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CORPORATIONS ACT 2001 - SECT 458E

When is a company eligible for temporary restructuring relief?

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.



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