Securities and Futures Act 2001 · 2020 Revised Edition · Part 13 · Offers of Investments
265. Power of court in relation to certain irredeemable debentures
Feedback & supportDespite anything in any debenture or trust deed, the security for any debentures which are irredeemable or redeemable only on the happening of a contingency is, if the court so orders, enforceable, immediately or at such other time as the court directs if, on the application of the trustee for the holders of the debentures or (where there is no trustee) on the application of any holder of the debentures, the court is satisfied that —
debenture
“debenture” includes —(a)any debenture stock, bond, note and any other debt securities issued by or proposed to be issued by a corporation or any other entity, whether constituting a charge or not, on the assets of the issuer;(b)any debenture stock, bond, note and any other debt securities issued by or proposed to be issued by a trustee‑manager of a business trust in its capacity as trustee‑manager of the business trust, or a trustee of a real estate investment trust in its capacity as trustee of the real estate investment trust, whether constituting a charge or not, on the assets of the business trust or real estate investment trust; or(c)such other product or class of products as the Authority may prescribe,but does not include —(d)a cheque, letter of credit, order for the payment of money or bill of exchange; or(e)for the purposes of the application of this definition to a provision of this Act in respect of which any regulations made under that provision provide that the word “debenture” does not include a prescribed document or a document included in a prescribed class of documents, that document or a document included in that class of documents, as the case may be;
at the time of the issue of the debentures the assets of the borrowing entity which constituted or were intended to constitute the security therefor were sufficient or likely to become sufficient to discharge the principal debt and any interest thereon;
the security, if realised under the circumstances existing at the time of the application, would be likely to bring not more than 60% of the principal sum of moneys outstanding (regard being had to all prior charges and charges ranking pari passu, if any); and
the assets covered by the security, on a fair valuation on the basis of a going concern after allowing a reasonable amount for depreciation are worth less than the principal sum and the borrowing entity is not making sufficient profit to pay the interest due on the principal sum or (where no definite rate of interest is payable) interest thereon at such rate as the court considers would be a fair rate to expect from a similar investment.
Subsection (1) does not affect any power to vary rights or accept any compromise or arrangement created by the terms of the debentures or the relevant trust deed or under a compromise or arrangement between the borrowing entity and creditors.
entity
“entity” includes a corporation, an unincorporated association, a partnership and the government of any state, but does not include a trust;