Document ID: chunk:federal_register_of_legislation:C2004A04501:schedule:3:p100
Version: federal_register_of_legislation:C2004A04501
Segment Type: schedule
Provision Reference: sch 3 (pt 100/110)
Character Range: 405007–407801

or 5

Application of amount paid as compensation

"588Y.(1) An amount paid to a company under section 588J, 588K, 588M or 588W is not available to pay a secured debt of the company unless all the company's unsecured debts have been paid in full.

  "(2) Where:

    (a)    under section 588J or 588K, or in proceedings under section 588M or 588W, a court orders a person to pay to the company compensation, or an amount, equal to the amount of loss or damage suffered by a person in relation to a debt because of the company's insolvency; and

    (b) the court is satisfied that, at the time when the company incurred the debt, the person who suffered the loss or damage knew that the company was insolvent at that time or would become insolvent by incurring the debt, or by incurring at that time debts including the debt, as the case requires;

the court may order that the compensation or amount paid to the company is not available to pay that debt unless all the company's unsecured debts (other than debts to which orders under this subsection relate) have been paid in full.

"(3) Subsection (2) does not apply in relation to proceedings under section 588M in relation to the incurring of a debt by a company if the proceedings are begun by a creditor of the company (as provided for in Subdivision B of Division 4).

              " 'Division 7—Person managing company while disqualified may become liable for company's debts

Court may make order imposing liability

  "588Z. Where:

  (a)     a company is being wound up; and

     (b)     at or after the commencement of this Part and within 4 years before the relation-back day, a person contravened:

       (i) section 229, 230, 599, 600 or 1317EF; or

         (ii) a previous law corresponding to a section referred to in subparagraph (i);

     by managing the company (as defined by section 91A);

the Court may, on the application of the company's liquidator, order that the person is personally liable for so much of the company's debts and liabilities as does not exceed an amount specified in the order.".

Interpretation and application

  112. Section 589 of the Corporations Law is amended:

    (a) by omitting paragraph (1)(c) and substituting the following paragraphs:

        "(ba) of which a provisional liquidator has been appointed;

         (c) that is or has been under administration;

         (ca) that has executed a deed of company arrangement, even if the deed has since terminated;";

  (b)    by omitting from paragraph (2)(a) "4" and substituting "3";

    (c)     by omitting paragraph (b) of the definition of "appropriate officer" in subsection (5) and substituting the following paragraphs:

          "(aa) in relation to a company of which a provisional liquidator has been appointed—the