Commonwealth Numbered Acts

CORPORATE LAW REFORM ACT 1992 No. 210 of 1992 - SECT 94

94. After section 554 of the Corporations Law the following sections and
headings are inserted: Determination of value of debts and claims of uncertain
value

"554A.(1) This section applies where, in the winding up of a company, the
liquidator admits a debt or claim that, as at the relevant date, did not bear
a certain value.

"(2) The liquidator must:

   (a)  make an estimate of the value of the debt or claim as at the relevant
        date; or

   (b)  refer the question of the value of the debt or claim to the Court.

"(3) A person who is aggrieved by the liquidator's estimate of the value of
the debt or claim may, in accordance with the regulations, appeal to the Court
against the liquidator's estimate.

"(4) If:

   (a)  the liquidator refers the question of the value of the debt or claim
        to the Court; or

   (b)  a person appeals to the Court against the liquidator's estimate of the
        value of the debt or claim; the Court must:

   (c)  make an estimate of the value of the debt or claim as at the relevant
        date; or

   (d)  determine a method to be applied by the liquidator in working out the
        value of the debt or claim as at the relevant date.

"(5) If the Court determines a method to be applied by the liquidator in
working out the value of the debt or claim, the liquidator must work out the
value of the debt or claim as at the relevant date in accordance with that
method.

"(6) If:

   (a)  the Court has determined a method to be applied by the liquidator in
        working out the value of the debt or claim as at the relevant date;
        and

   (b)  a person is aggrieved by the way in which that method has been applied
        by the liquidator in working out that value; the person may, in
        accordance with the regulations, appeal to the Court against the way
        in which the method was applied.

"(7) If:

   (a)  a person appeals to the Court against the way in which the liquidator,
        in working out the value of the debt or claim, applied a method
        determined by the court; and

   (b)  the Court is satisfied that the liquidator did not correctly apply
        that method; the Court must work out the value of the debt or claim as
        at the relevant date in accordance with that method.

"(8) For the purposes of this Division, the amount of the debt or claim that
is admissible to proof is the value as estimated or worked out under this
section. Discounting of debts payable after relevant date

"554B. The amount of a debt that is admissible to proof but that, as at the
relevant date, was not payable by the company until an ascertained or
ascertainable date ('the future date') after the relevant date is the amount
payable on the future date reduced by the amount of the discount worked out in
accordance with the regulations. Conversion into Australian currency of
foreign currency debts or claims

"554C.(1) This section applies if the amount of a debt or claim admissible to
proof against a company would, apart from this section, be an amount of
foreign currency.

"(2) If the company and the creditor or claimant have, in an instrument
created before the relevant date, agreed on a method to be applied for the
purpose of converting the company's liability in respect of the debt or claim
into Australian currency, the amount of the debt or claim that is admissible
to proof is the equivalent in Australian currency of the amount of foreign
currency, worked out as at the relevant date and in accordance with the agreed
method.

"(3) If subsection (2) does not apply, the amount of the debt or claim that is
admissible to proof is the equivalent in Australian currency of the amount of
foreign currency, worked out by reference to the opening carded on demand
airmail buying rate in relation to the foreign currency available at the
Commonwealth Bank of Australia on the relevant date.

"Subdivision C - Special provisions relating to secured
creditors of insolvent companies Application of Subdivision

"554D.(1) This Subdivision applies in relation to the proof of a secured debt
in the winding up of an insolvent company.

"(2) For the purposes of the application of this Subdivision in relation to a
secured debt of an insolvent company that is being wound up, the amount of the
debt is taken to be the amount of the debt as at the relevant date (as worked
out in accordance with Subdivision B). Proof of debt by secured creditor

"554E.(1) In the winding up of an insolvent company, a secured creditor is not
entitled to prove the whole or a part of the secured debt otherwise than in
accordance with this section and with any other provisions of this Law or the
regulations that are applicable to proving the debt.

"(2) The creditor's proof of debt must be in writing.

