Restrictions on exercise of third party property rights
440B Restrictions on exercise of third party property rights
General rule
During the administration of a company, the restrictions set out in the table at the end of this section apply in relation to the exercise of the rights of a person (the third party) in property of the company, or other property used or occupied by, or in the possession of, the company, as set out in the table.
The property of the company includes any PPSA retention of title property of the company (see section 435B).
Exception—consent of administrator or leave of court
The restrictions set out in the table at the end of this section do not apply in relation to the exercise of a third party’s rights in property if the rights are exercised:
with the administrator’s written consent; or
with the leave of the Court.
Possessory security interests—continued possession
If a company’s property is subject to a possessory security interest, and the property is in the lawful possession of the secured party, the secured party may continue to possess the property during the administration of the company.
Restrictions on exercise of third party rights | ||
|---|---|---|
Item | If the third party is … | then … |
1 | a secured party in relation to property of the company, and is not otherwise covered by this table | the third party cannot enforce the security interest. |
2 | a secured party in relation to a possessory security interest in the property of the company | the third party cannot sell the property, or otherwise enforce the security interest. |
3 | a lessor of property used or occupied by, or in the possession of, the company, including a secured party (a PPSA secured party) in relation to a PPSA security interest in goods arising out of a lease of the goods | the following restrictions apply: (a) distress for rent must not be carried out against the property; (b) the third party cannot take possession of the property or otherwise recover it; (c) if the third party is a PPSA secured party—the third party cannot otherwise enforce the security interest. |
4 | an owner (other than a lessor) of property used or occupied by, or in the possession of, the company, including a secured party (a PPSA secured party) in relation to a PPSA security interest in the property | the following restrictions apply: (a) the third party cannot take possession of the property or otherwise recover it; (b) if the third party is a PPSA secured party—the third party cannot otherwise enforce the security interest. |
This Act’s bill:Explanatory memorandumSecond reading speech
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