Australian Barter Currency Exchange v Uniting Church [2009] NSWSC 607

The director of the borrowing companies borrowed $14 million from the lender in four separate loan transactions. The loans were secured by mortgages over 29 properties. The director was sent to prison for two and a half years and this caused the loans to go into default and his companies to go into liquidation. Upon his release from prison, he sought to refinance and bring his companies out of liquidation. He was able to bring the companies out of liquidation using rental income from the properties. Nevertheless there was a debt still owing to the liquidator for fees and the liquidator lodged caveats.

The lender sold some of the properties, notwithstanding a failed attempt to seek orders from the Court to prevent the sale. The lender now sought to sell the balance of the properties and once again the borrowers sought an injunction to allow them to refinance. Importantly, the lender in these proceedings conceded that the remaining debt was no more than half the value of the remaining properties. In support of the injunction, the director proffered an affidavit of a Mr Bill Salouris of Global Capital Corporation Pty Limited which indicated that a refinance would be completed within 6 weeks.

The Court concluded that as a result of the earlier sales and the removal of “under external administration” from the ASIC records (which had in the meantime been achieved) meant that the refinance was now more likely to take place. The Court was influenced by the reflection that even if the refinance did not take place, the lender would not suffer financially. Accordingly, an injunction preventing the sales from proceeding was granted.

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