Companies Act 2014 section 558ZD

Court hearing in case of objection

Section 558ZD sets out the procedure the court follows when hearing objections to a rescue plan for a small or micro company, including who may be heard, the burden of proof, the court's powers, and the binding effect of its decision.

• When a creditor or member objects to a rescue plan, the court schedules a hearing as soon as possible, at which the company, the process adviser, affected creditors or members, the directors, and any other person the court considers appropriate may appear and be heard.
• The burden of proof falls on the process adviser to demonstrate that the objection should not be upheld; the court may then either dismiss or uphold the objection, and if it upholds the objection it can modify the plan, set aside a meeting decision, or order a meeting to be reconvened.
• The court cannot dismiss an objection where the rescue plan affects a lease or hiring agreement for substantial non-land property in a way that reduces payments or restricts the owner's rights, unless the property owner has given written consent in the prescribed form.
• Once the court dismisses an objection or approves a modified rescue plan, the plan becomes binding on all affected members, creditors, and the company itself, but the court will never approve a plan whose sole or primary purpose is to avoid paying tax.