creditor that is a related entity of the company in administration; (c) "related entity" in relation to the company in administration, means— (i) a promoter; (ii) a relative or spouse of a promoter; (iii) a relative of a spouse of a promoter; (iv) a director or shareholder; (v) a relative or spouse of a director or shareholder; (vi) a relative of a spouse of a director or shareholder; (vii) a related company; (viii) a beneficiary under a trust of which the company in administration is or has at any time been a trustee; (ix) a relative or spouse of that beneficiary; (x) a relative of a spouse of that beneficiary; (xi) a company, one of whose directors is also a director of the company in administration; or (xii) a trustee of a trust under which a person is a beneficiary, if that person is a related entity of the company in administration under this subsection. - 26 Verify source ↗
Pooled property owners
AI-assisted research summary: The Court may, on the administrator’s application, order pooled property owners to be treated as a separate class. If that happens and the stated vote conditions are met, each pooled property owner is bound by the restructuring agreement.
Section 26—Pooled property owners (1) On the application of the administrator, the Court may order that, for the purpose of this section, pooled property owners are a separate class. (2) A pooled property owner is bound by a restructuring agreement as if the pooled property owner has voted in favour of the resolution at the watershed meeting where— 23 (a) the Court has ordered that the pooled property owners are a separate class; (b) the creditors, including the pooled property owners, approved the resolution at the watershed meeting; and (c) the requisite majority of the pooled property owners were included in the creditors who voted in favour of the resolution. (3) A separate meeting of the pooled property owners is not necessary to vote on the resolution. (4) This section shall be in addition to, and not in derogation of sections 48 and 49. (5) In this section, (a) "pooled property owner" means an owner or lessor of property that is pooled in a single enterprise forming part of the business of a company in administration; (b) "requisite majority" means at least fifty-one per cent of the pooled property owners voting in person or by proxy vote or by postal vote; and (c) "resolution" means a resolution that a company in administration executes the restructuring agreement specified in the resolution. - 27 Verify source ↗
Adjournment of watershed meeting
AI-assisted research summary: A watershed meeting may be adjourned to a date within 42 days of the first meeting day, unless the Court orders a longer adjournment on the administrator’s application.
Section 27—Adjournment of watershed meeting A watershed meeting may be adjourned to a day that is not more than forty-two days after the first day on which the meeting is held, unless the Court, on the application of the administrator, orders that the meeting be adjourned for more than forty-two days. - 28 Verify source ↗
Decisions at watershed meeting
AI-assisted research summary: At a watershed meeting, creditors may vote to require a company restructuring agreement or to end administration, and the resolution passes only if at least 51% of voting creditors support it.
Section 28—Decisions at watershed meeting (1) At a watershed meeting, the creditors may resolve that the— (a) company execute a restructuring agreement specified in the resolution; or (b) administration should end. (2) The resolution shall be carried if the resolution is supported by the votes of at least fifty- one percent of the creditors voting in person, by proxy or by postal vote in accordance with sections 20 and 21. - 29 Verify source ↗
Proposed agreement not fully approved Protection of Property of Company
AI-assisted research summary: The administrator must tell creditors at the watershed meeting about their right to inspect and comment on the draft agreement, the administrator’s responsibility for drafting it, and that the signed agreement may differ from the draft.
Section 29—Proposed agreement not fully approved (1) The administrator shall inform the creditors at the watershed meeting of— (a) the right of the creditors to inspect and comment on the draft agreement; (b) the ultimate responsibility of the administrator for drafting the agreement; and (c) the fact that the executed agreement may differ from the draft. 24 (2) Where at a watershed meeting, the creditors resolve that the company execute a restructuring agreement, but the proposed agreement is not fully approved at the meeting, the administrator shall take the steps as set out in section 46. Protection of Property of Company - 30 Verify source ↗
Unenforceable charge
AI-assisted research summary: A person must not enforce a charge over company property while the company is in administration, unless the Court orders otherwise.
Section 30—Unenforceable charge Subject to the provisions of sections 37, 38, 60 and 80, a person shall not enforce a charge over the property of the company during the administration of that company except by an order of the Court. - 31 Verify source ↗
Recovery of property
AI-assisted research summary: During a company administration, an owner or lessor generally cannot take back property used, occupied, or held by the company unless the Court allows it.
Section 31—Recovery of property (1) During the administration of a company, the owner or lessor of property shall not, except with leave of the Court, take possession of the property or otherwise recover the property that— (a) was used or occupied by the company, or (b) is in the possession of the company. (2) Subsection (1) does not prevent a person from giving a notice to a company under an agreement relating to property that is used or occupied by, or is in the possession of, the company. - 32 Verify source ↗
Proceedings in Court
AI-assisted research summary: During a company’s administration, a person must not start or continue court proceedings against the company or its property unless the Court gives leave.
Section 32—Proceedings in Court During the administration of a company, a person shall not commence or continue proceedings in a Court against the company or in relation to any property of the company except with leave of the Court and on terms that the Court considers appropriate. - 33 Verify source ↗
Enforcement process
AI-assisted research summary: A person must not start or continue enforcement proceedings against company property during a company’s administration unless the Court gives leave and sets appropriate terms.
Section 33—Enforcement process During the administration of a company, a person shall not commence or continue an enforcement process in relation to the property of the company except with leave of the Court and on terms that the Court considers appropriate. - 34 Verify source ↗
Duties of court officer in relation to property of company
AI-assisted research summary: Court officers must stop most execution-process dealings with company property once written notice of administration is received, and must hand relevant property or money to the administrator.
Section 34—Duties of court officer in relation to property of company (1) Where the Registrar of the Court or any other officer of the Court receives written notice that a company is in administration, the Registrar or an officer of the Court shall not— (a) take action to sell a property of the company under an execution process; (b) pay to a person other than the administrator— (i) proceeds of the sale of the property of the company under an execution process where the sale has already taken place; (ii) moneys of the company seized under an execution process; or (iii) money in lieu of seizure or sale of property of the company under an execution process; 25 (c) take action in respect of the attachment of a debt due the company; or (d) pay to a person other than the administrator, money received as a result of the attachment of a debt due the company. (2) The officer of the Court shall deliver to the administrator, any property of the company that is in the possession of the officer of the Court due to an execution process. (3) The officer of the Court shall pay to the administrator proceeds or moneys of a kind referred to in paragraph (b) or (d) of subsection (1) that (a) is in the possession of the officer of the Court; or (b) has been paid into Court and has not since been paid out. (4) The cost of the execution or attachment is a first charge over property delivered under subsection (2) or proceeds or money paid under subsection (3). (5) For the purpose of subsection (4), the officer of the Court may retain the cost of the execution or attachment of the property delivered under subsection (2) or proceeds or money paid under subsection (3). (6) Despite subsection (1), the Court may permit the officer of the Court to take action, or make a payment where the Court is satisfied that it is appropriate to do so. (7) Despite this section, a person who buys property in good faith under a sale pursuant to an execution process, conducted six months prior to the administration or restructuring of the company obtains a good title to the property as against the company and the administrator if at the date of commencement of restructuring or administration, the person— (a) has made full payment for the property to the Court; and (b) has met all the terms and conditions of the sale. (8) Where the person refered to in subsection (7) fails to meet the criteria specified in paragraphs (a) and (b) of subsection (7), the sale shall be set aside. - 35 Verify source ↗
Liability of director or relative Rights of Secured Creditor
AI-assisted research summary: A guarantee for a company’s liability in administration cannot be enforced against the director, the director’s spouse or relative, or a related company or party unless the Court gives leave and sets appropriate terms.
