Paying employees at the death — securing the benefit of the statutory priority

By Michael Hughes

A recent decision by the Supreme Court of New South Wales, In the matter of Dalma No 1 Pty Ltd (in liquidation) (ACN 111 772 260); Application of Bruce Gleeson and David Shannon in their capacity as joint and several liquidators of Dalma No 1 Pty Ltd (in liquidation) and anor [2012] NSWSC 1335 has highlighted an important limitation to section 560 of the Corporations Act 2001 (Cth). Namely, funds must be advanced to the company to enable the employees to be paid — and not advanced directly to employees. Although the decision does suggest it may be sufficient if the company specifies that proceeds be paid directly to the employees.

This was a key provision of the former General Employee Entitlements and Redundancy Scheme, which was used by the Commonwealth government as a basis to secure the recovery of funds it paid out to employees under the scheme. It can also be used as a vehicle for the provision of emergency funding for a company in distress.

Section 560 of the Corporations Act 2001 (Cth) provides a mechanism for creditors and other stakeholders to make advances to an insolvent company to meet outstanding employee entitlements, and in so doing secure an equivalent level of priority for the advance that the employee would have enjoyed…

If you are registered and logged in to the site, click on the link below to read the rest of the Minter Ellison briefing. If not, please register or sign in with your details below.

Sign in or Register to continue reading this article

Sign in

Register

It's quick, easy and free!

It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.

Register now

Why register to The Lawyer

 

Industry insight

In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.

 

Market intelligence

Identify the major players and business opportunities within a particular region through our series of free, special reports.

 

Email newsletters

Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.

More relevant to you

To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.

Overview

Level 19, Aurora Place
88 Phillip Street
Sydney
2000
Australia
http://www.minterellison.com

Jurisdiction: Australia
No. of offices: 10
No. of qualified lawyers: 791