LexisNexis Practical Guidance®

Chapter 5 of Corporations Act 2001 (Cth) (CA), entitled “external administration”, deals with four types of administration, in order:

• •arrangements and reconstructions;
• •receivers and other controllers;
• •voluntary administration; and
• •winding up.

All have in common the appointment, by the company itself, by a secured creditor or by the court, of a person or persons who take control of the company or of some or all of its property in the place of the directors. These external administrators, usually specialised accountants, have for many years been subject to a statutory registration regime, but the rules about the way in which they carry out their functions have varied according to the type of administration in such areas as:

• •remuneration;
• •meetings of shareholders or creditors; and
• •committees of inspection.

Many of these rules are now standardised by the progressive introduction of the Insolvency Practice Schedule (IPS), see Introduction. It is important to understand that “external administration” for the purposes of IPS applies only to the second two of the four types of administration, see Definitions.

At the same time, the provisions of IPS relating to the registration and disciplining of insolvency practitioners also apply to persons appointed in the first two types of administration, because of the requirement in CA that persons appointed in these types be registered liquidators, Registering and disciplining practitioners.

In addition to the provisions dealing with the registration and disciplining of external administrators, the IPS makes uniform provision for the following aspects of the administrations to which the Schedule applies; namely, voluntary administrations and deeds of company arrangement, and winding up:

• •Remuneration, Div 60. See Remuneration;
• •Funds handling, Div 65. See Funds handling;
• •Information, Div 70, covering returns to ASIC, record-keeping and giving information to creditors. See Information;
• •Meetings, Div 75. See Meetings;
• •Committees of inspection, Div 80. See Committees of inspection;
• •Directions by creditors, Div 85. See Directions by creditors;
• •Review of external administration, Div 90, including the new measures of review by another registered liquidator, and removal of an administrator by creditors. See Review of external administration; and
• •Sundry matters, Div 95, especially the right of an external administrator to assign a right to sue under the Act. See Assignment of claims.

The provisions of the IPS are supplemented by the Insolvency Practice (Corporations) Rules 2016 (Cth) (“IPR”), made under Div 105 of the IPS.

A receiver is one who is appointed to a corporation with power to receive income and other property and to pay necessary outgoings, but with no power to carry on the corporation’s business or to sell or buy assets. If the appointee is given such powers, he or she is a receiver and manager. In practice, the term “receiver” includes a receiver and manager, and this is given statutory effect by s 416 of the Corporations Act 2001 (Cth) (CA), which also deems a person having power to manage the corporation’s affairs to be a receiver and manager however he or she is described.

There are two main types of appointment:

• •by the court (“court receiver”); and
• •pursuant to the powers contained in an instrument given by the company, usually to a secured party (“private receiver”).

See Appointment.

A court receiver is not the agent of any party to the litigation in which he or she is appointed, but is an officer of the court. Interference with, or obstruction of, the exercise of their functions will be a contempt of court. As regards third parties, the receiver is a principal and personally liable, but has a right of indemnity against, and a lien over, the assets to which he or she is appointed for those liabilities.

A private receiver is usually made the agent of the corporation, rather than the appointor, by virtue of the instrument under which he or she is appointed.

See Effect of Appointment.

A receiver is an “officer” of the corporation: see the definition of “officer” found in s 9 CA; and as such is subject to the general duties prescribed by the CA, namely:

• •the duty to use reasonable care and diligence;
• •the duty to act in good faith and for a proper purpose;
• •the duty not to use their position improperly; and
• •the duty not to make improper use of information.

The receiver also has a number of specific statutory duties.

See Duties.

A receiver of property of a corporation is given a broad power to act for the achievement of the objectives for which the receiver was appointed. A receiver also has the list of powers enumerated powers in s 420(2). These powers are subject to the court order by which, or the instrument under which, the receiver was appointed.

See Powers.