Section 35—Liability of director or relative (1) A guarantee in respect of a liability of the company in administration shall not be enforced against (a) a director of the company; (b) the spouse or relative of the director; or (c) any related company or party during the period of administration of a company except with leave of the Court and on the terms that the Court considers appropriate. (2) In this section, "liability" includes a debt or other obligation. Rights of Secured Creditor - 36 Verify source ↗
Interpretation
AI-assisted research summary: This section defines key terms used for sections 37 and 38, including “decision period” and “enforce.”
Section 36—Interpretation 26 (1) For the purposes of sections 37 and 38, unless the context otherwise requires, (a) "decision period", in relation to a charge holder and to a charge over property of a company in administration, means the period that— (i) begins when notice of the appointment of an administrator is given to the charge holder under section 72, or in any other case, on the day when the administration begins; and (ii) ends at the close of the fourteenth day after the notice of the administration began; (b) "enforce", in relation to a secured creditor holding a charge over property of a company in administration, includes (i) to appoint a receiver of property of the company under a power contained in an instrument relating to the charge; (ii) to obtain an order for the appointment of a receiver of property for the purpose of enforcing the charge; (iii) to give notice to convert a floating charge into a fixed charge; (iv) to enter into possession or assume control of property; (v) to appoint a person to enter into possession or assume control as agent for the secured creditor or for the company: or (vi) to exercise as secured creditor or as a receiver or person so appointed, a right, power or remedy that exists because of the charge, whether that right power or remedy arises under an instrument that relates to the charge, under an enactment or otherwise. - 37 Verify source ↗
Leave to enforce security
AI-assisted research summary: A secured creditor affected by an administrator’s appointment may ask the Court for leave to enforce security, and the administrator must respond and report certain asset/liability information. The Court can decide the application, delay it briefly, set limits, and allow immediate enforcement for perishable property.
Section 37—Leave to enforce security (1) A secured creditor affected by the appointment of an administrator may apply to the Court within the decision period, for the grant of leave to the secured creditor to enforce the security of the secured creditor. (2) A secured creditor who makes an application to the Court shall, give notice of the application to the administrator. (3) The administrator shall (a) file an affidavit informing the Court whether the administrator supports or opposes the application, (b) file a report on the assets and liabilities of the company under administration that are known to the administrator and (c) state any respect in which, to the knowledge of the administrator, the statement of assets and liabilities of the company may be incomplete. (4) The Court may (a) proceed to make a determination on the application at the bearing; or 27 (b) where the Court considers it essential to receive further information and reports from either the secured creditor or the administrator in order to effectively determine the application, adjourn the hearing for that purpose for a period of not more than twenty-one days. (5) The Court may, in determining the application of the secured creditor, grant leave to the secured creditor to enforce the security of the secured creditor over the property of the company where the Court is satisfied that in the circumstances of the case, serious prejudice will be caused to the secured creditor if the application is not granted and that outweighs the prejudice which shall be caused to other creditors arising from the grant of the application. (6) The Court may, in making an order consider— (a) the fact that the secured creditor, a receiver, or any other person involved in the enforcement of the security shall not be required to perform a specified function or exercise a specified power except as permitted by further order of the Court; (b) the limitation of the enforcement of the security to specified property; or (c) the directive that the enforcement by a creditor of the security of the creditor by any sale of property shall be conducted in the manner laid down by the Court or subject to any further leave or directions from the Court. (7) A secured creditor granted leave to enforce a security shall, at intervals not exceeding three months, report to the administrator on the enforcement of the security and the proceeds recovered by the secured creditor. (8) The Court, in the case of perishable property, on an application under this section, may make an order to grant leave to the secured creditor to immediately enforce the security so far as it is a security over perishable property and to hold any proceeds that are recovered by the secured creditor in trust for the administrator pending the determination of the application by the Court under subsection (5). (9) Nothing in this section shall prevent a person from giving a notice under a security agreement. - 38 Verify source ↗
Recovery of property before administration Restructuring Officer
AI-assisted research summary: Before administration starts, a receiver or other person acting to recover property may possess or control the property and section 30, 31 and 14 do not block those actions in the stated circumstances.
Section 38—Recovery of property before administration (1) Where a receiver or any other person before the commencement of the administration of a company, (a) enters into possession or assumes control of property used or occupied by, or in the possession of the company; or (b) exercises any other power in relation to the property, in order to enforce a right of the owner or lessor of the property to take possession of the property or otherwise recover the property, sections 30 and 31 shall not prevent the receiver or that other person from performing a function or exercising a power in relation to the property. 28 (2) Section 14 does not apply to a transaction or dealing that affects the property and is entered into in the performance of a function or the exercise of a power of the receiver or other person. Restructuring Officer - 39 Verify source ↗
Restructuring officer
AI-assisted research summary: This section says who becomes the restructuring officer, who can appoint one, and when a person may be appointed.
Section 39—Restructuring officer (1) The administrator of a company in administration shall be the restructuring officer, unless the creditors at the watershed meeting by resolution appoint an individual to be the restructuring officer. (2) A person shall not be appointed a restructuring officer unless that person— (a) is qualified to act as an insolvency practitioner, or (b) has consented in writing and has not withdrawn the consent at the time when the restructuring agreement is executed. (3) The appointment of a restructuring officer is irrevocable, except by an order of the Court. (4) One or three persons may be appointed as restructuring officers. (5) Where three persons are appointed as restructuring officers jointly— (a) the function or power of the restructuring officer may be performed or exercised by anyone of the restructuring officers or all of the restructuring officers together, except where the order, instrument or resolution that appoints the persons provides otherwise; and (b) a reference in this Act to a restructuring officer refers to one or three of the restructuring officers as the case may be. - 40 Verify source ↗
Vacancy in the office of restructuring officer
AI-assisted research summary: This section says when a restructuring officer’s office becomes vacant and who may replace the officer.
Section 40—Vacancy in the office of restructuring officer (1) The office of a restructuring officer shall be vacant if the restructuring officer— (a) resigns by giving written notice to the company; (b) becomes disqualified under section 155; (c) is removed by the Court; or (d) dies. (2) The Court may— (a) remove a restructuring officer, and appoint a person in the place of the restructuring officer; or (b) appoint a new restructuring officer if the restructuring agreement has not yet terminated but for some reason the restructuring officer is not performing the functions of a restructuring officer. (3) The Court may make an order under subsection (2) on the application of— 29 (a) the Registrar, (b) a creditor of the company, (c) a shareholder, or (d) the private liquidator utile company is in private liquidation. (4) Where there are three restructuring officers, there is a vacancy if one of the restructuring officers (a) resigns; (b) becomes disqualified under section 155; (c) is removed by the Court; or (d) dies. (5) The creditors may appoint a new restructuring officer in the case of a vacancy. - 41 Verify source ↗
Remuneration of restructuring officer
AI-assisted research summary: A restructuring officer may charge reasonable remuneration, but only with the committee of creditors’ approval.
