Australia's relatively lenient attitude to tardy lenders
may be about to change.
The Federal Court has questioned the use of judicial
discretion to validate the late registration of debentures and
other charges. If other courts adopt the same attitude, lenders
(and other secured creditors) will have to tighten up their
back office procedures.
Background
Australia's Corporations Act requires the public
registration of charges over company property. When a company
goes into liquidation, priority between secured creditors is
determined by the chronological order in which they registered
their charges.
Public registration allows other potential creditors to
determine the extent to which the company's assets are
pledged to the payment of particular secured creditors. In
general terms, unsecured creditors are only entitled to be paid
out of those assets - if any - left over after secured
