Commonwealth Numbered Regulations Commonwealth Numbered Regulations
1 Before regulation 5.5.01
Insert:
Division 1 -- Resolution for winding up
2 At the end of Part 5.5
Add:
Division 2 -- Simplified liquidation process
5.5.02 Declaration about eligibility for simplified liquidation process and other matters
For the purposes of subsection 498(3) of the Act, the following information is prescribed:
(a) whether, in the directors' opinion, there are reasonable grounds to believe that the company has entered into a transaction that would be voidable under section 588FE of the Act, other than a transaction that would be an unfair preference;
(b) whether, in the directors' opinion, there are reasonable grounds to believe that, on the declaration being given, the eligibility criteria for the simplified liquidation process will be met in relation to the company, and the reasons for that opinion.
5.5.03 Eligibility criteria for simplified liquidation process
(1) For the purposes of paragraph 500AA(1)(d) of the Act, the test for eligibility is that the total liabilities of the company on the day on which the triggering event occurred must not exceed $1 million.
(2) For the purposes of paragraph 500AA(1)(e) of the Act, a period of 7 years is prescribed.
(3) For the purposes of paragraph 500AA(1)(f) of the Act, a period of 7 years is prescribed.
(4) For the purposes of paragraph 500AA(2)(b) of the Act, a prescribed circumstance is that:
(a) the other company is a related body corporate of the company in relation to which the eligibility criteria are to be met; and
(b) the other company is, or has been:
(i) under restructuring; or
(ii) the subject of a simplified liquidation process; and
(c) if subparagraph (b)(i) applies--the restructuring practitioner for the other company was appointed no more than 20 business days before the day on which the company in relation to which the eligibility criteria are to be met began to follow the simplified liquidation process; and
(d) if subparagraph (b)(ii) applies--the other company began to follow the simplified liquidation process no more than 20 business days before the day on which the company in relation to which the eligibility criteria are to be met began to follow the simplified liquidation process.
(5) For the purposes of paragraph 500AA(2)(c) of the Act, a prescribed circumstance is that:
(a) the company has been under restructuring; and
(b) the restructuring terminated no more than 20 business days before the day on which the company began to follow the simplified liquidation process.
Definitions
(6) In this regulation:
"liability " means any liability or obligation.
Subdivision B -- Simplified liquidation process
5.5.04 Transactions that are not voidable
(1) This regulation is made for the purposes of paragraph 500AE(3)(b) of the Act.
(2) An unfair preference of a company is not voidable despite subsection 588FE(2) of the Act, provided either subregulation (3) or (4) is satisfied.
(3) This subregulation is satisfied if:
(a) the company is subject to the simplified liquidation process; and
(b) the transaction was entered into, or an act was done for the purposes of giving effect to it, before the day that is 3 months before the relation-back day; and
(c) no creditor under the transaction is a related entity of the company.
(4) This subregulation is satisfied if:
(a) the company is subject to the simplified liquidation process; and
(b) the transaction was entered into, or an act was done for the purposes of giving effect to it:
(i) during the 3 months ending on the relation-back day; or
(ii) after that day but on or before the day when the winding up began; and
(c) either:
(i) the transaction results in the creditor receiving from the company no more than $30,000 in value; or
(ii) if the transaction forms part of a series of related transactions, all of the related transactions result in the creditor receiving from the company no more than $30,000 in value; and
(d) no creditor under the transaction is a related entity of the company.
(1) This regulation is made for the purposes of paragraph 500AE(3)(f) of the Act and applies in relation to the liquidator of a company that is subject to the simplified liquidation process.
(2) If, in the opinion of the liquidator, there are reasonable grounds to believe that:
(a) a past or present officer or employee, or a member or contributory, of the company; or
(b) a person who has taken part in the formation, promotion, administration, management or winding up of the company;
may have engaged in conduct constituting an offence under a law of the Commonwealth or a State or Territory in relation to the company that has had, or is likely to have, a material adverse effect on the interests of the creditors as a whole or of a class of creditors as a whole, the liquidator must:
(c) as soon as practicable, and in any event within 6 months, after first forming the opinion, lodge with ASIC a report in the prescribed form (if any) with respect to the matter and state in the report whether the liquidator proposes to make an application for an examination or order under section 597 of the Act; and
(d) give ASIC such information, and give to it such access to and facilities for inspecting and taking copies of any documents, as ASIC requires.
(3) The liquidator may also, if the liquidator thinks fit, lodge further reports specifying any other matter that, in the liquidator's opinion, it is desirable to bring to the notice of ASIC.
(4) If it appears to the Court, in the course of winding up a company, that:
(a) a person mentioned in paragraph (2)(a) or (b) has engaged in conduct constituting an offence under a law of the Commonwealth or a State or Territory in relation to the company that has had, or is likely to have, a material adverse effect on the interests of the creditors as a whole or of a class of creditors as a whole; and
(b) the liquidator has not lodged with ASIC a report with respect to the matter;
the Court may, on the application of a person interested in the winding up, direct the liquidator to lodge such a report.
5.5.06 Notice of adoption of simplified liquidation process
(1) This regulation is made for the purposes of paragraph 500AE(3)(f) of the Act.
(2) If the liquidator of a company adopts the simplified liquidation process on a day, the liquidator must, within 2 business days after that day, lodge with ASIC:
(a) notice in the prescribed form (if any) of the adoption; and
(b) a copy of the declaration given by the directors of the company to the liquidator in accordance with section 498 of the Act.