Section 41—Remuneration of restructuring officer (1) A restructuring officer is entitled, with the approval of the committee of creditors, to charge reasonable remuneration for the discharge of duties and exercise of powers as a restructuring officer. (2) Where there is a disagreement as to the remuneration of a restructuring officer, the Court may, on the application of a restructuring officer, an officer, a creditor or a shareholder of the company, review or fix the remuneration of the restructuring officer at a level that is reasonable in the circumstances. - 42 Verify source ↗
Sale of shares by restructuring officer Restructuring Agreement
AI-assisted research summary: A restructuring officer may sell existing company shares only with the shareholder’s written consent or with leave of the Court on the administrator’s application if the shareholder does not consent.
Section 42—Sale of shares by restructuring officer (1) A restructuring officer may sell existing shares in the company— (a) with the written consent of the shareholder concerned; or (b) with leave of the Court on an application of the administrator on notice, where the shareholder does not consent. (2) The shareholder, a creditor or the Registrar may oppose an application by the administrator. Restructuring Agreement - 43 Verify source ↗
Application of sections 44 to 59
AI-assisted research summary: Sections 44 to 59 apply when creditors at a watershed meeting resolve that the company executes a restructuring agreement.
Section 43—Application of sections 44 to 59 Sections 44 to 59 shall apply where the creditors at a watershed meeting resolve that the company executes a restructuring agreement. - 44 Verify source ↗
Preparation and content of restructuring agreement
AI-assisted research summary: The restructuring officer must prepare the restructuring agreement document, and the document must list specified matters such as funding, creditor property, moratorium, liabilities, termination, and claim timing.
Section 44—Preparation and content of restructuring agreement (1) The restructuring officer shall prepare a document that sets out the content of the agreement. 30 (2) The document shall specify— (a) who the restructuring officer is; (b) funding of the restructuring agreement; (c) the property of the company that will be available to pay creditors; (d) whether the property is owned by the company at the time when the company executes the agreement; (e) the nature and duration of any moratorium period for which the agreement provides; (f) the extent to which the company will be released from the liabilities of the company; (g) the conditions for the agreement to come into operation; (h) the circumstances in which the agreement terminates; (i) the order in which the proceeds of realisation of the property of the company will be distributed among creditors who are bound by the agreement; and (j) the day, on or before which claims of the creditors must have arisen if the claims are to be admissible under the restructuring agreement which shall not be later than the day when the administration began. (3) The document shall be deemed to include the provisions prescribed under sections 2 to 78, except the provisions that the document expressly excludes. (4) A restructuring agreement shall include post-commencement financing. - 45 Verify source ↗
Execution of restructuring agreement
AI-assisted research summary: A restructuring agreement takes effect only when executed by the company in administration and the restructuring officer, and the company must not execute it unless its directors have authorised it by resolution.
Section 45—Execution of restructuring agreement (1) A restructuring agreement takes effect when the agreement is executed by the company in administration and the restructuring officer. (2) The restructuring agreement shall be executed within (a) twenty-one days after a watershed meeting has approved that restructuring agreement; or (b) a further period that the Court orders, if the restructuring officer has applied to the Court for an extension of time before the end of the initial period of twenty-one days after approval at the watershed meeting. (3) The company shall not execute the restructuring agreement unless the directors of the company have, by resolution, authorised the execution of the agreement by the company or on behalf of the company. (4) Subsection (3) applies despite section 12, but does not limit the functions and powers of the administrator of the company. - 46 Verify source ↗
Procedure if restructuring agreement not fully approved 3
AI-assisted research summary: If a restructuring agreement is not fully approved at the watershed meeting, the restructuring officer must complete and circulate it within 14 days, creditors may inspect it for 3 working days, and the company and restructuring officer must then execute it within 2 working days.
Section 46—Procedure if restructuring agreement not fully approved 31 (1) Where, at a watershed meeting, the creditors resolve that the company executes a restructuring agreement, but the proposed agreement is not fully approved at the meeting— (a) the restructuring officer shall draft the complete agreement and circulate the agreement to the creditors within fourteen days after the meeting; (b) the creditors may inspect the agreement for a period of three working days after the end of the period specified in paragraph (a), and (c) the company and the restructuring officer shall execute the agreement within two working days after the end of the period specified in paragraph (b). (2) The Court may extend the period referred to in paragraph (a) of subsection (1) by ten working days, on an application by the restructuring officer, but only if the application is made within that period. (3) The Court may extend the period referred to in paragraph (c) of subsection (1) by additional two working days on an application by the restructuring officer, but only if the application is made within that period. - 47 Verify source ↗
Acts of creditor
AI-assisted research summary: A creditor must not act inconsistently with a restructuring agreement, except with the Court’s leave, during the stated period around the company’s restructuring resolution and agreement execution.
Section 47—Acts of creditor A creditor shall not so far as that creditor will be bound by an agreement if the agreement has already been executed— (a) do anything inconsistent with the agreement except with the leave of the Court; or (b) take a step that is prohibited under section 51, during the period between the time of the passage of a resolution at the watershed meeting that the company executes a restructuring agreement and— (i) the execution of the agreement by the company and the restructuring officer; or (ii) the expiry of the period during which the agreement is executed. - 48 Verify source ↗
Failure of company to execute restructuring agreement
AI-assisted research summary: If creditors pass the required resolution and the company still does not execute the restructuring agreement on time, the restructuring officer must apply to court for leave to move the company from administration into official liquidation.
Section 48—Failure of company to execute restructuring agreement Where the creditors at a watershed meeting pass an ordinary resolution that the company executes a restructuring agreement, and the company fails to do so within the deadline for execution, the restructuring officer shall apply to the Court for leave to convert the administration of the company into official liquidation. - 49 Verify source ↗
Persons bound by restructuring agreement
AI-assisted research summary: A restructuring agreement binds the company, its officers and shareholders, the restructuring officer, and the company’s creditors to the extent section 50 allows.
Section 49—Persons bound by restructuring agreement A restructuring agreement binds— (a) the creditors of the company, to the extent provided by section 50; (b) the company; (c) the officers and shareholders of the company; and (d) the restructuring officer. 32 - 50 Verify source ↗
Extent to which restructuring agreement binds creditors
AI-assisted research summary: A restructuring agreement can bind creditors, but secured creditors and property owners/lessors are generally barred from enforcing related rights unless the agreement allows it and the meeting vote condition is met, or the Court orders otherwise.
