The Trust Company (Nominees) Limited v Southern Finance Limited, in the matter of Southern Finance Limited

The Trust Company (Nominees) Limited, a trustee under a trust deed for debenture stock, sought relief under section 283HB of the Corporations Act 2001 (Cth) against Southern Finance Limited, a financial services company that had issued debentures known as Southern Notes. The plaintiff, concerned about the defendant's financial health and liquidity, sought to prevent the defendant from making payments to debenture holders, borrowing, or re-investing existing debentures, and to restrict the defendant's ability to pay out funds received by electronic transfer. The court was required to determine whether the orders sought by the plaintiff were appropriate to protect the interests of existing and prospective debenture holders.

The court examined the evidence presented, which showed that the defendant's liquidity ratio was low, and reserves of liquid assets were decreasing. The plaintiff had concerns about the adequacy of the defendant's provisioning for loans in default or impaired assets. Although no breach of the trust deed or the Act had been alleged, the plaintiff believed that the defendant should not make payments to noteholders, issue new Southern Notes, or renew existing Southern Notes until KPMG had concluded their review and reported on the defendant's financial position. The court found that the orders sought were appropriate to protect the interests of the debenture holders. The court also noted that the defendant had consented to the orders and that ASIC neither supported nor opposed the plaintiff's application. The court decided to vary the previous orders to allow for open court proceedings and public disclosure of the parties' names, while maintaining restrictions on access to certain documents.

The court made orders restraining the defendant from making payments to debenture holders, borrowing, and re-investing existing debentures, as well as requiring the defendant to refund funds received by electronic transfer within 48 hours of receipt. The court also ordered that the matter be re-listed before a Corporations List Duty Judge on 4 December 2012. The parties were granted liberty to apply at one day's notice.