Fekala Pty Ltd v Cenbond Pty Ltd [2001] NSWSC 340

Fekala Pty Ltd v Cenbond Pty Ltd [2001] NSWSC 340

The Court determined that provided the chargee's interests are at least protected to the stage they are under general law, there is no barrier to making an order under s 441D(2) restraining the secured creditor, and that it is a matter of discretion whether to grant such a stay. In this instance, the Court ordered that the plaintiffs not take any action to sell or advertise the subject property until 30 April 2001, subject to conditions that the administrators provide a firm proposal, do not themselves advertise the property, and keep it fully insured.

Parties
Plaintiff: Fekala Pty Limited; Defendant: Cenbond Pty Limited; Administrators: J T Johnson
Jurisdiction
Australia
Judgment Date
09 April 2001
Procedural Posture
Interlocutory Application / Judgment on Administrators' Application for Order Under S 441 D(2) Corporations Law
Outcome
Interlocutory restraining order granted, subject to conditions.
Legal Topics
Administration, Protection of Property During Administration, Secured Creditor Enforcement, Stay of Enforcement
Corporations Administration Protection of Property During Administration Secured Creditor Enforcement Stay of Enforcement

Case Brief

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Parties

Fekala Pty Limited

Plaintiff

Cenbond Pty Limited

Defendant

J T Johnson

Administrators

Procedural Posture

Interlocutory Application / Judgment on Administrators' Application for Order Under S 441 D(2) Corporations Law

Legal Issues

  1. 1 Whether a stay should be granted restraining secured creditors from enforcing their security during administration.
  2. 2 Whether the Court should make an order under s 441D(2) restraining the plaintiffs from performing specified functions or exercising specified powers in relation to property over which security is held.

Ratio Decidendi

The Court determined that provided the chargee's interests are at least protected to the stage they are under general law, there is no barrier to making an order under s 441D(2) restraining the secured creditor, and that it is a matter of discretion whether to grant such a stay. In this instance, the Court ordered that the plaintiffs not take any action to sell or advertise the subject property until 30 April 2001, subject to conditions that the administrators provide a firm proposal, do not themselves advertise the property, and keep it fully insured.

Court Disposition

Interlocutory restraining order granted, subject to conditions.

Orders

  • The plaintiffs (chargees) not to sell or advertise the subject property up to and including 30 April 2001, on condition that administrators forward to Court a firm proposal for a buyer by 27 April 2001, do not themselves advertise the property, and undertake to keep it fully and properly insured, with administrators...
  • Matter stood over to 30 April 2001 at 9.50 am. Liberty to apply.