Section 50—Extent to which restructuring agreement binds creditors (1) A restructuring agreement binds creditors including seemed creditors regarding claims that arise on or before the day specified in the agreement in accordance with paragraph (i) of subsection (2) of section 44. (2) A secured creditor shall not realise or otherwise enforce the secured charge of the creditor except where (a) the agreement provides for the secured creditor to realise or enforce the charge and the secured creditor at the watershed meeting voted in favour of the resolution as a result of which the company executed the agreement; or (b) the Court makes an order to that effect under section 52. (3) An owner or lessor of property shall not exercise rights in relation to property, except where (a) the agreement provides for the exercise of rights in relation to an owner or lessor of property who at the watershed meeting voted in favour of the resolution as a result of which the company executed the agreement; or (b) the Court makes an order to that effect under section 52. - 51 Verify source ↗
Prohibited acts
AI-assisted research summary: A person bound by a restructuring agreement must not start or continue liquidation-related applications, court proceedings, or enforcement against the company’s property unless the Court gives leave.
Section 51—Prohibited acts (1) A person who is bound by a restructuring agreement shall not— (a) apply or continue with an application to the Court for the appointment of a liquidator of the company. (b) commence or continue proceedings against the company or in relation to any property of the company except with leave of the Court; or (c) commence or continue an enforcement process against the property of the company except with leave of the Court, while the agreement is in force. (2) In this section, "property" includes property used or occupied by the company or in the possession of the company. - 52 Verify source ↗
Enforcement of charge or recovery of property
AI-assisted research summary: The Court may order a secured creditor, or a property owner/lessor, to enforce or recover property rights after creditors approve execution of a restructuring agreement.
Section 52—Enforcement of charge or recovery of property (1) The Court may, at any time after creditors have resolved at a watershed meeting that a restructuring agreement be executed, order that— (a) a secured creditor may realise or otherwise enforce the secured charge of the creditor; or (b) the owner or lessor of property that is used or occupied by the company or is in the possession of the company, take possession of the property or otherwise recover the property or exercise rights in relation to the property. (2) The Court may make an order under subsection (1) subject to the terms that the Court considers appropriate. 33 (3) The Court may make an order under subsection (1) where the Court is satisfied that— (a) the achievement of the purposes of the restructuring agreement would not be adversely affected if the order is made; and (b) the secured interests of the creditor, property owner or lessor affected by the order will not be prejudiced to an extent that outweighs prejudice to other creditors if an order is not made, having regard to the terms of the restructuring agreement and the order, and any other relevant matters. (4) An application for an order under this section may be made (a) where the agreement has not yet been executed by the administrator; or (b) where the agreement has been executed by the restructuring officer. - 53 Verify source ↗
Effect of restructuring agreement on debts of the company
AI-assisted research summary: A restructuring agreement releases the company from a debt only if the agreement says so and the creditor is bound by it.
Section 53—Effect of restructuring agreement on debts of the company (1) A restructuring agreement releases the company from a debt only where— (a) the agreement provides for the release; and (b) the creditor concerned is bound by the agreement. (2) The release of the company from a debt shall not discharge or otherwise affect the liability of (a) a guarantor of the debt; or (b) a person who has indemnified the creditor concerned against default by the company in relation to the debt. - 54 Verify source ↗
Court ruling on validity of restructuring agreement
AI-assisted research summary: The Court may decide whether a restructuring agreement is valid, and may declare it or part of it void.
Section 54—Court ruling on validity of restructuring agreement (1) The Court may rule on the validity of a restructuring agreement if there is doubt, on a specific ground, as to whether tile agreement complies with this Act. (2) An application may be made by— (a) the restructuring officer; (b) a shareholder or creditor of the company; or (c) the Registrar to the Court for the determination of the validity of the restructuring agreement. (3) The Court may, on an application under this section, declare (a) a provision of the agreement void; or (b) the agreement void. (4) Where the Court declares that the agreement is void in contravention of this Act, the Court may validate the agreement, if the Court is satisfied that 34 (a) a provision of this section was substantially complied with; and (b) injustice will result for anyone bound by the agreement if the contravention is not disregarded. (5) Where the Court declares that a provision of the agreement is void, the Court may vary other provisions of the agreement if the restructuring officer consents. - 55 Verify source ↗
Variation of restructuring agreement by creditors
AI-assisted research summary: Creditors may vary a restructuring agreement, but the change must not be materially different from the proposal in the meeting notice.
Section 55—Variation of restructuring agreement by creditors (1) The creditors may vary a restructuring agreement by a resolution passed at a meeting convened under section 58, except that the variation shall not be materially different from the proposed variation set out in the notice of the meeting. (2) A creditor of a company in "administration may apply to the Court for an order to cancel the variation of the agreement by the creditors. (3) The Court may, on hearing the application, (a) cancel or confirm the variation subject to any condition that the Court deems appropriate; and (b) make any other order that the Court considers appropriate. - 56 Verify source ↗
Termination of restructuring agreement
AI-assisted research summary: A restructuring agreement can end by court action, by a creditor resolution, or automatically if the agreement says it will end when specified circumstances happen.
Section 56—Termination of restructuring agreement (1) A restructuring agreement may be terminated— (a) by the Court under section 57; or (b) by a resolution of the creditors under section 59; or (2) A restructuring agreement terminates where the agreement specifies circumstances in which the agreement will terminate and those circumstances occur. - 57 Verify source ↗
Termination of restructuring agreement by Court
AI-assisted research summary: The Court may terminate a restructuring agreement if an application is made or if listed grounds are satisfied, and it must first consider third-party rights.
Section 57—Termination of restructuring agreement by Court (1) The Court may terminate a restructuring agreement on the application of— (a) the company; (b) a creditor; (c) the restructuring officer; or (d) any other person with an interest in the termination of the agreement. (2) The Court may terminate a restructuring agreement where the Court is satisfied that (a) an information breach has occurred; (b) there has been a material contravention of the agreement by a person bound by the agreement; (c) effect cannot be given to the agreement without injustice or undue delay; 35 (d) the agreement or a provision of the agreement which if implemented under the agreement, or an act proposed to be done under the agreement shall be— (i) oppressive or unfairly prejudicial to, or unfairly discriminatory against, one or more of the creditors; or (ii) contrary to the interests of the company as a whole; or (e) the agreement be terminated for some other reason. (3) The Court shall not terminate the agreement without first taking into account the rights of third parties. (4) In this section— "information breach" means— (a) the giving of false or misleading information about the business, property, affairs or financial circumstances of the company (i) to the administrator or a creditor; or (ii) in a report or statement under subsection (7) of section 24 that accompanies a notice of meeting at which a resolution that the company executes a restructuring agreement was passed; or (b) an omission from the report or statement referred to in subparagraph (ii) of paragraph (a) of subsection (4), where the information or the omission, as the case may be, can reasonably have been expected to be material to the creditors in deciding whether to vote in favour of the resolution that the company execute the restructuring agreement. - 58 Verify source ↗
Meeting of creditors to consider proposed variation or termination of restructuring agreement
AI-assisted research summary: The restructuring officer may or must convene a creditors’ meeting to consider varying or ending the restructuring agreement, and must give notice and preside over the meeting.
