Practical guidance for receivers when exercising their power of sale
The Supreme Court of Victoria case Manda Capital Holdings Pty Ltd v PEC Portfolio Springvale Pty Ltd [2022] VSC 381 (Manda v PEC) determined a secured party took reasonable care to sell the secured property for not less than its market value pursuant to the receiver's obligations under s 420A of the Corporations Act 2001 (Cth) (Act).
Manda Capital Holdings Pty Ltd (Manda) loaned $6.39 million (Loan) to PEC Portfolio Springvale Pty Ltd (PEC), which was secured by a mortgage over PEC’s commercial premises (Property). PEC defaulted on the Loan, and Manda took possession of the Property. Manda then sold the Property in December 2020 for $7 million, which was less than the total amount owed, and demanded PEC pay the $974,037 balance of the Loan.
PEC led expert evidence that the Property should have sold for $7.8 million, while Manda led evidence that the Property was instead valued much lower at between $6.2 million and $6.7 million. The Court was therefore faced with competing valuations of the Property and determined that while the Property was sold at the lower end of the recommended range, nothing Manda did in the course of the sale was unreasonable under s 420A of the Act.
Receivers should continue taking a commercial approach to their power of sale duties to maximise the amount recovered from the sale as the Courts remain sensitive to 'fire sales'.
Read the original article on ARITA: Practical guidance for receivers when exercising their power of sale
Read more articles from the The Annual Return: 2022 in Review
By Melissa Jeremiah, Michael Wells & Lachlan Peavey
Keep up to date with our legal insights and events
Sign upRecent articles
Meta Marks - are your trade marks ready for the metaverse?
By Elizabeth Ireland, and Emma Woelke
As the metaverse becomes more prevalent, real-world brands are starting to expand into virtual offerings.
Reform to Australia’s merger clearance regime
By Ron Smooker, Shaun Temby, Jacqueline Picone, and Oliver Wahlstrom
A new mandatory, suspensory merger review system conducted by the ACCC comes into effect in Australia on 1 January 2026.
Important changes to the Workplace Injury Rehabilitation and Compensation Act 2013 concerning workers’ compensation in Victoria
By Catherine Dunlop, Jessica Mourney
From 31 March 2024, amendments to the Victorian workers’ compensation scheme took effect
A step closer to mandatory climate-related disclosure
By Ron Smooker, Rosamond Sayer, Samantha Murphy, and Joseph Fox
The Treasurer introduced the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024.
Partner
Melbourne