Part 3A of the Corporations Act 2001 (Cth) (CA) was introduced in 1993 “to provide for the business, property and affairs of an insolvent company to be administered in a way that:

• maximises the chances of the company, or as much as possible of its business, continuing in existence; or

• if it is not possible for the company or its business to continue in existence — results in a better return for the company’s creditors and members than would result from an immediate winding up of the company. See Introduction.

An administrator (or administrators) can be appointed in writing by:

• the company itself where the directors have resolved both that the company is insolvent or is likely to become so at some future time and that an administrator should be appointed;

• a liquidator or provisional liquidator who believes the company is insolvent or likely to become so at some future date; or

• a secured party holding a security interest over the whole or substantially the whole of the company’s property, if the interest has become and still is enforceable and if a liquidator or provisional liquidator has not been appointed. See Administrator.

The powers of officers of the company (including a provisional liquidator) are suspended upon the appointment of an administrator, except with his or her written approval or the approval of the court. However, the directors retain the power to appoint a replacement administrator in the event of a vacancy by death or otherwise. Proceedings against the company and action against its property are generally stayed. See Effect of appointment.

The purpose of the first meeting of creditors is:

• to decide whether to appoint a committee of inspection and, if so, who are to be the members; and

• to give creditors the opportunity to remove the administrator initially appointed and appoint another. See First meeting of creditors.

The purpose of the second meeting of creditors is to decide the company’s future. The CA gives the creditors three options:

• to resolve that the company execute a DOCA in a specified form, which may differ from the form (if any) which accompanied the notice of meeting;

• to resolve that the administration ends when the company will revert to its former ownership and control; or

• to resolve that the company be wound up, in which case it will move into a creditors’ voluntary winding up via the transition arrangements. See Second meeting and ending of administration.

If a deed of company arrangement is proposed, the administrator must prepare an instrument setting out the terms of the deed. This will usually be done before the notice convening the second meeting of creditors is sent out, accompanied by a copy of the proposed deed, but it may be amended at the meeting. See Deed of company arrangement (DOCA).

A DOCA can be varied:

• by resolution of creditors (s 445A CA), subject to whole or partial cancellation by the court under s 445B CA; or

• by the court in the exercise of its general powers under s 447A CA. See Variation and termination of DOCA.

A DOCA may also be terminated by the court and by the creditors in defined circumstances. See Variation and termination of DOCA.

The CA gives the court power to “make such order as it thinks appropriate about how this Part is to operate in relation to a particular company”. An order can:

• operate retrospectively; or

• alter the usual operation of the Act, and not merely fill in gaps in the legislation. See General powers of court.

The CA sets out a number of events which trigger a transition to winding up. They are:

• The passing of a resolution to that effect at the second meeting of creditors.

• The failure of the company to execute a DOCA following a resolution requiring it to do so.

• The passing of resolutions terminating the deed and that the company be wound up. Other triggering events are set out in the Regulations. See Transition to voluntary winding up.

This schedule (called “IPS” in these notes) came into effect progressively, with provisions relating to the registering and disciplining of insolvency practitioners commencing on 1 March 2017 and the balance on 1 September 2017. See Insolvency Law Reform Act 2016 (Cth).