Section 58—Meeting of creditors to consider proposed variation or termination of restructuring agreement (1) The restructuring officer— (a) may convene a meeting of the creditors of the company to consider a variation to, or the termination of, the agreement; or (b) shall convene a meeting if requested in writing by creditors whose claims against the company are not less than twenty per cent of the total value of every claim of a creditor. (2) The restructuring officer shall convene the meeting by— (a) giving written notice to the creditors of the company; and (b) the publication of a notice of the meeting in a daily newspaper of national circulation. (3) The restructuring officer shall take the steps set out in subsection (2) not less than seven days before the meeting. (4) The notice given to the creditors shall set out any resolution to vary or terminate the agreement that is to be considered by the meeting. 36 (5) The restructuring officer shall preside at the meeting. - 59 Verify source ↗
Termination of restructuring agreement by creditors Liability of Administrator
AI-assisted research summary: Creditors may terminate a restructuring agreement if there is a material breach that has not been rectified, and they may also vote to wind up the company if the meeting notice proposes official liquidation.
Section 59—Termination of restructuring agreement by creditors (1) The creditors, by a resolution passed at a meeting convened under section 58 may terminate a restructuring agreement if a material breach of the agreement has occurred and the breach has not been rectified. (2) The creditors may pass an ordinary resolution for the winding-up of the company where the notice of the meeting sets out a proposed ordinary resolution that the company be wound up by official liquidation. Liability of Administrator - 60 Verify source ↗
Acts of administrator
AI-assisted research summary: Good-faith acts, payments, and transactions made by or with the administrator’s consent are protected from being set aside in liquidation.
Section 60—Acts of administrator (1) A payment made, transaction entered into, or any other related act or action taken or done, in good faith, by or with the consent of the administrator of a company in administration, shall not be set aside in the liquidation of the company. (2) Sections 121 to 124 do not apply to a transaction by a company in administration where the transaction is— (a) carried out by or with the authority of the administrator or restructuring officer appointed under section 39; (b) specifically authorised by the restructuring agreement and carried out by the restructuring officer; or (c) by order of the Court. - 61 Verify source ↗
Liability for debt
AI-assisted research summary: An administrator is generally not liable for company debts, except where this section makes the administrator liable for certain debts, services, property use, and specified rent and payments.
Section 61—Liability for debt (1) An administrator is not liable for the debts of the company except as provided in this section. (2) An administrator is liable for debts that the administrator incurs, in the performance or exercise, or purported performance or exercise, of the functions and powers as administrator, for— (a) the purpose of funding the company; (b) any services rendered; or (c) any property hired, leased or occupied. (3) Subsection (2) has effect despite any agreement to the contrary, but without limiting the rights of the administrator against the company or any other person. (4) An administrator is liable, to the extent specified in subsection (5), for the rent and other payments that become due by the company under an agreement— (a) made before the administration began; and 37 (b) that relates to the use, possession or occupation of property by the company. (5) An administrator is liable for rent and other payments that accrue in the period (a) commencing fourteen days after the administration begins; and (b) during which (i) the company continues to use or occupy, or be in possession of the property; and (ii) the administration continues; and (c) ending on the earliest of any of the following: (i) the end of the administration; (ii) the giving of a notice under section 62; (iii) the appointment of a receiver of the property where an order is made under section 52 to permit a secured creditor or owner of property to enforce a charge or exercise rights in relation to property; (iv) the appointment of an agent by a secured creditor of the property, under the provisions of a charge over the property, to enter into possession or to assume control of the property where an order is made to that effect under section 52; or (v) where a secured creditor takes possession or assumes control of the property under the provisions of a charge over the property where an order is made to that effect under section 52. (6) An administrator shall not be deemed to— (a) have adopted the agreement; or (b) be liable under the agreement subject to subsection (5). (7) This section shall not affect the liability of the company for rent or any other payment due under the agreement. - 62 Verify source ↗
Non-use notice
AI-assisted research summary: An administrator is not liable under section 61 while a valid non-use notice is in force, if the notice is given within 14 days, identifies the property, and says the company does not intend to use it or exercise rights over it.
Section 62—Non-use notice (1) An administrator is not liable under section 61 for any period during which a non-use notice is in force which— (a) is given by the administrator to the owner or the lessor of the property within fourteen days after the administration commences; (b) specifies the property to which the notice relates; and (e) states that the company does not propose to use the property or otherwise exercise any rights in relation to the property. (2) A notice under subsection (1) ceases to have effect where— (a) the administrator, in writing to the owner or lessor, revokes the notice; or 38 (b) the company exercises, or purports to exercise, a right in relation to the property. (3) For the purpose of paragraph (b) of subsection (2), the company does not exercise, or purport to exercise, a right in relation to the property merely because the company continues to occupy, or to be in possession of, the property, unless the company— (a) also uses the property; or (b) asserts a right, as against the owner or the lessor, to continue to occupy or be in possession. (4) A notice under this section shall not affect the liability of the company for rent and other payments. (5) The Court may exempt an administrator from liability for rent and other payments under this section, but the order of the Court shall not affect the liability of the company. - 63 Verify source ↗
Indemnity of administrator Power of the Court
AI-assisted research summary: An administrator is indemnified out of company property for liabilities incurred in doing the duties and for remuneration, except liabilities incurred in bad faith or negligently.
Section 63—Indemnity of administrator (1) An administrator shall be indemnified out of the property of the company for— (a) a liability incurred in the performance of the duties but not a liability incurred in bad faith or negligently; and (b) the remuneration to which the administrator is entitled. (2) Subject to section 64, the right of indemnity of an administrator under this section has priority over the debts of the company. (3) An administrator has a lien on the property of the company to secure a right of indemnity under this section. (4) A lien has priority over a charge to the same extent as the right of indemnity has priority over a debt secured by the relevant charge. Power of the Court - 64 Verify source ↗
General powers of Court
AI-assisted research summary: The Court may make orders about a company administration and may end the administration if the stated conditions are met.
Section 64—General powers of Court (1) The Court may make any order that the Court considers appropriate in respect of the administration of a company. (2) The Court may terminate an administration where the Court is satisfied that— (a) the company is solvent; (b) the provisions on the administration of companies are not being complied with; or (e) for some other justifiable reason the administration should end (3) The Court may make an order under this section on the application of (a) the company; (b) a creditor of the company; 39 (c) the administrator; (d) the restructuring officer; (e) the Registrar; or (f) any other person with an interest in the administration of the company. - 65 Verify source ↗
Order to protect creditor during administration
AI-assisted research summary: The Court may make an order, if the Registrar or a company director applies, to protect creditors’ interests during administration.
Section 65—Order to protect creditor during administration The Court may, on the application of the Registrar or a director of a company, make an order which the Court considers necessary to protect the interests of the creditors of the company in administration. - 66 Verify source ↗
Validity of appointment of administrator or restructuring officer
AI-assisted research summary: Certain people may ask the Court to rule on whether an administrator or restructuring officer was validly appointed, and the Court can look beyond the reasons stated in the application if it finds the appointment invalid.
Section 66—Validity of appointment of administrator or restructuring officer (1) Where there is doubt, on a specific ground, as to the validity of the appointment of a person as administrator or restructuring officer, any of the following persons may apply to the Court for a ruling on the validity of the appointment: (a) the person appointed; (b) the company in question; or (e) a creditor of the company. (2) The Court, in making the ruling that the appointment is invalid, is not limited to the grounds specified in the application. - 67 Verify source ↗
Application by administrator or restructuring officer to Court for directions
AI-assisted research summary: An administrator or restructuring officer may ask the Court for directions about their functions, powers, operations, or giving effect to the restructuring agreement.
