113When statutory manager may dispose of encumbered property

113 When statutory manager may dispose of encumbered property

(1) The statutory manager of a body corporate under statutory management must not dispose of:

(a) property of the body corporate that is subject to a security interest; or

(b) property (other than PPSA retention of title property) that is used or occupied by, or is in the possession of, the body corporate but of which someone else is the owner or lessor.

Note: PPSA retention of title property is subject to a PPSA security interest, and so is covered by paragraph (a) of this subsection: see the definition of PPSA retention of title property in section 51F of the Corporations Act 2001.

(2) Subsection (1) does not prevent a disposal:

(a) in the ordinary course of the body corporate’s business; or

(b) with the written consent of the secured party, owner or lessor, as the case may be; or

(c) at the direction of or with the written consent of the Reserve Bank.

(3) If:

(a) a body corporate is under statutory management; and

(b) property of the body corporate is subject to a security interest; and

(c) the statutory manager disposes of the property;

the disposal extinguishes the security interest.

(4) For the purposes of paragraph (2)(a), if:

(a) property is used or occupied by, or is in the possession of, a body corporate; and

(b) another person is the owner of the property; and

(c) either:

(i) the property is PPSA retention of title property; or

(ii) the property is subject to a retention of title clause under a contract; and

(d) the owner demands the return of the property;

a disposal of the property that occurs after the demand is made does not mean that the disposal is not in the ordinary course of the body corporate’s business.