KENNEDY & Co provides professional advice in all areas of Corporate Insolvency and Reconstruction. We have allocated specific resources and personnel to develop a specialist cell within the firm to provide our clients with the practical expertise to deliver timely and cost-effective solutions.

Bob Kennedy and Paul Jorgensen are Official Liquidators and have experience in all forms of corporate insolvency and reconstruction. Our practice includes advising with regard to Voluntary Administrations, Deeds Of Company Arrangement, Receivership, Court Winding Up, Creditors' Winding Up and Members' Voluntary Winding Up. We can accept appointment in any of these roles. At all times we have ongoing matters that enable us to continually improve the services we can provide to our clients in this demanding area.

For more information please see the following topics:
Voluntary Administrations
Deed of Company Arrangement
Receivership
Winding Up

Voluntary Administrations

The Voluntary Administration provisions of the Corporations Law were contained in the Corporate Law Reform Act 1992. The object of this addition to the Corporations Law is to increase the chances of a company that is insolvent or experiencing financial difficulties which are likely to render the company insolvent to either trade out of insolvency or if this is not feasible to provide for the maximum return to the creditors of the company.

The administrator's role is to take control of the affairs and business of the company during the administration period; and to investigate, during the administration period, the financial situation and affairs of the company with a view to recommending, within 28 days, a course of action to a meeting of creditors.

There are three courses of action available to creditors:

That the company enter into a deed of company arrangement;
That the administration cease (and the company be returned to the directors); or
That the company be wound up in insolvency.
Whilst the company is under administration there is a moratorium period during which creditors, subject to a number of exceptions, are prohibited from taking any action against the company to recover debts, enforce charges or have the company wound up without the consent of the administrator or the Court.

The main exception to the moratorium is the right of a secured creditor who has a registered charge over the whole or substantially the whole of the company's property to enforce the charge and appoint a receiver or otherwise assume control of the property as a mortgagee in possession. A 10 day limit applies to the commencement of this action.

Deed of Company Arrangement

A deed of company arrangement is one of the outcomes of a voluntary administration. Such a deed is an undertaking by the company under seal and its creditors as to the means by which it will satisfy the company's debts existing at the commencement of the administration.

Receivership

A company may be placed into receivership by a secured creditor appointing a receiver as a result of the company defaulting in terms of the charge pursuant to a mortgagee debenture (or similar charge) or by the court for the benefit of creditors generally.

The receivers' primary role is to realise a company's property, the subject of the charge, to repay the charge holder.

Winding Up

As the Corporations Law provides for the birth of a company so too must it provide for the company's demise. The process by which a company's existence is terminated is called 'liquidation' or 'winding up'. A company's existence can only be terminated through the winding up process.

When a company is wound up it represents the realisation of the company's assets by the liquidator for the benefit firstly of creditors, and then if there is a surplus, for the benefit of its members. At the conclusion of the winding up process the company ceases to exist.

The forms of winding up are known as court winding up, creditors' winding up and members' voluntary winding up, of which the first two are concerned with insolvency. A brief discussion of each type follows.

Court Winding Up
The court may order a company wound up on the application of a person specified by the Act because of the following:

It is insolvent; or
Some other event as set out in section 461 of the Corporations Law has occurred. The applicant may be a creditor, director, provisional liquidator or the Australian Securities Commission.
The presumption of insolvency by the court may occur if:

It failed to comply with a statutory demand;
A judgement is returned;
A receiver is appointed.
The court has the power to appoint a provisional liquidator who takes control of the company pending a further hearing or investigation in respect of the application.

The liquidator has the power to sell or dispose of the assets, bring or defend any legal action on behalf of the company, and carry on business for the beneficial realisation of assets.

Creditors' Winding Up

A creditors' winding up is initiated by a special resolution of members that the company be wound up. A creditors' meeting follows this resolution where the creditors consider the summary of affairs, to approve or otherwise overrule members' nomination for the appointment of liquidator and appoint a committee of inspection.

Members' Voluntary Winding Up - Reconstruction

A members' voluntary winding up is the means by which the members of a solvent company are able to terminate the existence of a company. The winding up is brought about by a special resolution passed by the members. The company in general meeting appoints the liquidator, determines his salary and supervises his duties. The creditors do not play a role in this type of winding because the company must meet stringent prerequisites, including the ability to pay all its debts in full.

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