Section 67—Application by administrator or restructuring officer to Court for directions (1) An administrator or a restructuring officer may apply to the Court for directions in respect of the performance or exercise of any of the functions and powers of the administrator or restructuring officer. (2) An administrator or a restructuring officer may apply to the Court for directions in relation to the operations of, or for giving effect to the restructuring agreement. - 68 Verify source ↗
Supervision of administrator or restructuring officer
AI-assisted research summary: The Court may make an appropriate order over an administrator or restructuring officer if their management or conduct is prejudicial to a creditor’s or shareholder’s interests.
Section 68—Supervision of administrator or restructuring officer (1) The Court may make an order that the Court considers appropriate where the Court is satisfied that (a) the management of the business, property or affairs of the company by an administrator or a restructuring officer is prejudicial to the interests of a creditor or shareholder of the company; or (b) the conduct of an administrator or a restructuring officer has been, is or will be prejudicial to the interests of a creditor or shareholder. (2) An application for an order under this section may be made by— (a) a creditor or shareholder of the company; 40 (b) the Registrar; or (e) any other person with interest in the administration of the company. - 69 Verify source ↗
Order to remedy default
AI-assisted research summary: The court may order an administrator or restructuring officer to remedy a default.
Section 69—Order to remedy default (1) The Court may order an administrator or a restructuring officer to remedy the default of that administrator or restructuring officer. (2) An order may be made where— (a) the administrator or restructuring officer has failed, as required by this Act or any other enactment. to make or file any return, account, or other document or to give a notice, and has not remedied the default within fourteen days after service on the administrator, a notice by a shareholder or creditor of the company in administration requiring that the default be remedied; or (b) the administrator or restructuring officer has failed, after being required at any time by the liquidator of the company to do so (i) to render proper accounts of, and to provide appropriate vouchers for the receipts and payments as administrator or restructuring officer; or (ii) to pay to the liquidator an amount properly payable to the liquidator. (3) An application for an order under this section may be made by— (a) a shareholder or creditor of the company, in the case of a default referred to in paragragh[sic] (a) of subsection (2); (b) the liquidator in the case of a default referred to in paragraph (b) of subsection (2); or (c) the Registrar; or (d) any other person with interest in the administration or restructuring of the company. - 70 Verify source ↗
Power of Court to make order in relation to vacancy in the office of administrator or restructuring officer
AI-assisted research summary: The Court may make any appropriate order if there is a vacancy or no acting administrator or restructuring officer; a creditor, shareholder, or the Registrar may apply for that order.
Section 70—Power of Court to make an order in relation to vacancy in the office of administrator or restructuring officer (1) The Court may make any order the Court considers appropriate where the Court is satisfied that (a) the office of the administrator is vacant or no administrator is acting in the case of a company in administration; or (b) the office of the restructuring officer is vacant or no restructuring officer is acting in the case of a restructuring agreement. (2) An application for an order may be made by— (a) a creditor or shareholder of the company; or (b) the Registrar. 41 - 71 Verify source ↗
Prohibition order against an administrator or restructuring officer Notices 4
AI-assisted research summary: The Court can make a prohibition order against an unfit administrator or restructuring officer, and a person under such an order must not act as an insolvency practitioner.
Section 71—Prohibition order against an administrator or restructuring officer (1) The Court shall make a prohibition order in respect of a person where the Court is satisfied that, that person is unfit to act as an administrator or a restructuring officer. (2) The Court may, make a prohibition order for a period not exceeding five years. (3) A person against whom a prohibition order is made shall not act as an insolvency practitioner. (4) The Court may make an order under this section in respect of a past or current administrator or restructuring officer of a company in administration on the application of— (a) the company or a shareholder of the company; (b) a creditor of the company; (c) the administrator or restructuring officer of the company; (d) the Registrar; or (e) any other person interested in the administration of the company. (5) The applicant shall deliver to the Registrar a copy of an order made under subsection (1) within ten working days after the order is made. (6) The Registrar shall keep on file indexed by reference to the name of the administrator or restructuring officer concerned a copy of the order delivered. (7) In this section, "failure to comply" means a failure of an administrator or restructuring officer to Comply with a relevant duty that arises— (a) under this or any other enactment; or (b) under any order or direction of the Court. Notices - 72 Verify source ↗
Notice of appointment
AI-assisted research summary: Certain appointment notices must be filed and published promptly, and written notice must also be given to affected charge holders and the company in one case.
Section 72—Notice of appointment (1) An administrator or a restructuring officer appointed by a company, the liquidator, a secured creditor or the Court shall— (a) lodge a notice of the appointment with the Registrar for publication in the Companies Bulletin before the end of the next working day after the appointment; (b) publish a notice of the appointment in the Companies Bulletin within three working days after the appointment; and (e) give written notice of the appointment within seventy-two hours after the appointment to— (i) each person who holds a charge over the whole, or substantially the whole, of the property of the company; or 42 (ii) each person who holds two or more charges over the property of the company where the property of the company subject to those charges together, is the whole, or substantially the whole, of the property of the company; and (d) publish a notice of the appointment in a daily newspaper of national circulation. (2) The Registrar shall cause to be published in the Companies Bulletin the appointment of the administrator. (3) A secured creditor who appoints an administrator under section 3 shall give written notice of the appointment to the company before the end of the next working day. - 73 Verify source ↗
Notice of execution of restructuring agreement
AI-assisted research summary: The restructuring officer must, within 14 days after a restructuring agreement is executed, notify each creditor, file a copy with the Registrar, and publish notice in a national newspaper and the Companies Bulletin.
Section 73—Notice of execution of restructuring agreement The restructuring officer shall within fourteen days after a restructuring agreement is executed (a) send to each creditor a written notice of the execution of the agreement; (b) file a copy of the agreement with the Registrar; and (c) publish a notice of the execution of the agreement in (i) a daily newspaper of national circulation; and (ii) the Companies Bulletin. - 74 Verify source ↗
Notice of failure to execute restructuring agreement
AI-assisted research summary: If a company misses the deadline to execute a restructuring agreement, the restructuring officer must publish a notice of the failure and file a copy with the Registrar within 72 hours.
Section 74—Notice of failure to execute restructuring agreement The restructuring officer shall, where a company does not meet the deadline for the execution of a restructuring agreement, (a) publish a notice of the failure in a daily newspaper of national circulation, and (b) file a copy of the notice, within seventy-two hours with the Registrar for publication in the Companies Bulletin. - 75 Verify source ↗
Notice of termination by creditors of restructuring agreement
AI-assisted research summary: If creditors terminate a restructuring agreement, the restructuring officer must notify each creditor, publish the notice twice in a daily newspaper of national circulation, and file a copy with the Registrar within 14 days.
Section 75—Notice of termination by creditors of restructuring agreement The restructuring officer shall, where the creditors terminate a restructuring agreement (a) send a notice of the termination to each of the creditors; (b) publish the notice twice in a daily newspaper of national circulation; and (e) file a copy of the notice with the Registrar within fourteen days. - 76 Verify source ↗
Notice of administration
AI-assisted research summary: A company in administration must add the words "in administration" to certain documents, and the Court may exempt the company on application.
