In brief

The recent decision of Divitkos, In the matter of Ex DVD Pty Ltd (In liquidation) has paved the way for secured creditors who pay employee entitlements out of secured assets to receive a priority for that payment from preference claims recovered in a subsequent liquidation.

Summary

In brief

In the matter of Maiden Civil (P&E) Pty Ltd; Richard Albarran and Blair Alexander Pleash as receivers and managers of Maiden Civil (P&E) Pty Ltd & Ors v Queensland Excavation Services Pty Ltd & Ors [2013] NSWSC 852

Overview

There is a recognised ambiguity in the transitional provisions of the Personal Property Securities Act 2009 (Cth) (PPSA),relating to the issue of whether an ‘umbrella agreement’, governing the supply of goods on retention of title (RoT) terms entered into prior to 30 January 2012, will be an effective transitional security interest.

Sale at an undervalue; time for presenting a petition; implied term avoids manifest injustice; complying with time limits; order for sale threshold; Wragge & Co's finance litigation experts bring you the latest on the cases and issues affecting the lending industry.

Sale at an undervalue

In Butterfield Bank (UK) Ltd v Philip and others, the bank sought summary judgment against four guarantors of a bank facility. It was alleged that the bank had sold a property at a £500,000 undervalue.

Summary

In Carey v Korda [2012] WASCA 228, the Western Australian Supreme Court of Appeal (Court) has provided a timely confirmation that legal advisers engaged by receivers to provide advice in relation to a receivership are properly viewed as advisers to the receivers as principal, and not the mortgagor company.

The decision will no doubt be welcomed by insolvency practitioners, as it confirms that the legal advice, and the right to invoke the associated privilege, belongs to the receivers, not the mortgagor company.

Notice of assignment

Notice of assignment can be given by either the assignee or assignor under the Consumer Credit Act 1974 (CCA).

This was the High Court's finding in Smith v 1st Credit (Finance) Ltd and another. Smith was notified by her credit card company that her credit card debt had been assigned to 1st Credit. 1st Credit wrote to Smith shortly afterwards confirming the assignment and advising how payment could be made. Smith failed to pay and was made bankrupt by 1st Credit which subsequently repossessed and sold Smith's property.

The court will unravel a transaction where it appears to have been entered into to place assets beyond the reach of creditors.

This was the case in Ambrose sub nom Garwood v Amborse & Ambrose, where the trustee in bankruptcy of Mr Ambrose applied for declaratory relief and an order for the possession and sale of Mr & Mrs Ambrose's property.

In Rhinegold Publishing Ltd v Apex Business Development Ltd, Rhinegold and another company owed debts to the defendant in the sums of approximately £22,000 and £31,000 respectively. The defendant presented a winding-up petition against both companies which resulted in settlement being reached. The settlement provided that the companies would pay off the debts owed in full by monthly payments and that no proceedings would be issued in relation to the debts referred to in the original statutory demand if payment was made.

Where there is no evidence of lack of authority in placing orders which have not been paid, the court refused to allow an injunction to restrain a winding-up petition.

In the matter of A company (2012) (the company), a creditor had issued a statutory demand against it in relation to invoices for advertising placed with it by the company's sales and marketing manager (M) that were unpaid. The company argued that those orders had been placed without its authority and M admitted that she had exceeded her authority in so placing them.