Corporations Act 2001

On the application of a managing controller of property of a corporation, the Court may by order authorise the controller to sell, or to dispose of in some other specified way, specified property of the corporation, even though it is subject to a security interest (the prior security interest) that has priority over a security interest (the controller’s security interest) in that property that the controller is enforcing.

However, the Court may only make an order if satisfied that:

apart from the existence of the prior security interest, the controller would have power to sell, or to so dispose of, the property; and

the controller has taken all reasonable steps to obtain the consent of the secured party in relation to the prior security interest to the sale or disposal, but has not obtained that consent; and

sale or disposal of the property under the order is in the best interests of the corporation’s creditors and of the corporation; and

sale or disposal of the property under the order will not unreasonably prejudice the rights or interests of the secured party in relation to the prior security interest.

The Court is to have regard to the need to protect adequately the rights and interests of the secured party in relation to the prior security interest.

If the property would be sold or disposed of together with other property that is subject to the controller’s security interest, the Court may have regard to:

the amount (if any) by which it is reasonable to expect that the net proceeds of selling or disposing of that other property otherwise than together with the first‑mentioned property would be less than so much of the net proceeds of selling or disposing of all the property together as would be attributable to that other property; and

the amount (if any) by which it is reasonable to expect that the net proceeds of selling or disposing of the first‑mentioned property otherwise than together with the other property would be greater than so much of the net proceeds of selling or disposing of all the property together as would be attributable to the first‑mentioned property.

Nothing in subsection (3) or (4) limits the matters to which the Court may have regard for the purposes of subsection (2).

An order may be made subject to conditions, for example (but without limitation):

a condition that:

the net proceeds of the sale or disposal; and

the net proceeds of the sale or disposal of such other property (if any) as is specified in the condition and is subject to the controller’s security interest;

a condition that the controller apply a specified amount in payment of specified amounts secured by the prior security interest.