The Case and Decision

The NSW Supreme Court has reaffirmed the rights of secured financiers to recover financed assets following borrower default, including where the borrower has entered liquidation.

In this case, a secured lender sought possession of agricultural equipment subject to a chattel mortgage after the borrower defaulted on its loan obligations.

The Court confirmed that the lender was entitled to possession under both its contractual security rights and the default judgment provisions of the Uniform Civil Procedure Rules 2005 (NSW).

Importantly, the Court confirmed that the lender could recover its secured assets even after the borrower entered liquidation, without needing the Court's permission.

What This Means for Asset Financiers

1. Liquidation does not prevent enforcement

Where a corporate borrower or dealership enters liquidation, a secured financier is not necessarily required to await the outcome of the insolvency administration before recovering financed assets.

Provided its security is valid and enforceable, the financier may pursue possession independently of the liquidator.

2. Court proceedings can provide an effective recovery mechanism

Where a borrower refuses to surrender secured assets, financiers can consider proceedings seeking delivery up of those assets.

If the proceedings are undefended, default judgment may provide a relatively efficient means of obtaining enforceable possession orders, particularly where assets are depreciating or their whereabouts are uncertain.

3. Finance documentation is critical

The decision highlights the importance of clearly drafted default and enforcement provisions in commercial finance agreements.

Express rights to take possession and sell secured assets can materially strengthen a financier's position when enforcing against uncooperative borrowers or insolvent businesses.

4. Asset-backed and floorplan facilities require prompt action

Where a borrower or dealership defaults or enters external administration, financiers should promptly identify secured assets, confirm their security position and consider immediate recovery action.

Accurate asset records, PPSR registrations and stock reconciliations may be critical in establishing entitlement to specific secured property.

Some Takeaways

Although the judgment does not establish new law, it provides useful recent authority supporting the enforcement rights of secured lenders and asset financiers.

The practical message is that early, decisive enforcement action may be available even where a borrower is insolvent or refuses to cooperate.

Where secured assets are at risk of being sold, transferred or concealed, prompt assessment of the security position and available recovery remedies can significantly improve the prospects of successful recovery.

DISCLAIMER: This article is current as at October 2026. It is general in nature and does not constitute legal advice. Specific advice should be obtained for your particular circumstances.