Corporate Insolvency and Restructuring Act, 2020 (ACT 1015)

This section states the Act’s purpose and says distressed companies may be put into administration or restructuring when they cannot pay debts as due or have negative net worth.

A company in administration must stop trading, unless continuing business is needed for the beneficial administration of the company.

This section sets out who may appoint an administrator of a company and when appointment is blocked or limited.

The Act allows one or three administrators to be appointed where it provides for an administrator, and a majority of them may act unless the appointing document says otherwise.

An administrator may charge reasonable remuneration if the committee of creditors approves it, and the Court may resolve disputes about that remuneration.

An administrator’s office becomes vacant if the administrator dies, resigns, becomes disqualified, or is removed by the Court or creditors.

An administrator may resign in writing, and may also be removed by the Court or by creditors if the stated notice, hearing, and replacement-administrator requirements are met.

The appointer of an administrator, and the directors by resolution, may appoint someone to fill a vacancy in the office of administrator.

A replacement administrator must call and arrange a creditors’ meeting, unless a court has appointed the replacement administrator.

The administrator controls the company, investigates its affairs, may manage or dispose of business/property, and must file reports and financial statements on schedule.

An administrator may perform the administrator’s functions and duties, sue and defend proceedings, run the company’s business as needed for the administration, and appoint others to act on the administrator’s behalf.

An administrator’s appointment does not remove company directors from office, but a director of a company in administration must not carry out company management or officer functions unless the administrator gives prior written approval or the Act expressly اجازت permits it.

An administrator does not automatically end employee contracts, must pay accrued wages or salary for pre-appointment employment contracts during the administration, and may avoid that payment only by giving due notice of termination within 21 days after appointment.

Deals with company property during administration are void unless approved by the administrator, made by court order, or entered by the administrator on the company’s behalf.

A person generally must not transfer shares in a company in administration or change a shareholder’s rights or liabilities, unless the administrator consents or the Court orders it.

The administrator must investigate the company’s business, property, affairs, and finances, and decide whether creditors’ interests favor a restructuring agreement, ending the administration, or appointing a liquidator.

After an administrator is appointed, directors must submit the company’s financial statements within 7 days. The administrator may extend the deadline by 7 more days and must table the statements at the relevant creditors meeting. A director who misses the deadline may have to pay an administrative penalty of 250 penalty units to the Registrar.

An administrator may use the liquidator’s section 97 powers to access documents and information.

An administrator must report matters to the Registrar and provide help and documents when reasonably required.

The administrator must call specified creditors’ meetings, chair meetings when held, and has a casting vote. Related companies may hold joint creditors’ meetings only with every creditor’s consent, and an objection deadline must be set within 14 days.

The administrator must call and arrange the first meeting of creditors, give notice, publish notice, table an interests statement, and make reasonable inquiries about it.

The committee of creditors may advise, receive and consider reports, and approve the administrator’s remuneration and engagement terms. The administrator must report on administration matters when reasonably required, and the committee must not give directions to the administrator.

A person may join the committee of creditors only if they are a creditor, a creditor’s agent under power of attorney, or a creditor-authorised person in writing.

The administrator must call a watershed meeting after the convening period, give notice to creditors and in a national newspaper, and provide required reports and statements with the notice.

A dissatisfied creditor or administrator may apply to the Court about a creditors’ meeting, and the Court may set aside the resolution, order a new meeting, restrict a related creditor’s vote, or make another appropriate order.

The Court may, on the administrator’s application, order pooled property owners to be treated as a separate class. If that happens and the stated vote conditions are met, each pooled property owner is bound by the restructuring agreement.

A watershed meeting may be adjourned to a date within 42 days of the first meeting day, unless the Court orders a longer adjournment on the administrator’s application.

At a watershed meeting, creditors may vote to require a company restructuring agreement or to end administration, and the resolution passes only if at least 51% of voting creditors support it.

