Question

(2) What is the effect of the stay (moratorium) on proceedings during administration and what do...

(2) What is the effect of the stay (moratorium) on proceedings during administration and what do you think are the reasons the Act enables certain creditors to avoid the stay (be exempted from the stay).

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During the period of administration, there is a deferral “freeze” or “stay” on creditors carrying debt rescue activities, winding up proceedings, and other claims: Though, there are exceptions: A safe creditor with a safety consideration in the whole or a significant portion of the company’s assets that imposes within the first thirteen business day of the administration is not bound by the stay. A secured creditor that imposes before the administrator is appointed is not bound by the stay. A secured creditor with security over perishable property is not bound by the stay – s441C.

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