Commercial Lawyer Brisbane
Personal Property Securities Act 2009 & Voluntary Administrations
In the event of the appointment of a voluntary administrator to the company under Part 5.3A, section 440B of the Corporations Act 2001 imposes restrictions on:
- An owner of property used by the company from taking possession of or recovering the property;
- A lessor from levying distress rent, taking possession, or otherwise recovering the property; and
- A secured party with possessory security from selling the property or otherwise enforcing the security interest.
The voluntary administrator may still sell or dispose of assets:
- With the consent of the secured party;
- With the consent of the court; and
- In the ordinary course of business.
Any disposal made by the voluntary administrator requires the sale proceeds from the secured property to be distributed to those holding relevant security interests.
Effect of Voluntary Administration on a Landlord
A landlord is bound by the same moratorium applying to all creditors, provided the landlord did not commence enforcement proceedings prior to the appointment. The administrator can occupy the company’s leased premises for up to seven calendar days without paying rent, but must pay rent for the remainder of the voluntary administration period. The administrator’s liability to the landlord ends at the conclusion of the voluntary administration or when the premises are vacated. The administrator will not be liable for rent if they do not have possession of the property. However, the company will continue to incur liability for the rent.
Cost of Voluntary Administration
Each administration is different and will therefore have a different cost depending on the work required. There are two types of work on insolvency files, statutory and non-statutory, but both are necessary. Statutory work is required on every file regardless of size, complexity or other unique factors. Statutory work includes:
- Notifying ASIC;
- Issuing notices to creditors;
- Issuing notices to utilities and statutory authorities, such as the Australian Taxation Office;
- Conducting the first meeting of creditors;
- Dealing with creditors’ enquiries;
- Conducting preliminary investigations into preferential payments, insolvent trading and other voidable transactions;
- Preparing and issuing a detailed report to creditors;
- Conducting the second meeting of creditors; and
- Notifying creditors and ASIC of the outcome of the second meeting of creditors.
Non-statutory but still necessary work may include the following tasks:
- Trading on the business;
- Dealing with secured creditors;
- Dealing with finance companies ;
- Collecting and selling some or all of a company’s assets or the business of a company; and
- More detailed investigations into potential recoveries, assets ownership and the viability of any proposal for a DOCA.
Timing of a Voluntary Administration
The voluntary administration ends when:
- A DOCA is fully executed;
- The creditors resolve to wind up a company • the creditors resolve that the voluntary administration should end;
- The court orders that the administration is to end;
- The approved DOCA is not signed within 15 business days of the second meeting;
- The period for calling the second meeting ends without the meeting being called; and
- The court appoints a liquidator to the company.