The administrator must tell creditors at the watershed meeting about their right to inspect and comment on the draft agreement, the administrator’s responsibility for drafting it, and that the signed agreement may differ from the draft.

A person must not enforce a charge over company property while the company is in administration, unless the Court orders otherwise.

During a company administration, an owner or lessor generally cannot take back property used, occupied, or held by the company unless the Court allows it.

During a company’s administration, a person must not start or continue court proceedings against the company or its property unless the Court gives leave.

A person must not start or continue enforcement proceedings against company property during a company’s administration unless the Court gives leave and sets appropriate terms.

Court officers must stop most execution-process dealings with company property once written notice of administration is received, and must hand relevant property or money to the administrator.

A guarantee for a company’s liability in administration cannot be enforced against the director, the director’s spouse or relative, or a related company or party unless the Court gives leave and sets appropriate terms.

This section defines key terms used for sections 37 and 38, including “decision period” and “enforce.”

A secured creditor affected by an administrator’s appointment may ask the Court for leave to enforce security, and the administrator must respond and report certain asset/liability information. The Court can decide the application, delay it briefly, set limits, and allow immediate enforcement for perishable property.

Before administration starts, a receiver or other person acting to recover property may possess or control the property and section 30, 31 and 14 do not block those actions in the stated circumstances.

This section says who becomes the restructuring officer, who can appoint one, and when a person may be appointed.

This section says when a restructuring officer’s office becomes vacant and who may replace the officer.

A restructuring officer may charge reasonable remuneration, but only with the committee of creditors’ approval.

A restructuring officer may sell existing company shares only with the shareholder’s written consent or with leave of the Court on the administrator’s application if the shareholder does not consent.

Sections 44 to 59 apply when creditors at a watershed meeting resolve that the company executes a restructuring agreement.

The restructuring officer must prepare the restructuring agreement document, and the document must list specified matters such as funding, creditor property, moratorium, liabilities, termination, and claim timing.

A restructuring agreement takes effect only when executed by the company in administration and the restructuring officer, and the company must not execute it unless its directors have authorised it by resolution.

If a restructuring agreement is not fully approved at the watershed meeting, the restructuring officer must complete and circulate it within 14 days, creditors may inspect it for 3 working days, and the company and restructuring officer must then execute it within 2 working days.

A creditor must not act inconsistently with a restructuring agreement, except with the Court’s leave, during the stated period around the company’s restructuring resolution and agreement execution.

If creditors pass the required resolution and the company still does not execute the restructuring agreement on time, the restructuring officer must apply to court for leave to move the company from administration into official liquidation.

A restructuring agreement binds the company, its officers and shareholders, the restructuring officer, and the company’s creditors to the extent section 50 allows.

A restructuring agreement can bind creditors, but secured creditors and property owners/lessors are generally barred from enforcing related rights unless the agreement allows it and the meeting vote condition is met, or the Court orders otherwise.

A person bound by a restructuring agreement must not start or continue liquidation-related applications, court proceedings, or enforcement against the company’s property unless the Court gives leave.

The Court may order a secured creditor, or a property owner/lessor, to enforce or recover property rights after creditors approve execution of a restructuring agreement.

A restructuring agreement releases the company from a debt only if the agreement says so and the creditor is bound by it.

The Court may decide whether a restructuring agreement is valid, and may declare it or part of it void.

Creditors may vary a restructuring agreement, but the change must not be materially different from the proposal in the meeting notice.

A restructuring agreement can end by court action, by a creditor resolution, or automatically if the agreement says it will end when specified circumstances happen.

The Court may terminate a restructuring agreement if an application is made or if listed grounds are satisfied, and it must first consider third-party rights.

The restructuring officer may or must convene a creditors’ meeting to consider varying or ending the restructuring agreement, and must give notice and preside over the meeting.

Creditors may terminate a restructuring agreement if there is a material breach that has not been rectified, and they may also vote to wind up the company if the meeting notice proposes official liquidation.

