Section 447A: A significant reserve in a voluntary administrator’s statutory tool kit

It is well understood that Australia's voluntary administration regime provides companies and their administrators with significant flexibility to promote business restructurings. This is in large part due to the statutory moratorium afforded to insolvent companies, allowing breathing space for the administrator to work with relevant stakeholders to promote a sale and/or restructuring via a deed of company arrangement. A significant aid to administrators in this regard is the operation and use of section 447A of the Corporations Act 2001 (Cth) (the Act), a seemingly modest procedural provision, which can in fact be one of the most powerful tools in an administrator's toolkit.

Section 447A enables the courts to make orders that alter how Part 5.3A of the Act operates in relation to a particular company.¹ Administrators can rely on this provision to seek relief from the otherwise rigid statutory requirements to better suit the specific needs of the insolvent company.

This article explores the scope of section 447A and how it has been successfully – and at times unsuccessfully – utilised by administrators.

General Principles

The court's primary consideration when adjudicating on a section 447A application is that the relief sought must achieve the objectives of Part 5.3A, (in effect being to maximise the chances of the company, or as much as possible of its business, continuing in existence) having regard to the circumstances of the particular company the subject of the application before the court.

Any order made under section 447A must also have a nexus with how Part 5.3A is to operate in relation to a particular company.² The court also considers the interests of creditors as a whole (being the prevailing interest) and the public interest at large when hearing these types of applications.

Common applications

Extension of convening period

Most readers will be aware that section 447A is commonly used to extend the convening period for second creditors' meetings beyond the 20 business day limit (25 business days in certain circumstances). There is no prescribed limit on the number or length of extensions that may be sought, as illustrated by the recent case Regional Express Holdings Ltd,³ where three extensions of two, six, and five months respectively were sought and obtained by the administrators of the airline.

Limiting personal liability

Most readers will also be aware that administrators are personally liable for debts they incur in the performance or exercise of their functions and powers as administrators of a company.⁴

In a trade-on administration, these debts and liabilities generally include leasing and rental costs, goods acquired (i.e., stock or spare parts), costs for services rendered to the business and any debt and borrowing costs. In such circumstances, contractual counterparties may be reluctant or unwilling to assume the financial risk in dealing with an insolvent company. Therefore, administrators may, in appropriate circumstances, accept personal liability in order to secure the continued supply of goods or services and provide critical counterparties with comfort as to payment.

This of course reflects the commercial imperative for administrators to secure the continued supply of goods or services in a trade on administration. Administrators must balance the need to mitigate their own personal exposure with the practical necessity of ensuring the company can continue to trade, particularly where ongoing supply is critical. Administrators may be comfortable assuming such liability where the company's cash or asset position is sufficient to cover the relevant exposure, or where they have comfort as to funding from a secured creditor or other stakeholder. Of course, in circumstances where significant liabilities or debts are to be incurred by a company, in the usual course an administrator would seek a court order limiting their personal liability prior to causing the company to incur the relevant debt.

Accordingly, administrators commonly rely on section 447A to limit their personal liability in respect of specifically identified contracts – particularly as administrators cannot simply "contract out" of personal liability incurred under section 443A(1) of the Act.⁵ The courts are largely open to limiting the personal liability of administrators on the basis that administrators should not have to risk significant personal liability while carrying out their duties.⁶

It is well established that section 447A is wide enough to capture orders that will have an effect in the future, but are based on actions that occurred in the past.⁷ However, courts have also exercised discretion in respect of the future actions of administrators. In Freeman, in the matter of Regional Express Holdings Ltd (Administrators Appointed) (No 4),⁸ the administrators obtained orders limiting their personal liability for future agreements they intended to enter into on behalf of the companies to which they were appointed. This approach was adopted to avoid the need for repeated applications and to promote efficiency. Given the large variety of contracts required to be entered into for the continued operation of the business, the prospect of repeated limitation of liability applications was considered to be "highly inefficient and impractical" and one that would impose significant additional costs in the administration.⁹ Similar orders were made in Re Virgin Australia Holdings Ltd (Administrators Appointed) (No 2).¹⁰ This represents a novel departure from the typical practice, where orders limiting personal liability are usually sought in relation to specific contracts only.

Bespoke applications

Further to the common and somewhat procedural application of section 447A, the wide scope of the provision also caters for more bespoke uses. We set out some such examples below.

Amending a Deed of Company Arrangement

Deed administrators have utilised section 447A to amend deeds of company arrangement (DOCAs) as an alternative to the usual section 445A creditor-approval process.¹¹ Courts typically proceed with caution in these situations, being mindful not to undermine the rights of creditors under the Act. An amendment will only be granted if it does not prejudice creditors, and the court will also consider the practical commercial implications of refusing the variation.¹²

Remedial operation

Section 447A can be used not only to modify how Part 5.3A operates, but also to cure defects such as the defective appointment of administrators. Courts have used their discretion to validate defective appointments in cases where, for example, when a sole director, who was an undischarged bankrupt (and therefore could not be a director), appointed administrators, and when directors (who were invalidly appointed themselves) appointed administrators, resulting in an initially invalid appointment of administrators. In both instances, the court exercised its discretion under section 447A to cure the defect and validated the administrators' appointment and conduct.

