Section 563C — Corporations Act 2001 (Cth)

(1) Nothing in this Division renders a debt subordination by a creditor of a company unlawful or unenforceable, except so far as the debt subordination would disadvantage any creditor of the company who was not a party to, or otherwise concerned in, the debt subordination.

(2) In this section:

debt subordination means an agreement or declaration by a creditor of a company, however expressed, to the effect that, in specified circumstances:

(a) a specified debt that the company owes the creditor; or

(b) a specified part of such a debt;

will not be repaid until other specified debts that the company owes are repaid to a specified extent.

Related sections

• s 563A — Postponing subordinate claims
• s 563AAA — Redemption of debentures
• s 563B — Interest on debts and claims from relevant date to date of payment
• s 564 — Power of Court to make orders in favour of certain creditors
• s 565 — Undue preference
• s 566 — Effect of floating charge

Research how courts apply s 563C

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