You act for Fred who is the secured lending manager of BigBank. He has a troublesome customer, Macs Tires Pty Ltd. This is a family run tire business with three directors. The principal controllers are Ed and his wife Ethel. Fred is worried that the current account is falling steadily into arrears. The bank has a fixed and floating charge over the asset and undertaking of Macs. It also has purported to take a "fixed" charge over Macs' book debts but that charge has not been registered, and Macs has been permitted to use the funds in the account. Fred suspects that much of the raw material used to produce the tires is held on retention of title terms (ROT). Fred seeks you advice on the following matters:
(a) if he wishes to appoint a receiver and manager, how long must he allow for payment of the amount secured?
(b) if the stock is held on ROT terms, may the receiver seize it. What remedies are available to the ROT suppliers to enable them to retrieve their product?
(c) many customers have left tires to be repaired - may they also be seized?
(d) what issues may arise with respect to the charge over book debts if the funds have in fact been used by Macs?
(e) if the charged assets are sold, what is the extent of the bank's liability in equity and under statute with respect to the method of disposal?
2. "The decision in IATA v Ansett Australia Holdings (2008) 82 ALJR 419; [2008] HCA 3 allows contracting parties to ignore the effect of the pari passu rule to the detriment of general creditors". Discuss and examine the reasoning in the case.
3. "The automatic discharge available to most bankrupts under the current legislation is too lenient and encourages reckless business behaviour".
4. "The introduction of the Personal Property Security Act will have a large impact on the taking of security, and the position in insolvency".
5. "The question of what constitutes an "uncommercial transaction" is, in the light of authority, difficult to state precisely". Discuss the recent authority and the concept of "uncommercial transaction".
6. "The doctrine of modified universality strikes a fair balance between the rights of the unsecured creditor in any particular law district and the need to have one central place in charge of liquidation overall".
7. "The decision in Eurofinance v Rubin may mean that there is no longer any relevant jurisdictional limit to the enforcement in Australia of an insolvency order granted by a court in Ruritania".