Companies Act 2014 section 523

Disapplication of section 440 to receivers in certain circumstances

Section 523 allows the court to relieve a receiver of the obligation to pay preferential creditors (as required by section 440) where doing so would help a company survive as a going concern, in the context of an examinership or a potential examinership.

• The court may disapply the receiver's obligation to pay preferential creditors under section 440 where an examiner has been appointed or may yet be appointed to the company.
• Such an order can only be made if the court believes it would be likely to facilitate the survival of the company, and the whole or any part of its undertaking, as a going concern.
• Before making the order, the court must give all preferential creditors — those whose debts would normally be paid ahead of other debts in a winding up — the opportunity to be heard.
• The power to make this order does not limit the broader powers available to the court under section 522(1) regarding the effect of an examiner's appointment on a receiver.