Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) An officer of a company must not engage in conduct that results in the company making a creditor - defeating disposition of property of the company, if:
(a) the company is insolvent; or
(b) the company becomes insolvent because of the disposition or a number of dispositions made at the time of the disposition; or
(c) less than 12 months after the disposition, the start of an external administration (as defined in Schedule 2) of the company occurs as a direct or indirect result of the disposition; or
(d) less than 12 months after the disposition, the company ceases to carry on business altogether as a direct or indirect result of the disposition.
Note 1: Failure to comply with this subsection is an offence: see subsection 1311(1).
Note 2: Recklessness is the fault element for the result of the company making the creditor - defeating disposition and for paragraphs (1)(a), (b), (c) and (d): see section 5.6 of the Criminal Code .
(2) An officer of a company must not engage in conduct that results in the company making a disposition of property of the company, if:
(a) one or more of the following applies:
(ii) the company becomes insolvent because of the disposition or a number of dispositions made at the time of the disposition;
(iii) less than 12 months after the disposition, the start of an external administration (as defined in Schedule 2) of the company occurs as a direct or indirect result of the disposition;
(iv) less than 12 months after the disposition, the company ceases to carry on business altogether as a direct or indirect result of the disposition; and
(b) the officer knows, or a reasonable person in the position of the officer would know, that the disposition is a creditor - defeating disposition.
Note 1: This subsection is a civil penalty provision (see section 1317E).
Note 2: Section 588E provides for presumptions about when a company is insolvent and about matters relevant to whether a disposition is a creditor - defeating disposition.
Exceptions
(3) Subsections (1) and (2) do not apply if the disposition was made:
(a) under a compromise or arrangement approved by a Court under section 411; or
(b) under a deed of company arrangement executed by the company; or
(ba) under a restructuring plan made by the company; or
(c) by the company's liquidator; or
(d) by a provisional liquidator of the company.
Note: Section 588GA also provides for subsections (1) and (2) of this section not to apply if the disposition was connected with a course of action likely to lead to a better outcome for the company.