On 25 March 2011, the High Court delivered a judgment concluding that a notice of crystallisation served by a bank (who held fixed and floating charges) on three borrowers shortly before they were placed into liquidation did not alter the statutory order of priorities attached to certain preferential debts over the claims of holders of floating charges.
In a supplementary judgment delivered on 11 July 2011, the High Court considered the issue of whether the service of notices by the Bank had the effect of validly crystallising the floating charges. The Court decided that the floating charges had not validly crystallised.
The full judgment is attached. A key finding of the judgment is that, the Company's continued entitlement to use the assets which were the subject of the Bank's notice without the need to obtain Bank consent, was inconsistent with the existence of a fixed charge. Accordingly, the notices had not served to crystallise the floating charges.
Both judgments are being appealed to the Supreme Court and the Official Liquidator hopes to have the appeal expedited with a view to seeking a hearing date as soon as possible.