Section 76—Notice of administration (1) A company in administration shall set out in each document issued or signed by or on behalf of the company that evidences or creates a legal obligation of the company, after the name of the company where the name first appears the words, "in administration" for as long as the company is in administration. 43 (2) The Court may exempt the company from the requirement of subsection (1) on an application by the company. - 77 Verify source ↗
Notice of change of name
AI-assisted research summary: A company in administration that changed its name within the stated 12-month period must keep showing the former name on company documents where the name appears. If the company is later put into liquidation during that administration, the liquidator must do the same.
Section 77—Notice of change of name (1) A company in administration that changes the name twelve months before the appointment of the administrator shall include the former name in any document of the company where the name appears. (2) Where a company to which subsection (1) applies is in the course of the administration placed in liquidation, the liquidator shall include the former name of the company in any document of the company where the name appears. - 78 Verify source ↗
Effect of contravention of sections 72 to 77 Commencement of Official Liquidation
AI-assisted research summary: A contravention of sections 72 to 77 does not make things done under those sections invalid, unless the Court orders otherwise.
Section 78—Effect of contravention of sections 72 to 77 A contravention of sections 72 to 77 shall not affect the validity of anything done under sections 72 to 77 unless the Court orders otherwise. Commencement of Official Liquidation - 79 Verify source ↗
Purpose of sections 80 to 149
AI-assisted research summary: This section says sections 80 to 149 are for the official winding up of a body corporate to maximise realisation of the insolvent company’s estate and distribute it fairly among stakeholders.
Section 79—Purpose of sections 80 to 149 (1) The purpose of sections 80 to 149 is to provide for the official winding up of a body corporate in a manner that results in the maximisation of the realisation of the estate of the insolvent company and the distribution of the estate having regard to the equitable treatment of stakeholders in the company. (2) Where the Registrar is appointed as official liquidator, sections 80 to 107 shall apply. - 80 Verify source ↗
Appointment of liquidator for company in administration
AI-assisted research summary: A liquidator can be appointed for a company in administration by the Court, creditors, or a meeting in specified circumstances, and a Court appointment ends the administration.
Section 80—Appointment of liquidator for company in administration (1) A liquidator may be appointed for a company in administration— (a) by the Court, on an application under section 86; (b) by resolution of the creditors at a watershed meeting; or (c) at a meeting convened under section 58 to consider the termination of a restructuring agreement. (2) The Court may adjourn the hearing of the application under section 86 for the appointment of a liquidator for a company in administration where the Court is satisfied that, it is in the interest of the creditors of the company for the company to continue in administration rather than be placed in liquidation. (3) The Court shall not appoint a liquidator of a company in administration where the Corut is satisfied that it is in the interest of the creditors of the company for the company to continue in administration rather than have a liquidator appointed. (4) The appointment by the Court of a liquidator for a company that is in administration ends the administration. 44 (5) Where a liquidator is appointed to a company that is in administration under a restructuring agreement, the person in control of the company immediately before the appointment of the liquidator shall lodge with the Registrar (a) a copy of the report of the administrator that accompanied the notice to creditors of the watershed meeting; and (b) a further report that updates the report of the administrator with any matters of which the administrator is aware that (i) are not referred to in the report of the administrator, or that have changed since that report; and (ii) affect the financial position of the company. (6) Where there is no administrator or restructuring officer to act when the company is placed in liquidation, the directors of the company at the date of liquidation shall take the steps described in this section and act in the stead of the administrator or restructuring-officer. - 81 Verify source ↗
Modes of winding-up
AI-assisted research summary: A company’s official winding-up may start by special resolution, petition to the Registrar or Court, or conversion from private liquidation, administration, or restructuring.
Section 81—Modes of winding-up (1) The official winding-up of a company may be commenced by a— (a) special resolution of the company; (b) petition addressed to the Registrar; (e) petition to the Court; (d) conversion from a private liquidation; or (e) conversion from administration or restructuring of the company. (2) Unless a contrary intention appears, sections 82 to 147 apply with respect to the winding- up of a company in any of the modes of winding up. - 82 Verify source ↗
Procedure on resolution
AI-assisted research summary: This section sets the steps for an official winding-up resolution, including notices to the Registrar, publication by the Registrar, and immediate control of company assets by the official liquidator.
Section 82—Procedure on resolution (1) A special resolution of a company for the official winding-up of the company shall state that, the company shall be wound up by way of an official winding-up. (2) A copy of the special resolution and the notice for the meeting shall be served on the Registrar. (3) The Registrar or a representative of the Registrar shall be afforded the opportunity to attend the meeting at which the special resolution is passed. (4) When a company has passed a special resolution for the official winding-up of the company, a copy of the resolution shall be sent immediately by the directors of the company to the Registrar. (5) The Registrar shall publish the resolution in the Companies Bulletin after receipt of the resolution. 45 (6) When the special resolution is passed, the official liquidator shall take immediate control of the assets of the company. (7) After the passage of the resolution, a director, officer, liquidator or the official liquidator shall not dispose of the assets of the company without the approval of the Court unless the disposal is in the normal course of business. (8) Where a person, other than a body corporate, contravenes subsection (7), that person commits an offence and is liable on summary conviction to a fine of not less than five hundred penalty units and not more than one thousand penalty units or to a term of imprisonment of not less than two years and not more than five years or to both. - 83 Verify source ↗
Procedure on petition to the Registrar
AI-assisted research summary: Rules for who may petition the Registrar for a company’s official winding-up, when the Registrar may act, and what steps the petitioner and Registrar must take.
Section 83—Procedure on petition to the Registrar (1) Subject to subsections (2) and (3), a person who is— (a) a creditor of a company, or (b) a member or contributory of a company may present a petition to the Registrar for the official winding-up of the company. (2) A member of a company with shares is not entitled to present a winding-up petition unless the shares or some of the shares of that member (a) were originally allotted to that member; (b) have been held by that member, and registered in the name of that member for at least six months during the eighteen months preceding the date of the presentation of the petition; or (e) have devolved on that member by operation of law. (3) The Registrar shall not consider a winding-up petition presented by a contingent or prospective creditor (a) unless a security for costs that the Registrar considers reasonable has been given, and (b) until a prima facie case for winding-up has been established to the satisfaction of the Registrar. (4) The Registrar may order the official winding-up of the company on the petition if the Registrar is satisfied that the company is unable to pay the debts of the company. (5) For the purpose of sections 80 to 148, a company is unable to pay the debts of the company if— (a) a creditor, by assignment or otherwise, to whom the company is indebted in a sum of money of not more than ten thousand currency points then due, has served on the company a written demand requiring the company to pay the sum of money that is due and the company has for thirty days after the demand, neglected to pay the sum of money or to secure or compound for the sum of money to the reasonable satisfaction of the creditor; 46 (b) an execution or any other process issued on a judgment or order of the Court in favour of a creditor of a company is returned unsatisfied in whole or in part; or (c) it is proved to the satisfaction of the Registrar that the company is unable to pay the debts of the company. (6) The Registrar shall in determining whether a company is unable to pay the debts of the company, take into account the contingent and prospective liabilities of the company. (7) The petitioner shall serve a copy of the petition on the company on or before the day on which the petition is presented to the Registrar. (8) Where two or more petitions are presented in respect of the same company a winding-up order made in respect of any of the petitions shall be deemed to have been made in respect of each petition presented. (9) A further petition shall not be presented in respect of a company regarding a winding-up order that has been made before the termination of the official winding-up proceedings. (10) The Registrar shall— (a) place on record a copy of the winding-up order for the company concerned. and (b) publish the order in the Companies Bulletin. - 84 Verify source ↗
Procedure on petition to the Court
AI-assisted research summary: Certain persons may petition the Court to wind up a company, and the Court may order winding-up only in specified circumstances.