The receiver is personally liable for torts committed in the course of the receivership, and for:

• •a contract made prior to appointment if he or she adopts it. To ensure that it is not taken to have been adopted, the receiver should get leave of the court to repudiate it;
• •certain continuing contracts made prior to appointment, unless the receiver gives notice of disavowal upon appointment;
• •certain contracts made after appointment notwithstanding any stipulation to the contrary; and
• •other contracts entered into after appointment, unless personal liability is excluded, which may be either express or implied.

See Liability and Indemnity.

The remuneration of a court receiver is fixed by the terms of the order appointing him or her. Alternatively, it may be fixed by a subsequent order. Without an order, the receiver generally has no right to remuneration, but may be allowed compensation if the work has conferred an incontrovertible benefit to the corporation. As with other liabilities, the receiver has no right to claim remuneration from the parties to the action, and must look to the assets under his or her control.

A private receiver’s remuneration is as agreed between him or her and the appointing creditor, but is subject to review by the court.

See Remuneration.

As an officer of the court, the court receiver is subject to its supervision and may seek directions at any time. The parties to the action in which the receiver was appointed, and especially the moving party, are obliged to report any delay or default to the court. The receiver is obliged to account to the court for his or her receipts and payments, and the rules of court of the Federal Court and the Supreme Courts of the states and territories all make provision for the filing and passing, if necessary, of accounts. These obligations are in addition to statutory controls, which apply to both court and private receivers.

See Reporting and Supervision.

Apart from the statutory provisions, a court receiver can only be removed by a court order, unless the order of appointment provides for automatic termination or for a time limited appointment. In the case of discharge on completion of functions, application is generally made by one (or both) of the parties to the proceedings in which the appointment was made. However, it may be made by the receiver.

A private receiver may be removed by the appointor at any time and will resign office once the purpose of the appointment has been fulfilled.

For both types of receiver, there are provisions for supervision and removal by the court.

See Cessation of Appointment.

A receiver is not an “external administrator” for the purposes of the Insolvency Practice Schedule (Corporations) (IPS), see Definitions. Accordingly, the provisions of the schedule do not apply directly, although the receiver will be subject to the requirements for registration and discipline by reason of being required to be a registered liquidator.

See Registering and disciplining practitioners.

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 Purpose of voluntary administration.

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 Appointment of 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 and there is a moratorium on enforcing contractual rights against the company for a specified period. See Effect of appointment of administrator.

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.
• •The making of a court order terminating the deed.
• •Where a deed specifies circumstances in which the deed is to terminate and the company is to be wound up, those circumstances happen.

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).

Although the provisions of the Corporations Act (CA) relating to arrangements and reconstructions are found in Ch 5 dealing with external administration, they are not limited to corporations which are, or may be, insolvent. A scheme covered by the provisions (in these notes all referred to as “schemes”) may be between the corporation and its creditors, or some of them, between the corporation and its members, or some of them, or between all three (see, for example, Pr 235.500 and Pr 235.509, as well as the creditors’ moratorium scheme in Pr 235.515). It may, especially in the case of amalgamations, apply to a number of corporations. By reason of the definition of “Pt 5.1 body” in s 9, CA, it can also apply to foreign corporations registered here. See Scope of provisions.

An application for an order to convene a meeting or meetings is made ex parte. It may be made by the corporation, by any creditor or member or by the liquidator if the company is in liquidation. See First court application — to convene meeting.

Documents to convene a meeting include:

• •a covering letter;
• •a notice of meeting;
• •a copy of the proposed scheme;
• •the explanatory statement; and
• •a form of proxy.

They will be sent to all known creditors. See Convening meeting.

Although a scheme need not provide for the appointment of a person to administer its provisions, a scheme with creditors invariably will. See Appointment of administrator of scheme.

A scheme with creditors becomes binding on the creditors and on the corporation only when:

• •it is agreed to by the required majority; and
• •it is approved by the court.

In addition, it will not take effect until a copy of the order approving the scheme is lodged with ASIC. A scheme may bind creditors in their rights against a third party. See Effect of scheme.