Unsuccessful applications

The scope of section 447A is wide, but not limitless.¹³ Courts have refused applications where:

a) the relief would prejudice creditors' interests or role;

b) the orders sought have been retrospective in nature; and

c) the relief would be beyond the scope of Part 5.3A.

Prejudice to creditors' interests or role

In Galaxy Resources Ltd v Kirman and Brauer (as joint and several administrators of Alita Resources Ltd (Receivers and Managers Appointed) (Administrators Appointed),¹⁴ a shareholder applied under section 447A to restrain the company's second meeting of creditors and to extend the convening period by one month. The purpose of the application was to enable the shareholder to put forward an alternative DOCA proposal in respect of the company. The application was opposed by both the administrators and the company's sole creditor. The Supreme Court denied the application, emphasizing that when the Act gives creditors, not the court, the authority to decide on a DOCA proposal before it is accepted, the court should only step in to stop the statutory process in rare and compelling circumstances.¹⁵ Any court intervention in the creditors' role would require a "very strong case", which was not established in this instance.¹⁶

Retrospective orders

In Re New Bounty Pty Ltd¹⁷ a major creditor agreed, as part of a DOCA, to forgive debt owed by the company in exchange for shares. After the DOCA had been fully implemented and the share transfer completed, a minority shareholder sought relief under section 447A to set aside the share issue. The court refused the application, deciding that section 447A does not permit it to retrospectively alter or remove provisions of a DOCA once it has been terminated, particularly where the relevant actions, such as the share issue, were valid when undertaken.¹⁸ The court also observed that the unexplained delay in bringing the proceedings would have weighed against granting relief under section 447A, even if it had the power to do so in the circumstances.¹⁹

Applications beyond the scope of Part 5.3A

Section 447A cannot be used to alter the operation of provisions outside Part 5.3A or to alter Part 5.3A to confer a power otherwise not available to the court.²⁰ In Chief Commissioner of State Revenue v Rafferty's Resort Management Pty Ltd,²¹ although there was evidence that the directors had misused voluntary administration to delay winding up and defer the relation-back period, the court held, in respect of an application brought by the liquidators, that section 447A could not be used to amend the relation-back day because the relevant relation-back provisions in sections 513A(b) and 513C sit in Part 5.6 of the Act, whereas section 447A applies only to matters governed by Part 5.3A.²²

Take away

Section 447A stands out as a powerful and adaptable tool in a voluntary administrator's arsenal, offering the flexibility needed to address the unique challenges of insolvent restructurings. While the courts have shown a willingness to exercise discretion when adjudicating on section 447A applications, the courts remain vigilant in protecting creditor rights and upholding the integrity of Part 5.3A. As the restructuring landscape continues to evolve, section 447A will likely remain central to innovative solutions and effective outcomes for distressed companies and their stakeholders.

Amna Parvez (White & Case, Associate, Sydney) contributed to the development of this publication.

_{1 Strawbridge (Administrator), in the matter of CBCH Group Pty Ltd (Administrator Appointed) (No 2) [2020] FCA 472 at [35].
2 Re Maria's Farm Veggies Pty Ltd (administrators appointed) [2016] NSWSC 1899 at [21], citing Ansett Australia Ground Staff Superannuation Plan Pty Ltd v Ansett Australia Ltd [2004] FCA 130 at 15.
3 Freeman, in the matter of Regional Express Holdings Ltd (Administrators Appointed) (No 5) [2025] FCA 685.
4 Corporations Act 2001 (Cth), section 443A(1).
5 Corporations Act 2001 (Cth), section 443A(2).
6 Re Abra Mining Pty Ltd; Ex Parte Tucker and Hutson as joint and several administrators of Abra Mining Pty Ltd (No 3) [2025] WASC 174 at [57].
7 Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 at [26].
8 [2025] FCA 385.
9 Freeman, in the matter of Regional Express Holdings Ltd (Administrators Appointed) (No 4) [2025] FCA 385 at [69].
10 [2020] FCA 717.
11 Section 445A requires that any amendments to a DOCA be approved by a resolution passed at a reconvened meeting of the company's creditors. This process necessitates giving notice of the meeting to creditors and issuing a further report to creditors and can be time-consuming and costly.
12 Re Dixon Advisory & Superannuation Services Pty Ltd [2024] FCA 70 at [51].
13 Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 at [20].
14 [2020] WASC 484.
15 Galaxy Resources Ltd v Kirman and Brauer (as joint and several administrators of Alita Resources Ltd (Receivers and Managers Appointed) (Administrators Appointed) [2020] WASC 484 at [26].
16 Galaxy Resources Ltd v Kirman and Brauer (as joint and several administrators of Alita Resources Ltd (Receivers and Managers Appointed) (Administrators Appointed) [2020] WASC 484 at [26]
17 [2015] NSWSC 1060.
18 Re New Bounty Pty Ltd [2015] NSWSC 1060 at [227].
19 Re New Bounty Pty Ltd [2015] NSWSC 1060 at [238].
20 Re New Bounty Pty Ltd [2015] NSWSC 1060 at [225]
21 (2008) 66 ACSR 199.
22 (2008) 66 ACSR 199 at [29].}

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