Section 84—Procedure on petition to the Court (1) The following persons may present a petition to the Court for the official winding-up of a company, in the circumstances specified in subsection (2): (a) the Registrar, (b) a creditor of the company, (c) a member of the company with shares, or (d) a contributory of the company. [As substituted by Corporate Insolvency Restructuring (Amendment) Act, 2020 (Act 1031), s.1 (a)] (1A) The Attorney-General may present a petition to the Court for the official winding-up of the company only in the circumstances specified in paragraphs (c), (d) and (e) of subsection (2). [As inserted by Corporate Insolvency Restructuring (Amendment) Act, 2020 (Act 1031), s.1 (b)] (2) The Court may order the official winding-up of a company on a petition presented where— (a) the company (i) does not commence the business which the company is authorised by the constitution of the company to carry on, or (ii) suspends business for a year within a year after the incorporation of the company; (b) the company does not have members; 47 (c) the business or objects of the company are unlawful; (d) the company is operated for an illegal purpose; (e) the business being carried out by the company is not authorised by the constitution of the company; (f) the company is unable to pay the debts of the company; or (g) the Court is of the opinion that it is just and equitable that the company should be wound up. (3) In the determination of whether the company is unable to pay the debts of the company, subsection (5) of section 83 applies. (4) On the hearing of the winding-up petition, the Court may— (a) dismiss the petition, (b) adjourn the hearing conditionally or unconditionally, or (c) make an interim order, or any other appropriate order subject to subsection (5). (5) The Court shall not refuse to make a winding-up order only on the grounds that (a) the assets of the company have been mortgaged to an amount equal to, or in excess of, those assets; or (b) the company does not have assets. (6) Where the petition is presented by members or contributories of the company on the grounds that it is just and equitable that the company should be wound up, the Court shall make a winding-up order if the Court is of the opinion that— (a) the petitioners are entitled to relief by winding-up of the company or by some other means, and (b) in the absence of any other remedy, it is just and equitable that the company should be wound up. (7) Despite subsection (6), where the Court finds that, an alternative remedy is available to the petitioners and that the petitioners acted unreasonably in seeking to have the company wound up instead of pursuing the alternative remedy, the Court shall not make a winding-up order. (8) After the winding-up order is made, the Registrar of the Court shall forward a copy of the order to the Registrar. (9) After receipt of the order, the Registrar shall make a minute of the winding-up order in the books of the Registrar relating to the company and publish the order in the Companies Bulletin. 48 (10) Subject to this section, the Court may appoint the Registrar as the liquidator to exercise all or any of the powers of a liquidator at any time between the presentation of a petition and the making of a winding-up order. - 85 Verify source ↗
Procedure on conversion from private liquidation to official winding-up
AI-assisted research summary: The Registrar may order a private liquidation converted into an official winding-up if the liquidator gives the required notice and the company may not be able to pay its debts in full within the stated period.
Section 85—Procedure on conversion from administration to official winding-up (1) The Registrar may make a winding-up order to convert a private liquidation into an official winding-up if the liquidator gives notice under a private liquidation in accordance with the Companies Act, 2019 (Act 992) alleging that the company may not be able to pay the debts of the company in full within the period stated in the declaration of insolvency. (2) The notice shall be accompanied with a statement in the prescribed form of the assets and liabilities of the company. (3) For the purpose of this section, proceedings taken on a private liquidation are validly taken unless the Court otherwise directs. - 86 Verify source ↗
Procedure on conversion from administration to official winding-up
AI-assisted research summary: The Registrar may apply to the Court for a winding-up order to turn a company’s administration into official winding-up once the administrator gives notice of official liquidation.
Section 86—Procedure on conversion from administration to official winding-up (1) The Registrar may by an application to the Court, make a winding-up order to convert the administration of a company into an official winding-up when the administrator gives notice that the administration has been converted into official liquidation. (2) A statement in the prescribed form of the assets and liabilities of the company shall accompany the notice. (3) For the purpose of this section, proceedings taken on an administration are validly taken unless the Court otherwise directs. - 87 Verify source ↗
Stay of proceedings
AI-assisted research summary: During winding-up, the Court may stay proceedings about the company or its property, and certain property dispositions and share transfers are void unless the Court directs otherwise.
Section 87—Stay of proceedings (1) On the commencement of winding-up proceedings against a company, civil proceedings against the company shall be stayed and any transfer of shares of the company within that period is void. (2) The Court may, on an application made by a party to the petition or the Registrar stay the proceedings by or against the company, or regarding the property of the company during the interval between the presentation of a petition for an official winding-up and the commencement of the winding-up. (3) In accordance with subsection (2), a disposition of the property of the company, including things in action and a transfer of shares is void, unless the Court otherwise directs. - 88 Verify source ↗
Costs of application for liquidation Effect of Commencement of Official Liquidation
AI-assisted research summary: The liquidator must pay the reasonable costs of the successful applicant, and an unsuccessful applicant must bear the costs of the failed winding-up application.
Section 88—Costs of application for liquidation (1) The liquidator shall pay the reasonable costs of the person who applied to the Court for an order that the company be wound up. Including the costs incurred by legal counsel and client in procuring the order. (2) The costs of the application shall be determined in accordance with the rules of Court. 49 (3) An applicant shall bear the cost of an unsuccessful application for the winding-up of a company. Effect of Commencement of Official liquidation - 89 Verify source ↗
Period of commencement
AI-assisted research summary: This section says when an official winding-up starts: either when a resolution for winding-up is passed or when a winding-up order is made.
Section 89—Period of commencement (1) An official winding-up under this Act commences— (a) on the passage of a resolution for the winding-up of the company, or (b) on the making of a winding-up order. (2) The words "commencement of a winding-up" and the cognate expressions shall be construed accordingly. - 90 Verify source ↗
Cessation of functions of directors
AI-assisted research summary: When a winding-up starts, the directors’ functions pass to the liquidator.
Section 90—Cessation of functions of directors On the commencement of a winding-up, the functions of the directors of the company shall vest in the liquidator who assumes a fiduciary position to the company. - 91 Verify source ↗
Cessation of business of company
AI-assisted research summary: When a winding-up starts, the company must stop carrying on business.
Section 91—Cessation of business of company (1) On the commencement of a winding-up, the company shall cease to carry
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Corporate Insolvency and Restructuring Act, 2020 (ACT 1015)
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