Good-faith acts, payments, and transactions made by or with the administrator’s consent are protected from being set aside in liquidation.

An administrator is generally not liable for company debts, except where this section makes the administrator liable for certain debts, services, property use, and specified rent and payments.

An administrator is not liable under section 61 while a valid non-use notice is in force, if the notice is given within 14 days, identifies the property, and says the company does not intend to use it or exercise rights over it.

An administrator is indemnified out of company property for liabilities incurred in doing the duties and for remuneration, except liabilities incurred in bad faith or negligently.

The Court may make orders about a company administration and may end the administration if the stated conditions are met.

The Court may make an order, if the Registrar or a company director applies, to protect creditors’ interests during administration.

Certain people may ask the Court to rule on whether an administrator or restructuring officer was validly appointed, and the Court can look beyond the reasons stated in the application if it finds the appointment invalid.

An administrator or restructuring officer may ask the Court for directions about their functions, powers, operations, or giving effect to the restructuring agreement.

The Court may make an appropriate order over an administrator or restructuring officer if their management or conduct is prejudicial to a creditor’s or shareholder’s interests.

The court may order an administrator or restructuring officer to remedy a default.

The Court may make any appropriate order if there is a vacancy or no acting administrator or restructuring officer; a creditor, shareholder, or the Registrar may apply for that order.

The Court can make a prohibition order against an unfit administrator or restructuring officer, and a person under such an order must not act as an insolvency practitioner.

Certain appointment notices must be filed and published promptly, and written notice must also be given to affected charge holders and the company in one case.

The restructuring officer must, within 14 days after a restructuring agreement is executed, notify each creditor, file a copy with the Registrar, and publish notice in a national newspaper and the Companies Bulletin.

If a company misses the deadline to execute a restructuring agreement, the restructuring officer must publish a notice of the failure and file a copy with the Registrar within 72 hours.

If creditors terminate a restructuring agreement, the restructuring officer must notify each creditor, publish the notice twice in a daily newspaper of national circulation, and file a copy with the Registrar within 14 days.

A company in administration must add the words "in administration" to certain documents, and the Court may exempt the company on application.

A company in administration that changed its name within the stated 12-month period must keep showing the former name on company documents where the name appears. If the company is later put into liquidation during that administration, the liquidator must do the same.

A contravention of sections 72 to 77 does not make things done under those sections invalid, unless the Court orders otherwise.

This section says sections 80 to 149 are for the official winding up of a body corporate to maximise realisation of the insolvent company’s estate and distribute it fairly among stakeholders.

A liquidator can be appointed for a company in administration by the Court, creditors, or a meeting in specified circumstances, and a Court appointment ends the administration.

A company’s official winding-up may start by special resolution, petition to the Registrar or Court, or conversion from private liquidation, administration, or restructuring.

This section sets the steps for an official winding-up resolution, including notices to the Registrar, publication by the Registrar, and immediate control of company assets by the official liquidator.

Rules for who may petition the Registrar for a company’s official winding-up, when the Registrar may act, and what steps the petitioner and Registrar must take.

Certain persons may petition the Court to wind up a company, and the Court may order winding-up only in specified circumstances.

The Registrar may order a private liquidation converted into an official winding-up if the liquidator gives the required notice and the company may not be able to pay its debts in full within the stated period.

The Registrar may apply to the Court for a winding-up order to turn a company’s administration into official winding-up once the administrator gives notice of official liquidation.

During winding-up, the Court may stay proceedings about the company or its property, and certain property dispositions and share transfers are void unless the Court directs otherwise.

The liquidator must pay the reasonable costs of the successful applicant, and an unsuccessful applicant must bear the costs of the failed winding-up application.

This section says when an official winding-up starts: either when a resolution for winding-up is passed or when a winding-up order is made.

When a winding-up starts, the directors’ functions pass to the liquidator.

When a winding-up starts, the company must stop carrying on business.