CORPORATIONS ACT 2001 - SECT 458E Meaning of eligible for temporary restructuring relief

CORPORATIONS ACT 2001 - SECT 458E

When is a company eligible for temporary restructuring relief?

  (1)   A compan y is eligible for temporary restructuring relief if:

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

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

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

  (b)   there are reasonable grounds to believe that:

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

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

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

  (d)   there is no:

  (i)   restructuring practitioner for the company; or

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

  (iii)   administrator of the company; or

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

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

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

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

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

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

  (ii)   for any other reason.

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

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

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

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

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

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

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

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

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

  (b)   set out:

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

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

  (c)   be in writing; and

  (d)   if there is a prescribed form for the declaration--be in the prescribed form.

Giving ASIC copies of declarations under this section

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

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

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

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

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

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

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

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

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

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

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