The paper "The Claim against Good Luck Ltd" is a perfect example of a finance and accounting assignment. Sue cannot enforce her security interest against Bling Bling Pty Limited. Under the Corporations Act 2001, for a security interest to be enforceable, it must meet the condition of being placed for the specific business. In the case of Sue, it is evident that the insurance security that she placed was not for Bling Bling Pty Limited but for Bling Bling. The insurance for the said business was also given using the personal name of Sue.
Sue cannot enforce the insurance as a security interest since the business Bling Bling Pty limited does not have an insurable interest from the said insurance. Under corporate law, a business is a separate entity from the owner and has the capacity of being insured under its name. Bling Pty Limited is not insured in this case and Sue cannot enforce her security interest against the business. Additionally, the company that suffered a loss is different from the one that was insured. In fact, the insured business is personal property and personal property under the Personal Property Securities Act 2009 (Cth) cannot be a security interest for another type of business that involves other shareholders. Section 441A of the Corporations Act 2001 stipulates that a secured party can act before when the whole or a substantial part of the whole business, the property of the company under administration is subject to the security interest.
It is also evident that there are limitations to the enforcement of security interests under the Corporations Act 2001 in the sense that the owner of the security cannot enforce the security interest when a receiver or an appointment of a liquidator to the property has been done.
From the scenario, it is clear that the whole of or a substantial part of Bling Bling Pty Limited is not subject to the security interest. Therefore, Sue cannot enforce security interests against Bling Bling Pty Limited. (b) Enforce the claim against Good Luck Ltd. [5 marks] Sue cannot also enforce the claim against Good Luck Limited as the business she insured using her name. Currently Bling Bling Pty Limited is a different business from the Bling Bling business that was insured by Sue.
Bling Pty Limited is not recognized by Good Luck Limited since it is not the company that was insured. Additionally, it is no longer a private company but a public company already registered under the ASIC. Under Corporations Law, security owned cannot enforce it for a different business that was not indicated in the insurance agreement. The right of enforcement of the secured party (Sue) requires that the property must be registered under the security interest.
The new business Bling Bling Pty Limited is owned by other shareholders and therefore, it is not related to the secured one. Therefore, Sue cannot recover the value of the stolen goods from Good Luck limited. The enforcement rights are usually left to the liquidator even though in our scenario it will not apply because the security interest and the property are not related.
Bennett, M, 2015, Practical Problem caused by the Personal Property Securities Act, The Tax Institute.
Corporations Act 2001
Harris, Hargovan & Adams, 2013, Australian Corporate Law, 4th ed, LexisNexis.
Kobras, S, 2010, Business Structures in Australia, Lawyers & Notaries, p.1-6.
Ward, D., & Woodruff, I, 2013, Limited Liability Partnerships, Thornton Grant, pp.1-6.