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Companies (Voluntary Administration) Regulations

75. The new voluntary administration regime will involve the appointment of an administrator who has control of the failing company's business and property. When a company is under administration there will be a stay on actions to recover money from the company. Within the period of the stay the administrator must convene a meeting of creditors to decide and vote on the company's future. One of the options is a deed of company arrangement. This is binding on all creditors and officers of the company and essentially sets out how the company will be managed, including the extent to which debts will be repaid.

76. New section 239ACN(3) of the Companies Act 1993 will provide for the deed of administration to include any prescribed provisions, except those provisions that the document expressly excludes. It is proposed that regulations provide for the following prescribed provisions:

• the deed administrator is deemed to act as agent for and on behalf of the company;
• the deed administrator has all the powers necessary to carry on the business of the company and the other specific powers of a liquidator in Schedule 6 of the Companies Act;
• the deed administrator may cease to carry on the business of the company if the deed administrator or the committee of inspection determines that it is no longer practicable to do so;
• the deed administrator may apply the property of the company in the same order of priority that a liquidator would apply if the company were in liquidation;
• creditors must accept their entitlements under the deed in full satisfaction and complete discharge of the debts or claim against the company;
• if the administrator has paid to the creditors their full entitlements under the deed, all debts or claims of the company are extinguished;
• the deed may be pleaded by the company against any creditor in bar of any debt or claim that is admissible under the deed and that a creditor must not, before termination of the deed, institute or prosecute any legal proceedings in relation to any debt incurred before the day when the administration began, exercise any right of set-off or cross-action, or commence or take any further step in any arbitration against the company;
• that the provisions of the Companies Act relating to creditors' claims, apply to the deed as if references to the liquidator were references to the administrator of the deed;
• that the provisions of the Companies Act relating to meetings of creditors, apply to meetings of creditors or of the committee of inspection, as if references to the liquidator were references to the administrator of the deed;
• rules relating to the appointment, membership and procedures of the committee of inspection;
• if the deed administrator has applied all of the proceeds of the realisation of the assets available for the payment of creditors, the deed administrator must certify to that effect in writing and lodge a notice of termination of the deed with the Registrar of the Companies Office; and
• the notice of termination of the deed.

77. These prescribed provisions will be largely drawn from the Australian Corporations Regulations 2001 ("the Australian Regulations"). However, the wording of similar sections applying to liquidators under the Companies Act will be used where appropriate and necessary for consistency. This will also mean that any case law under the Companies Act will apply. Also some matters in the Australian Regulations are already covered in the Companies Amendment Act, and will therefore not be repeated in the regulations.

78. New section 239ACZ of the Companies Act will require the administrator or deed administrator to prepare accounts in the prescribed form that must be filed with the Registrar of the Companies Office from time to time during the period of administration. It is proposed that regulations be made prescribing the form and content of the accounts to be filed, as follows:

• company details and contact details of the person filing the accounts;
• details of the appointment, including whether or not the accounts are final and the details of the administrator and date of appointment;
• the number and value of creditors as well as the payment of dividends;
• the professional fees recorded in the records, expenses and outlays paid to the administrator, and the estimated completion date;
• the total money received by the administrator for all periods;
• the total of all payments made prior to the current accounts, and during the current period, where dividends have been paid, the creditor's name and the nature of the dividend, any losses, the total of all payments for the whole administration, a bank reconciliation at the date of the current accounts; and
• the administrator's signature and verification of the accounts.

79. Again, these proposed requirements will be largely drawn from the Australian Regulations.