Kaizen Global Investments Limited, in the matter of Australia New Agribusiness and Chemical Group Limited (in liq) v Australia New Agribusiness and Chemical Group Limited (in liq)

Australia New Agribusiness and Chemical Group Limited (in liq) brought proceedings against Kaizen Global Investments Limited, seeking an order under s 588FM of the Corporations Act 2001 (Cth) to fix a later time for the registration of a share mortgage. The mortgagor company had gone into liquidation, and the mortgagee had failed to register the share mortgage within the required 20 business days. The court was required to determine whether it was just and equitable to grant the relief sought by the applicant.

The court considered the principles applicable to the exercise of the discretion to fix a later time for registration in circumstances where the mortgagor company has gone into liquidation or administration. The court noted that while the interests of unsecured creditors are relevant, they are not determinative. The court must have regard to the financial position of the company and whether there has been any prejudice to unsecured creditors due to the delay in registration. The court also noted that the purpose of the section is to relieve a secured creditor from the consequences of accident or inadvertence.

In this case, the court found that the failure to register the share mortgage was due to inadvertence on the part of the mortgagee. However, the court considered that the mere fact that the unsecured creditors would receive a lesser dividend if the extension was granted was not sufficient to outweigh the adverse impact on them. The court also noted that the delay in registration had not resulted in any prejudice to the unsecured creditors. Accordingly, the court dismissed the application.

The court ordered that each party file and serve written submissions on costs by a specified date. The court also noted that entry of orders was dealt with in Rule 39.32 of the Federal Court Rules 2011.