A recent decision of the Victorian Court of Appeal (handed down
on 14 July 2016) highlights a number of areas in which conflicts
can arise in a commercial transaction involving multiple secured
parties and the extent to which the interests of lower-ranked
secured parties need to be considered when the proceeds are dealt
with.
The case - Nom de Plume
While the facts of the case (Nom de Plume Nominees Pty Ltd
v. Fingal Developments Pty Ltd [2016] VSCA159) are quite
complicated, the transaction was a common one – a property
development structured through a unit trust, with funding provided
by both arms-length commercial financiers and private investors,
all of whom held security at various levels over the project
assets. The documentation was only partially successful in
resolving the multitude of potential disputes that can arise in
this situation if there is a project loss.
