Re Metal Storm Ltd (subject to deed of company arrangement)

The case involved Metal Storm Ltd, a company subject to a deed of company arrangement, and its trustee, who were in dispute over the trustee's obligations under the trust deeds and the Corporations Act 2001 (Cth). The majority secured creditor, who had provided directions to the trustee, sought to enforce the trust deeds and the appointment of a receiver over the company's assets. The court was required to determine whether the trustee was obliged to comply with the directions, whether the trustee's non-compliance was justified, and whether the administration of the company constituted an 'enforcement' under the relevant clause.

The court examined the trustee's obligations under the trust deeds and the Corporations Act, finding that the trustee was not obliged to comply with the directions as they related to voting for variations to the deed of company arrangement and the release of the trustee's charge over the company's assets. The court also found that the trustee's non-compliance with the directions was justified under the Corporations Act s 283HA, and that the trustee was relieved from liability under the Trustees Act 1925 (NSW) s 85. The court further held that the administration of the company did not constitute an 'enforcement' under the relevant clause, and that the majority secured creditor was not entitled to vote in the meeting of creditors.

The court also considered the application for the appointment of a receiver, finding that the relevant factors for the appointment of a receiver had been satisfied, and that the current deed administrator should be appointed as receiver. The court held that the appointment of a receiver did not entitle the trustee to release the relevant charge, and that the relevant parties were not entitled to exercise an equitable lien over the company's assets. Finally, the court ordered that monies wrongly paid by the deed administrator to the majority secured creditor be repaid to the trustee under Corporations Act s 447E, finding that the deed of company arrangement did not authorise such payment.

In conclusion, the court found in favour of the trustee, holding that the trustee was not obliged to comply with the directions of the majority secured creditor, and that the trustee's non-compliance was justified. The court also found that the administration of the company did not constitute an 'enforcement' under the relevant clause, and that the majority secured creditor was not entitled to vote in the meeting of creditors. The court further held that the appointment of a receiver was justified, but that the trustee was not entitled to release the relevant charge or exercise an equitable lien over the company's assets. Finally, the court ordered that monies wrongly paid by the deed administrator to the majority secured creditor be repaid to the trustee.