First Decision On Australia's Ipso Facto Stay In Voluntary Administration

The Federal Court of Australia (Court) has handed down the first reported decision on the ipso facto stay provisions contained in the Corporations Act 2001 (Cth) (Act). In Rathner, in the matter of Citius Property Pty Ltd (Administrator Appointed) [2023] FCA 26 the Court examined the operation of the voluntary administration ipso facto stay contained in s 451E(1) of the Act, and the extent to which that stay would continue during any liquidation that followed the administration.

Justice O'Bryan confirmed that:

• the s 451E(1) stay operates to restrain a counterparty from exercising its contractual rights by reason of: (i) a company's entry into administration; or (ii) its financial position during the period of administration;