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ARTICLE · 20 MARCH 2024

Taking Security From Related Entities Of A Borrower – Unreasonable Director-Related Transactions

Vincent Young
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The recent case of Cooper as Liquidator of Runtong Investment and Development Pty Ltd (In Liq) v CEG Direct Securities Pty Ltd [2024] FCA 6 (Cooper), shed light on when the Court will intervene...

AustraliaFinance and Banking
David Greenberg
David Greenberg
Victoria Caldwell
Victoria Caldwell

Case note – Cooper as Liquidator of Runtong Investment and Development Pty Ltd (In Liq) v CEG Direct Securities Pty Ltd [2024] FCA 6

The recent case of Cooper as Liquidator of Runtong Investment and Development Pty Ltd (In Liq) v CEG Direct Securities Pty Ltd [2024] FCA 6 (Cooper), shed light on when the Court will intervene to avoid director-related transactions. This case should prompt lenders to exercise caution when relying on cross-securities granted by related entities to a borrower or any guarantor.

Background

Runtong Investment & Development Pty Ltd (Runtong) owned land in Adelaide. That land had an approximate value of $3.5 million in 2014. Runtong had plans to construct residential apartments on the land.

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