Who gets the $2.5m – the bank or the unsecured creditors?
Tolcher v National Australia Bank [2003] NSWSC 207 Lloyd Scott Enterprises Pty Ltd (LSE) entered into a first ranking debenture with National Australia Bank (NAB) to secure some finance to be provided by NAB. The debenture provided for a fixed and floating charge over all the assets of LSE. LSE went into liquidation in 2001 and Tolcher was appointed liquidator. He found that he had possible claims against Key Equipment Finance Australia Pty Ltd in respect of an unfair preference and for insolvent trading. It was alleged that Key was answerable for insolvent trading because it was said to be a shadow director of LSE meaning that LSEs directors were accustomed to act in accordance with Keys instructions or wishes. The two claims against Key became the subject of mediation. They were resolved by Key paying to the liquidator of the sum of $2.5M in return for Tolcher promising not to sue Key in respect of his claims. Tolcher then asked the court to decide whether the money recovered from Ke
