Commonwealth Consolidated Acts

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Debt subordination

             (1)  Nothing in this Division renders a debt subordination by a creditor of a company unlawful or unenforceable, except so far as the debt subordination would disadvantage any creditor of the company who was not a party to, or otherwise concerned in, the debt subordination.

             (2)  In this section:

"debt subordination" means an agreement or declaration by a creditor of a company, however expressed, to the effect that, in specified circumstances:

                     (a)  a specified debt that the company owes the creditor; or

                     (b)  a specified part of such a debt;

will not be repaid until other specified debts that the company owes are repaid to a specified extent.

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