Companies Act 2014 section 521

Restriction on payment of pre-petition debts

Section 521 restricts a company under court protection from paying debts that arose before the examinership petition was presented, unless the independent expert recommends it or the court authorises it.

• While under court protection, a company cannot pay any liability, in whole or in part, that it incurred before the date the examinership petition was presented.
• Payment is permitted if the independent expert's report specifically recommends that the liability should be discharged or satisfied.
• Alternatively, the court may authorise payment if the examiner or any interested party applies for such an order.
• The court will only authorise payment where it is satisfied that failing to settle the liability would considerably reduce the company's prospects of surviving as a going concern.