Once the scheme has been passed by the required majority, it must be approved by the court, and has no effect until it is. The applicant must publish a notice of the proposed application in the prescribed form on the ASIC insolvency notices website. See Second court application — to approve scheme.

There is no objection to a scheme providing that it is to terminate in certain events, such as the making of a final payment or the expiration of a moratorium period and provision for termination should generally be made in clear terms. A scheme may also provide that it is to terminate if specified events do not occur. But a provision for termination by the court will not be approved. See Termination.

This schedule (in this subtopic called Insolvency Practice Schedule (IPS)) came into effect progressively, starting with provisions relating to the registration and disciplining of insolvency practitioners on 1 March 2017, with the remainder operational on 1 September 2017. See Insolvency Law Reform Act 2016.

A scheme administrator is not an “external administrator” for the purposes of the IPS. See Definitions. Accordingly, the provisions of the schedule do not apply directly, although the administrator will be subject to the requirements for registration and discipline by reason of being required to be a registered liquidator. See Registering and disciplining practitioners. In addition, some provisions of the IPS, and of the Act, are made applicable to scheme administrators. See Appointment of administrator of scheme — Transposed duties and liabilities.

There are three main types of winding up:

• •winding up by the court, which is in turn divided into:
• • ◦winding up in insolvency, where the company must be insolvent; and
• • ◦winding up by the court on other grounds, where the company may or may not be insolvent;
• •winding up by order of ASIC in specified circumstances; and
• •voluntary winding up, which is in turn divided into:
• • ◦members’ voluntary, where the company must be solvent; and
• • ◦creditors’ voluntary, where it will generally be insolvent.

See Introduction.

A company may be wound up on the ground that it is insolvent; that is, unable to pay all its debts as they fall due. Insolvency may be established in a number of ways, but the most common is failure to comply with a statutory demand by a creditor for payment of a debt. Such a demand may be set aside by the court on grounds including a dispute about the debt or a counter-claim.

The court can also wind up a company on a number of other grounds, including irregularities in the makeup or conduct of the company, or that it is just and equitable to do so.

The court is given wide powers to stay or terminate the winding up, to order the transfer of books or property to the liquidator and to pursue delinquent or absconding officers. It is also given powers as to the convening of meetings of creditors, the proving of debts and the making of calls on and distributions of surplus to, contributories (shareholders). These administrative powers are delegated to the liquidator.

See Winding up by the court.

A company may be wound up by order of ASIC in specified circumstances. Such a winding up proceeds as a creditors’ voluntary winding up.

See Winding up by ASIC order.

Both types of voluntary winding up are initiated by a special resolution of the members. If the directors have previously made a declaration of solvency, it will be a members’ voluntary winding up; if not, a creditors’ one.

In a creditors’ voluntary, the liquidator must convene a meeting of creditors within 11 days and advertise it. The liquidator must table a declaration of relevant relationships at the meeting, which can change the liquidator and appoint a committee of inspection. If the liquidator in a members’ voluntary forms the view that the company will not be able to pay all its debts in full in the period stated in the declaration of solvency, he or she must convene a meeting of creditors and lay before it a statement of assets and liabilities. The meeting may change the liquidator but in any event, the winding up then proceeds as a creditors’ voluntary.

See Voluntary winding up.

Liquidators must be registered with ASIC and must also not be disqualified from a particular appointment by a series of tests directed towards their independence, although the tests are less stringent in voluntary windings up, especially a members’ voluntary. All liquidators must maintain and keep proper books and comply with rules as to bank accounts and the investment of surplus funds.

See Liquidator generally.

Appointment in a court winding up is by the court, which also fills any casual vacancy from resignation, death or incapacity. A liquidator can be appointed in a court winding up provisionally at any time after an application has been filed.

The powers of a liquidator in a court winding up are:

• •those delegated by the court; and
• •those conferred directly by the Corporations Act 2001 (Cth) (CA), which in some cases requires approval by creditors or the court.

In a court winding up, the liquidator must:

• •lodge a preliminary report into the company’s property, the causes of its failure and whether investigation of any matter is warranted;
• •lodge supplementary reports about matters requiring investigation; and
• •lodge annual administration returns.

