Document ID: chunk:federal_register_of_legislation:C2004A04501:schedule:3:p98
Version: federal_register_of_legislation:C2004A04501
Segment Type: schedule
Provision Reference: sch 3 (pt 98/110)
Character Range: 399962–402788

the reasons why the liquidator thinks that such proceedings should not be begun; and

(b) the creditor applies for leave under paragraph (2)(b); then:

    (c)     the creditor must file the statement with the court when so applying; and

    (d)     in determining the application, the court is to have regard to the reasons set out in the statement.

Events preventing creditor from suing

"588U.(1) A creditor of a company that is being wound up cannot begin proceedings under section 588M in relation to the incurring of a debt by the company if:

    (a)     the company's liquidator has applied under section 588FF in relation to the debt, or in relation to a transaction under which the debt was incurred; or

    (b)    the company's liquidator has begun proceedings under section 588M in relation to the incurring of the debt; or

    (c)     the company's liquidator has intervened in an application for a civil penalty order against a person in relation to a contravention of section 588G in relation to the incurring of the debt.

  "(2) Subsection (1) has effect despite sections 588R and 588T.

                 "Division 5—Liability of holding company for insolvent trading by subsidiary

When holding company liable

  "588V.(1) A corporation contravenes this section if:

    (a)     the corporation is the holding company of a company at the time when the company incurs a debt; and

    (b)     the company is insolvent at that time, or becomes insolvent by incurring that debt, or by incurring at that time debts including that debt; and

    (c)     at that time, there are reasonable grounds for suspecting that the company is insolvent, or would so become insolvent, as the case may be; and

  (d)     one or both of the following subparagraphs applies:

         (i) the corporation, or one or more of its directors, is or are aware at that time that there are such grounds for so suspecting;

          (ii) having regard to the nature and extent of the corporation's control over the company's affairs and to any other relevant circumstances, it is reasonable to expect that:

             (A)    a holding company in the corporation's circumstances would be so aware; or

             (B)     one or more of such a holding company's directors would be so aware; and

  (e) that time is at or after the commencement of this Part.

"(2) A corporation that contravenes this section is not guilty of an offence.

Recovery of compensation for loss resulting from insolvent trading

  "588W.(1) Where:

      (a)     a corporation has contravened section 588V in relation to the incurring of a debt by a company; and

      (b)     the person to whom the debt is owed has suffered loss or damage in relation to the debt because of the company's insolvency; and

      (c)     the debt was wholly or partly