In the matter of Rio Dorado Limited ACN 148 175 991; Rio Dorado Limited (ACN 148 175 991) v Featherstone Enterprises Pty Limited (ACN 137 298 018)

The case involved Rio Dorado Limited, a creditor, and Featherstone Enterprises Pty Limited, the debtor. Rio Dorado held a convertible note issued by Featherstone, which had changed its name. Despite the name change, Rio Dorado did not update the register of debenture holders before issuing a notice of redemption for the note. The note contained a clause stating that the company would recognise only the noteholder whose name appeared in the register and could act accordingly. Featherstone did not redeem the note in response to the notice, and Rio Dorado sought to wind up Featherstone based on the unpaid note. Featherstone argued that there was a genuine dispute about the existence of the debt due to the failure to update the register.

The court had to determine whether Featherstone's failure to redeem the note constituted a genuine dispute about the existence of the debt. The key issue was whether the noteholder's failure to update the register of debenture holders invalidated the statutory demand and the subsequent winding-up application. Another issue was whether the clause in the note requiring the company to recognise only the noteholder whose name appeared in the register could be enforced.

The court held that the noteholder's failure to update the register did not invalidate the statutory demand. The court reasoned that the requirement to update the register was a procedural step and did not affect the validity of the demand itself. The court further held that the clause in the note requiring recognition of the noteholder whose name appeared in the register could be enforced. The court found that the clause was clear and unambiguous, and the noteholder had not acted unreasonably in relying on it. Consequently, the court found that there was no genuine dispute about the existence of the debt.

The court ordered that Featherstone pay the amount owing to Rio Dorado and its costs. The court also ordered that the winding-up application be dismissed as having no merit.