Note: Failure to comply with this subregulation is an offence: see subsection 1311(1) of the Act.
Subdivision C -- Ceasing of simplified liquidation process
5.5.07 Liquidator must cease to follow the simplified liquidation process
(1) For the purposes of paragraph 500AC(1)(b) of the Act, a prescribed circumstance is that the liquidator believes on reasonable grounds that:
(a) the company, or a director of the company, has engaged in conduct; and
(b) the conduct involved fraud or dishonesty; and
(c) the conduct has had, or is likely to have, a material adverse effect on the interests of the creditors as a whole or of a class of creditors as a whole.
(2) The liquidator is taken to have ceased to follow the simplified liquidation process on the day on which the liquidator first held the belief.
5.5.08 Transition from simplified liquidation process
(1) This regulation is made for the purposes of subsection 500AC(2) of the Act.
Notice of cessation of process
(2) If the liquidator of a company ceases to follow the simplified liquidation process on a day, the liquidator must, within 2 business days after that day, lodge with ASIC notice in the prescribed form (if any) of the cessation.
Note: Failure to comply with this subregulation is an offence: see subsection 1311(1) of the Act.
Validity of things done during process
(3) Subject to this regulation, the cessation of the simplified liquidation process in relation to a company does not affect the validity of anything that was done in good faith in relation to the company before the cessation.
Reports by liquidator
(4) If, at any time during the simplified liquidation process, it appeared to the liquidator that one or more of the circumstances in paragraph 533(1)(a), (b) or (c) existed, section 533 of the Act applies in relation to the liquidator as if paragraph 533(1)(d) were modified by omitting "within 6 months" and substituting "within 6 months after the day on which the simplified liquidation process in relation to the company ended".
5.5.09 Working out whether the 25% in value of creditors test met
For the purposes of paragraph 500AD(b) of the Act, a person who is a related entity, and a creditor, of the company is not to be taken into account.
3 Before subregulation 5.6.39(1)
Insert:
Companies not subject to the simplified liquidation process
4 Subregulation 5.6.39(1)
Omit "A liquidator", substitute "Subject to subregulations (1A) and (1B), a liquidator".
5 After subregulation 5.6.39(1)
Insert:
Companies subject to the simplified liquidation process
(1A) Subregulation (1) does not apply in relation to a liquidator of a company that is subject to the simplified liquidation process.
(1B) A liquidator of a company that is subject to the simplified liquidation process must fix a single day that is 14 days after the day on which notice is given in accordance with subregulation (2), on or before which a creditor may submit particulars of his or her debt or claim.
6 Before subregulation 5.6.39(2)
Insert:
Notice requirements
7 Subregulations 5.6.39(2) and (3)
Omit "The notice", substitute "A notice under subregulation (1) or (1B)".
8 Paragraph 5.6.39(3)(d)
After "subregulation (1)", insert "or (1B), as the case requires".
9 At the end of regulation 5.6.39
Add:
(4) A notice under subregulation (1B) may include a requirement that all, or a specified class, of debts or claims must be proved formally.
10 Before subregulation 5.6.48(1)
Insert:
Companies not subject to the simplified liquidation process
11 Subregulation 5.6.48(1)
Omit "A liquidator", substitute "Subject to subregulation (1A), a liquidator".
12 After subregulation 5.6.48(1)
Insert:
Companies subject to the simplified liquidation process
(1A) Subregulation (1) does not apply in relation to a liquidator of a company that is subject to the simplified liquidation process.
Note: A notice given under subregulation 5.6.39(1B) may include a requirement that the creditors of a company that is subject to the simplified liquidation process must formally prove all or a specified class of debts or claims (see subregulation 5.6.39(4)).
13 Before subregulation 5.6.48(2)
Insert:
Notice requirements
14 Subregulation 5.6.48(2)
Omit "the notice", substitute "a notice under subregulation (1)".
15 Subregulation 5.6.48(3)
Omit "The notice", substitute "A notice under subregulation (1)".
16 Before subregulation 5.6.48(4)
Insert:
Failure to comply with liquidator's requirements
17 Subregulation 5.6.65(1)
Omit "The liquidator", substitute "Subject to subregulation (1A), the liquidator".
18 After subregulation 5.6.65(1)
Insert:
(1A) The requirement in subregulation (1) that the notice must be given not more than 2 months before the intended date does not apply in relation to a liquidator of a company that is subject to the simplified liquidation process.
19 After regulation 5.6.67
Insert:
5.6.67A Single declaration and distribution of dividend for companies in simplified liquidation
The liquidator of a company that is subject to the simplified liquidation process may declare and distribute a dividend only once among creditors whose debts or claims have been admitted.
20 At the end of regulation 5.6.68
Add:
(3) This regulation does not apply in relation to a creditor of a company that is subject to the simplified liquidation process.
21 In the appropriate position in Chapter 10
Insert:
10.43.01 Application of amendments relating to the simplified liquidation process
(1) The amendments made by Schedule 3 to the Corporations Amendment (Corporate Insolvency Reforms) Regulations 2020 apply in relation to the winding up of a company because of a triggering event that occurs on or after the commencement of that Schedule.
(2) In this regulation:
"triggering event " has the same meaning as in section 489F of the Act (as in force on the commencement of Schedule 3 to the Corporations Amendment (Corporate Insolvency Reforms) Regulations 2020 ).