Hayes v Doran

[2012] WASC 486

Supreme Court of Western Australia

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Interrogate

Catchwords

1. Corporations
2. › Administration
3. › Appointment of administrator by chargee
4. › Security interest in whole or substantially whole of company's property
5. › Whether security interest enforceable
6. › Events of default under charges
7. › Effect of creditor's election to convert loan to shares on enforceability of charges
8. › Corporations Act 2001 (Cth), s 436C
1. Corporations
2. › Administration
3. › Deed of company arrangement
4. › Termination
5. › Material omissions in report to creditors
6. › Whether omissions material to creditors' decision
7. › Discrimination between classes of creditors
8. › Whether discrimination oppressive, unfairly prejudicial or unfairly discriminatory
9. › Legitimate commercial rationale for discrimination
10. › Corporations Act 2001 (Cth), ss 445D, 447A, 447C
1. Contract
2. › Formation
3. › Certainty of terms
4. › Oral agreements
5. › Disagreement over fundamental terms
6. › Whether binding agreement reached
7. › 40% return on investment versus 40% of profits
1. Contract
2. › Formation
3. › Consideration
4. › Whether consideration moved from promisee
5. › Matching funds agreement
6. › Whether obligation to purchase shares constituted consideration from company

Quick Take

A chargee who has elected to convert loan moneys to shares under a convertible loan agreement but has not received the conversion shares retains enforceable security interests where the failure to issue shares constitutes an event of default, and may elect between inconsistent rights (debt or equity) upon enforcement of the charges. Discrimination between classes of creditors in a DOCA is permissible where supported by a legitimate commercial rationale, such as maintaining business goodwill with trade creditors necessary for the company's ongoing operations.