On completion of the winding up a court liquidator can seek an order for release from the court, with or without an order that ASIC deregister the company, but in practice usually just applies to ASIC for deregistration.

See Liquidator in court winding up.

A liquidator is appointed by ASIC, which it may also remove or replace. The winding up then proceeds as a creditors’ voluntary one.

See Winding up by ASIC order.

In a voluntary winding up, the members appoint initially, subject to change by the creditors in a creditors' voluntary. A vacancy is filled by the creditors in a creditors’ voluntary, and the members in a members' voluntary. The powers of a liquidator in a voluntary winding up are broadly the same as those of a liquidator in a court winding up, with additional powers to facilitate a reconstruction of the company or its amalgamation with others.

On completion of the winding up, a voluntary liquidator lodges a return of the final meeting of members (plus creditors in a creditors’ voluntary) and the company is deregistered 3 months later.

See Liquidator in voluntary winding up.

The CA, the Insolvency Practice Schedule (Corporations) 2016 (Cth) (IPS) and the Insolvency Practice Rules (Corporations) 2016 (Cth) (IPR) require or permit meetings of creditors and/or members to be held for a variety of purposes in both winding up and voluntary administration. For all meetings, notice on the ASIC insolvency notices website is required. In most cases, notice by electronic means (email or website) is permitted.

Detailed provisions as to the convening and conduct of meetings are contained in the IPR, which also provide for the outcome of meetings to be notified to ASIC.

Special provision is made in the IPS for:

• •the court to intervene where the outcome of a resolution has been determined by the votes of creditors related to the company; and
• •the court to review resolutions, which have been won or lost on the casting vote of the chairman, usually the liquidator or a deputy.

See Meeting of creditors.

A committee of inspection may be elected by creditors and contributories from their number to advise and assist the liquidator, particularly in larger administrations. They are given a number of powers, especially to determine the liquidator’s remuneration but cannot direct the liquidator.

See Committees of inspection.

This is the term given to members of a company when it goes into liquidation, whether or not they are liable to contribute to a shortfall in the winding up. The CA contains a series of rules as to the liability of contributories, the most important being that the holders of fully paid shares are not liable to contribute. If it is necessary, and possible, to enforce a contribution from contributories, this is done by way of a call by the liquidator following the preparation and settlement of a list of contributories.

Conversely, it may be possible for the liquidator to have a surplus for distribution to contributories and this will often be the case in a members’ voluntary. In a court winding up, a surplus can only be distributed with the special leave of the court.

See Contributories.

The general rule is that all liabilities of the company are provable in the winding up and that all provable claims rank equally; but there are a number of creditors given priority, especially employees. Provision is made for the computation of claims, especially those which are unliquidated, future or contingent. Some claims are deferred to those of other creditors, notably claims by a member in their capacity as such. There are detailed provisions in the CR for the submission of proofs of debt, either formally or informally, for the admission or rejection of proofs and for appeals to the court against the rejection of a proof wholly or in part. The CR also provide for the notification and declaration of dividends to creditors and for payment of arrears to those creditors whose proof is admitted after a dividend has been paid.

Secured creditors can, in general, opt to stay outside the winding up and rely on their security, or to surrender their security and participate in the winding up. There are special provisions applicable to secured creditors, most notably those in the Personal Property Securities Act 2009 (Cth) (PPSA), which came into effect on 31 January 2012.

See Creditors.

A creditor:

• •must disgorge the proceeds of any enforcement process (ie a writ of execution, garnishee or charging order under a judgment against the company) received within 6 months before the commencement of the winding up; and
• •cannot start or proceed with the enforcement process once given notice of the filing of an application or the convening of a meeting for winding up, which freeze is lifted if the application is dismissed or the resolution not passed.

A similar freeze applies to the sheriff if given notice. The sheriff must pay any proceeds or money held to the liquidator once notified of his or her appointment.

See Effect of enforcement process.

