Key Points:
A DOCA can extinguish claims under a guarantee, even
where those claims arise following the DOCA's
termination.
If the underlying debt has already been extinguished by a DOCA,
can a secured creditor still enforce the charge? A recent case
explored the role of section 444D(2) of the Corporations Act in
this situation, with implications for parties seeking to rely on
guarantees from companies that have been through a DOCA (Australian
Gypsum Industries Pty Ltd v Dalesun Holdings Pty Ltd [2015] WASCA
95).
Dalesun becomes a guarantor ‒ and AGI a secured
creditor
AGI entered into an agreement with Newglen Nominees Pty Ltd,
under which AGI agreed to supply building products and services to
Newglen on a 30-day credit account. Newglen's obligations were
guaranteed by Dalesun, and that guaranteed obligation was secured
by a floating charge over Dalesun's assets in favour of
AGI.
