Case Update: Ceni Enterprises Pty Ltd (in liq) v Sykes, in the matter of Ceni Enterprises Pty Ltd (in liq) [2024] FCA 842

A liquidator has been ordered to provide approximately $1.5 million in security for costs in a proceeding brought against the company’s director and others alleging a secret sale of the company’s assets on extremely unfavourable terms.

While the liquidator had argued that the strength of the claim militated against an order for security for costs, the Court found that the proceeding was at too early a stage to make this determination.

The Court also concluded that ordering the liquidator to provide security would not stultify the proceeding, since the liquidator can enter into a litigation funding arrangement.

While this will come at a cost which will affect recoveries if the claim is successful, that is not a matter which the Court considered to be prejudicial to a plaintiff.

Read the decision here.