This is the right given to the liquidator to reject any onerous property or contract of the company, in most cases other than contracts without the leave of the court, by notice in writing. Once the disclaimer takes effect, it terminates the interest of the company in the property or contract concerned. The liquidator can be compelled to elect whether to disclaim by a person interested.

The court can set aside a disclaimer before and in some circumstances after, the disclaimer takes effect, and can make orders about the disposition of disclaimed property.

See Disclaimer.

Where two or more failed companies are related and hold property or carried on business in common, their administration can be combined into one by either:

• •a pooling determination by the liquidators involved, followed by approval by a majority in number and 75% in value of those attending or represented at a meeting of creditors of each company concerned; or
• •a pooling order by the court.

The effect of either is to merge the assets of the companies, to eliminate inter-company debts and to make the creditors of each creditors of the pooled group, with special provision for secured creditors. The effect can be varied by the determination or order, or subsequently and the court has wide powers to alter the effect of either a determination or an order at any time.

See Pooling.

The CA:

• •requires courts of the Commonwealth, of the states and territories, of certain external territories and of “prescribed countries” (notably the USA, UK and NZ) to aid and be auxiliary to each other in winding up matters;
• •permits the same action with respect to other foreign courts (although this is now mandated by the Model Law dealt with below); and
• •allows local courts to act on letters of request from foreign courts and to issue such letters to foreign courts.

In addition, Australia is now a party to the Model Law on Cross-Border Insolvency prepared by the United Nations Commission on International Trade Law (UNCITRAL) by reason of the Cross-Border Insolvency Act 2008 (Cth). This has precedence over the CA (subject to an overriding public interest test) and basically provides local recognition to the rights of foreign administrators and creditors, using the international concept of a “centre of main interest” of a company.

See International cooperation.

The liquidator is given power to seek a variety of orders, usually for the payment of money, to recover property disposed of by the company at differing times before and after the "relation-back day", which is usually the day of filing of the winding up application. The dispositions liable to attack are:

• •an unfair preference to a creditor where that is made within 6 months before the relation-back day (or 2 years if it is also an uncommercial transaction) and at a time when the company is insolvent;
• •an uncommercial transaction that is entered into within 2 years before the relation-back day;
• •an unfair preference or an uncommercial transaction that is entered into:
• • ◦with a related entity within 4 years before the relation-back day; or
• • ◦for the purpose of defeating creditors within 10 years before the relation-back day;
• •an unreasonable director-related transaction that is entered into within 4 years before the relation-back day; and
• •an unfair loan that is made at any time.

In addition, the liquidator can recover from a related entity a benefit received from such a transaction, such as the discharge or reduction of a guarantee in favour of the company.

Under amendments to the CA consequent upon the introduction of the PPSA, certain PPSA security interests created by a company which is wound up vest in the company (and so become unenforceable by a secured party) unless registered within a prescribed time prior to the commencement of the winding up. There are exceptions and in some cases a right in the (formerly) secured party to prove for its loss in the winding up.

The same amendments provide for the avoidance of security interests in favour of officers, some former officers and their associates if steps are taken to enforce them within 6 months after they are created, unless the court grants leave.

See Recovery of property for creditors

It is an offence for a director to allow a company to incur a debt when the company is insolvent if he or she is aware that there are reasonable grounds for suspecting insolvency or a reasonable person in his or her position would have been so aware. An offending director can be:

• •prosecuted or made subject to civil penalty orders under the CA; and
• •made civilly liable for the debt so incurred to the liquidator or, under certain conditions, to the relevant creditor.

In civil proceedings, it is a defence to prove:

• •that the director had reasonable grounds to expect that the company was solvent, including reliance on some other competent and qualified person;
• •that he or she did not take part in the management of the company at the relevant time for good reason such as illness; or
• •that he or she took all reasonable steps to prevent the company incurring the debt, including steps to appoint a voluntary administrator.

