Insolvency Law at Cocos (Keeling) Islands (Australia)
In the Cocos (Keeling) Islands, a small territory of Australia, Insolvency Law is primarily governed by Australian Federal Law, as the islands fall under the jurisdiction of Australian law. The key legislation governing insolvency in Australia, including for territories like the Cocos (Keeling) Islands, is the Corporations Act 2001 and the Bankruptcy Act 1966.
Key Aspects of Insolvency Law in Cocos (Keeling) Islands:
1. Insolvency of Companies:
Governed by the Corporations Act 2001.
If a company in the Cocos (Keeling) Islands becomes insolvent, the process of liquidation or administration applies, and the company may be placed under a liquidator or administrator appointed by the creditors or the court.
2. Types of Insolvency:
Voluntary Administration: Companies in financial distress may appoint an administrator to help restructure the company and avoid liquidation.
Liquidation: If a company is insolvent, it may be liquidated, and a liquidator is appointed to sell the company’s assets to pay creditors.
Receivership: If creditors hold a charge over the company’s assets, they can appoint a receiver to take control of and sell the assets.
Deed of Company Arrangement (DOCA): A formal agreement between the company and its creditors to settle debts in a structured manner.
3. Insolvency of Individuals:
Bankruptcy: Individuals who are unable to pay their debts can declare bankruptcy under the Bankruptcy Act 1966.
A trustee is appointed to manage the individual’s assets and distribute them to creditors.
Bankruptcy can last for a period of 3 years or longer, depending on circumstances.
4. Priority of Claims:
The order of payments in insolvency typically follows a hierarchy:
Secured creditors (those with a legal claim to specific assets).
Unsecured creditors (such as suppliers or lenders without collateral).
Employees' claims for unpaid wages and entitlements.
Shareholders or owners of the company, who are last to receive any remaining funds.
5. Cross-Border Insolvency:
The Cross-Border Insolvency Act 2008 (a part of Australian law) also applies to the Cocos (Keeling) Islands. It facilitates cooperation between Australian courts and courts in other jurisdictions when dealing with cross-border insolvency matters.
6. Role of Insolvency Practitioners:
In both company and individual insolvency, an insolvency practitioner (liquidator, trustee, or administrator) plays a key role in managing the insolvency process, maximizing recovery for creditors, and adhering to the legal requirements under the Corporations Act and Bankruptcy Act.
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