Big receiverships often test legal boundaries, and the Crafar group receivership is no exception.  Gibson & Stiassny v StockCo & Ors1  is the longest decision to date on the Personal Property Securities Act 1999 (PPSA). 

Although the facts are complex, the practical take-outs are fairly simple:

The Court of Appeal has overturned a High Court decision, agreeing with receivers that certain sales by the debtor were not in the ordinary course of business, but rather payments to an unsecured creditor.

In this case1 when the debtor began to experience cash flow difficulties, it established another company to purchase stock, which the debtor would find buyers for. Sales were made either in the name of the new company, or the debtor would account to the new company for the sale proceeds.

The Gibson & Stiassny v StockCo & Ors litigation in relation to the Crafar receivership has clarified important aspects of the Personal Property Securities Act 1999 (PPSA).

The procedures seem obvious in the abstract but, as the case demonstrates, can be less obvious on the ground:

It is not uncommon for a receiver, liquidator or competing creditor to be presented with a security agreement, the ink on which appears scarcely to be dry.

If that secured creditor registered on the Personal Property Securities Register (PPSR) months or years earlier, does that registration date determine priority between competing security interests?  Or is that unfair to other creditors?

Finnigan v He underlines the obligatory nature of bankruptcy set-off whereby once the statutory requirements that exist in section 310 of the Companies Act 1993 are met (and no exclusion applies), such a set-off is mandatory. It also discusses when a transaction occurs and the operation of the exclusion in section 310(2) that preludes bankruptcy set-off.

In Stiassny v Commissioner of Inland Revenue the court considered whether the receivers of 2 companies trading together in partnership were personally liable for GST on the sale of partnership assets, and whether a claim could be made against the Commissioner of Inland Revenue for money had and received.

ACC had contracted OPC to provide services. OPC's directors later established the OPC Trust, with OPC as the trustee, and 3 residuary trusts as beneficiaries.

The mere existence of a secured remedy against another party is not a substantial ground for refusing to allow a creditor to pursue a remedy against a guarantor.

A liquidator may assign to a third party funder, among other things:

1. the rights that are conferred on the liquidator under statute to bring a claim on behalf of the company. For example, rights accruing to the liquidator under the voidable transaction provisions of the Companies Act 1993
2. a company's rights that exist at the time of liquidation.

Bank B sought adjudication in bankruptcy of F.