"(3) If the creditor surrenders the security to the liquidator for the benefit
of creditors generally, the creditor may prove for the whole of the amount of
the secured debt.

"(4) If the creditor realises the security, the creditor may prove for any
balance due after deducting the net amount realised, unless the liquidator is
not satisfied that the realisation has been effected in good faith and in a
proper manner.

"(5) If the creditor has not realised or surrendered the security, the
creditor may:

   (a)  estimate its value; and

   (b)  prove for the balance due after deducting the value so estimated.

"(6) If subsection (5) applies, the proof of debt must include particulars of
the security and the creditor's estimate of its value. Redemption of security
by liquidator

"554F.(1) This section applies where a secured creditor's proof of debt is in
respect of the balance due after deducting the creditor's estimate of the
value of the security.

"(2) The liquidator may, at any time, redeem the security on payment to the
creditor of the amount of the creditor's estimate of its value.

"(3) If the liquidator is dissatisfied with the amount of the creditor's
estimate of the value of the security, the liquidator may require the property
comprised in the security to be offered for sale at such times and on such
terms and conditions as are agreed on by the creditor and the liquidator or,
in default of agreement, as the Court determines.

"(4) If the property is offered for sale by public auction, both the creditor
and the liquidator are entitled to bid for, and purchase, the property.

"(5) The creditor may at any time, by notice in writing, require the
liquidator to elect whether to exercise the power to redeem the security or to
require it to be sold and, if the liquidator does not, within 3 months after
receiving the notice, notify the creditor, in writing, that the liquidator
elects to exercise the power:

   (a)  the liquidator is not entitled to exercise it; and

   (b)  subject to subsection (6), any equity of redemption or other interest
        in the property comprised in the security that is vested in the
        company or the liquidator vests in the creditor; and

   (c)  the amount of the creditor's debt is, for the purposes of this
        Division, taken to be reduced by the amount of the creditor's estimate
        of the value of the security.

"(6) The vesting of an equity of redemption or other interest in property
because of paragraph (5)(b) is subject to compliance with any law requiring
the transmission of such interests in property to be registered. Amendment of
valuation

"554G.(1) If a secured creditor's proof of debt is in respect of the balance
due after deducting the creditor's estimate of the value of the security, the
creditor may, at any time, apply to the liquidator or the Court for permission
to amend the proof of debt by altering the estimated value.

"(2) If the liquidator or the Court is satisfied:

   (a)  that the estimate of the value of the security was made in good faith
        on a mistaken basis; or

   (b)  that the value of the security has changed since the estimate was
        made; the liquidator or the Court may permit the creditor to amend the
        proof of debt accordingly.

"(3) If the Court permits the creditor to amend the proof of debt, it may do
so on such terms as it thinks just and equitable. Repayment of excess

"554H.(1) Where a creditor who has amended a proof of debt under section 554G
has received, in the winding up of the debtor company, an amount in excess of
the amount to which the creditor would have been entitled under the amended
proof of debt, the creditor must, without delay, repay the amount of the
excess to the liquidator.

"(2) Where a creditor who has so amended a proof of debt has received, in the
winding up of the debtor company, less than the amount to which the creditor
would have been entitled under the amended proof of debt, the creditor is
entitled to be paid, out of the money remaining for distribution in the
winding up, the amount of the deficiency before any of that money is applied
in the payment of future distributions, but the creditor is not entitled to
affect a distribution made before the amendment of the proof of debt.
Subsequent realisation of security

"554J. Where:

   (a)  a secured creditor's proof of debt is in respect of the balance due
        after deducting the creditor's estimate of the value of the security;
        and

   (b)  subsequently:

        (i)    the creditor realises the security; or

        (ii)   the security is realised under section 554F; the net amount
               realised is to be substituted for the estimated value of the
               security and section 554H applies as if the proof of debt had
               been amended accordingly under section 554G.
                        "Subdivision D - Priorities".