Document ID: chunk:federal_register_of_legislation:C2004A04501:schedule:3:p85
Version: federal_register_of_legislation:C2004A04501
Segment Type: schedule
Provision Reference: sch 3 (pt 85/110)
Character Range: 367818–370725

(c) applies—the Supreme Court of this jurisdiction.

"Division 2—Winding up recognised companies".

111. After Part 5.7A of the Corporations Law the following Part is inserted:

   "PART 5.7B—RECOVERING PROPERTY OR COMPENSATION FOR THE BENEFIT OF CREDITORS OF INSOLVENT COMPANY

"Division 1—Preliminary

Secured debt may become unsecured

"588D. For the purposes of this Part, a secured debt becomes an unsecured debt to the extent that the creditor proves for the debt as an unsecured creditor.

Presumptions to be made in recovery proceedings

  "588E.(1) In this section:

'recovery proceeding', in relation to a company, means:

    (a)     an application under section 588FF by the company's liquidator; or

    (b)     proceedings begun under subsection 588FH(2) by the company's liquidator; or

    (c)     proceedings, in so far as they relate to the question whether a charge created by the company is void to any extent, as against the company's liquidator, because of subsection 588FJ(2); or

    (d)     proceedings begun under subsection 588FJ(6) by the company's liquidator; or

    (e)     proceedings for a contravention of section 588G in relation to the incurring of a debt by the company (including proceedings under section 588M in relation to the incurring of the debt but not including proceedings for an offence); or

     (f) proceedings under section 588W in relation to the incurring of a debt by the company.

"(2) Subsections (3) to (9), inclusive, have effect for the purposes of a recovery proceeding in relation to a company.

  "(3) If:

  (a)     the company is being wound up; and

    (b)     it is proved, or because of subsection (4) or (8) it must be presumed, that the company was insolvent at a particular time during the 12 months ending on the relation-back day;

it must be presumed that the company was insolvent throughout the period beginning at that time and ending on that day.

"(4) Subject to subsections (5), (6) and (7), if it is proved that the company:

    (a) has contravened subsection 289(1) by failing to keep accounting records that correctly record and explain:

         (i) its transactions (including any transactions as trustee) during a particular period ('the relevant period'); and

     (ii) its financial position during the relevant period; or by failing to keep such accounting records in the manner required by paragraph 289(1)(b); or

    (b) has contravened subsection 289(2) by failing to retain such accounting records for the period required by that subsection;

it must be presumed that the company was insolvent throughout the relevant period.

"(5) Paragraph (4)(a) does not apply in relation to a contravention of subsection 289(1) that is only minor or technical.

"(6) Subsection (4) does not have effect, in so far as it would prejudice a right or interest of a person for the company to be presumed insolvent because