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CORPORATIONS ACT 2001 - SECT 453W Restructuring not to trigger liability of director or relative under guarantee of company's liability

CORPORATIONS ACT 2001 - SECT 453W

Restructuring not to trigger liability of director or relative under guarantee of company's liability

  (1)   During the restructuring of a company:

  (a)   a guarantee of a liability of the company cannot be enforced, as against:

  (i)   a director of the company who is a natural person; or

  (ii)   a spouse or relative of such a director; and

  (b)   without limiting paragraph   (a), a proceeding in relation to such a guarantee cannot be begun against such a director, spouse or relative;

except with the leave of the Court and in accordance with such terms (if any) as the Court imposes.

  (2)   While subsection   (1) prevents a person (the creditor ) from:

  (a)   enforcing as against another person (the guarantor ) a guarantee of a liability of a company; or

  (b)   beginning a proceeding against another person (the guarantor ) in relation to such a guarantee;

section   1323 applies in relation to the creditor and the guarantor as if:

  (c)   a civil proceeding against the guarantor had begun under this Act; and

  (d)   the creditor were the only person of a kind referred to in that section as an aggrieved person.

Note:   Under section   1323, the Court can make a range of orders to ensure that a person can meet the person's liabilities.

  (3)   The effect that section   1323 has because of a particular application of subsection   (2) is additional to, and does not prejudice, the effect the section otherwise has.

  (4)   In this section:

"guarantee" , in relation to a liability of a company, includes a relevant agreement (as defined in section   9) because of which a person other than the company has incurred, or may incur, whether jointly with the company or otherwise, a liability in respect of the liability of the company.

"liability" means a debt, liability or other obligation.

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