THE CORPORATIONS LAW

CHAPTER 5 - EXTERNAL ADMINISTRATION

PART 5.2 - RECEIVERS, AND OTHER CONTROLLERS, OF PROPERTY OF CORPORATIONS

SECTION 420B   COURT MAY AUTHORISE MANAGING CONTROLLER TO DISPOSE OF PROPERTY DESPITE PRIOR CHARGE  

420B(1)  [Court may authorise disposal]  

On the application of a managing controller of property of a corporation, the Court may by order authorise the controller to sell, or to dispose of in some other specified way, specified property of the corporation, even though it is subject to a charge (in this section called the ``prior charge'' ) that has priority over a charge (in this section called the ``controller's charge'' ) on that property that the controller is enforcing.

420B(2)  [Preconditions to order]  

However, the Court may only make an order if satisfied that:

(a)  apart from the existence of the prior charge, the controller would have power to sell, or to so dispose of, the property; and

(b)  the controller has taken all reasonable steps to obtain the consent of the holder of the prior charge to the sale or disposal, but has not obtained that consent; and

(c)  sale or disposal of the property under the order is in the best interests of the corporation's creditors and of the corporation; and

(d)  sale or disposal of the property under the order will not unreasonably prejudice the rights or interests of the holder of the prior charge.

420B(3)  [Rights and interests of holder]  

The Court is to have regard to the need to protect adequately the rights and interests of the holder of the prior charge.

420B(4)  [Property subject to controller's charge]  

If the property would be sold or disposed of together with other property that is subject to the controller's charge, the Court may have regard to:

(a)  the amount (if any) by which it is reasonable to expect that the net proceeds of selling or disposing of that other property otherwise than together with the first-mentioned property would be less than so much of the net proceeds of selling or disposing of all the property together as would be attributable to that other property; and

(b)  the amount (if any) by which it is reasonable to expect that the net proceeds of selling or disposing of the first-mentioned property otherwise than together with the other property would be greater than so much of the net proceeds of selling or disposing of all the property together as would be attributable to the first-mentioned property.

420B(5)  [Sec 420B(3) and (4) do not limit Court]  

Nothing in subsection (3) or (4) limits the matters to which the Court may have regard for the purposes of subsection (2).

420B(6)  [Order made subject to conditions]  

An order may be made subject to conditions, for example (but without limitation):

(a)  a condition that:

(i) the net proceeds of the sale or disposal; and

(ii) the net proceeds of the sale or disposal of such other property (if any) as is specified in the condition and is subject to the controller's charge;

or a specified part of those net proceeds, be applied in payment of specified amounts secured by the prior charge; or

(b)  a condition that the controller apply a specified amount in payment of specified amounts secured by the prior charge.