A creditor can only sue for its own benefit with the consent of the liquidator or with the leave of the court after request for consent has been sought and not given; and cannot sue after the liquidator has taken action with respect to the debt. Any amount recovered by the liquidator is available to unsecured creditors generally but a creditor who knew the company was insolvent at the time it suffered loss may be prevented by court order from participating in any recovery until all other unsecured creditors are paid in full. A secured creditor is postponed to all unsecured creditors.

See Insolvent trading.

The court has a wide power to make compensation orders against persons guilty of fraud, negligence or breach of duty where the company has suffered loss as a result.

See Other orders against persons involved with corporation.

Employee entitlements (being essentially those claims given priority in the winding up) are protected in two basic ways:

• •It is a criminal offence to enter into a transaction, or as an officer of a company to cause it to enter into a transaction, with an intention to, or reckless as to whether it will, avoid or reduce employee entitlements;
• •It is a civil offence to do those things if he or she knows, or a reasonable person in his or her posi-tion would know, that the transaction was likely to avoid or reduce employee entitlements.

Any loss suffered by employees may be recovered from the person concerned by the liquidator, or if conditions are met, by employees, by a trade union or by certain public officials.

The Commonwealth has established the Fair Entitlements Guarantee (FEG) to enable payment of employee entitlements where the company's assets are insufficient. Such payments are treated in the same way as the claims they meet.

See Employee entitlements.

The liquidator can apply for a summons for the examination under oath of persons who might be able to give information about the company’s examinable affairs. There are two types:

• •a mandatory summons which the court must issue where the examinee is or has during the 2 years before the winding up began been, an officer of the company; and
• •a discretionary summons where another person is sought to be examined.

In both cases, the application is supported by a sealed affidavit only available to the examinee with leave of the court. The examinee can be directed to produce documents when attending. Examination is generally in public under the direction of the court. A person is not excused from answering questions on the grounds of self-incrimination, but if an objection is taken, the answer can only be used against him or her in a prosecution for perjury. Otherwise, the court can direct the examinee to sign the transcript and it can be used in evidence against that person.

See Examinations.

Deregistration of a company in liquidation is usually effected by ASIC:

• •automatically on the making of a court order directing it, with or without an order for the release of the liquidator, in a court winding up;
• •on the expiration of 3 months after lodgment of the report of the final meeting in a voluntary winding up; or
• •on application by the liquidator to ASIC on the grounds that the company’s affairs have been fully wound up and there are insufficient funds to pay for an application for a court order for deregistration.

Deregistration puts an end to the company’s existence, and any remaining assets vest in ASIC. The company’s registration can be reinstated by ASIC for administrative irregularity, or by the court on the application of an aggrieved person. This is not necessary when pursuing an insurer of the company, which may be sued direct.

See Deregistration.

The PPSA, which came into force on 31 January 2012, effects wide changes to the law as to winding up. These are dealt with in the notes, but it is important to bear in mind that the PPSA contains a number of new concepts, some of which are closely related to well-understood legal concepts and expressions. With some simplification:

• •a mortgage or charge is now a security interest (defined in s 51 CA);
• •a floating charge is now a circulating security interest (defined in s 51C CA);
• •a mortgagor is now a grantor; and
• •a mortgagee is now a secured party, defined in s 51B CA.

The CA also introduces a number of PPSA-related concepts, including:

• •PPSA security interest, defined in s 51 CA;
• •possessory security interest, defined in s 51D CA;
• •PPSA retention of title property, defined in s 51E CA; and
• •secured creditor, defined in s 51E CA.

These definitions are complex, chiefly because of their cross-reference to the PPSA and to other terms and concepts defined in that legislation. These notes can do no more than give a broad overview.

See Recovery of property for creditors.

This Act introduced the Insolvency Practice Rules (Corporations) 2016 (Cth) as Sch 2 to the Corporations Act 2001 (Cth) (CA), and came into effect progressively from 1 March 2017.The first set of changes dealing with the registration and disciplining of insolvency came into force on 1 March and the balance of the Schedule along with other changes to the CA operates from 1 September 2017.

See Insolvency practice — Introduction.