Yesterday, in the Federal Court in Sydney, Justice Kathleen Farrell handed down her reasons for deciding that The Trust Company had an enforceable right to appoint receivers to the debenture-funded financial services business, Gippsland Secured Investments.The parties had been in court on several occasions between late July and the end of August, after GSI announced, on 19 July, that impairment provisions for securities underlying its loans needed to be increased materially, leaving a possible deficiency in its net tangible assets.Proceedings were delayed several times while efforts were made, initially, for both the sale of GSI's loan book and the development of a recapitalisation plan by its management. The latter gave way to an alternate funding proposal by a group of local investors which had a reasonable chance of being be developed. This "Rescue Group" was desperate to keep GSI as a going concern because of its relevance as a local development funding vehicle for the Gippsland economy.Justice Farrell's analysis of all the arguments, evidence, case law and regulations was extensive, as were reasons behind the judge's decision not to grant a further stay of proceedings for GSI and its supporters, the so-called Rescue Group, comprised of local business leaders. In a final attempt to salvage the situation, GSI and the local investor group upped the ante, with the group offering to commit up to $1.5 million to protect the interests of note-holders. The parties returned to court on September 2 to present further plans.It was then that Justice Farrell ordered that the rights of the debenture note-holders be enforced immediately, rather than allow the further two-week adjournment sought by GSI and its supporters so they could come up with a more detailed recapitalisation plan. In other words, The Trust Company was permitted to appoint a receiver. Ernst & Young was called in the next day.In giving her reasons, Justice Farrell, said she had assessed a range of factors, including the likelihood that GSI was insolvent; the impact on the local community of placing GSI into receivership (over the objections of ASIC); and the efforts of the local investor group to fund GSI's external advisor costs while a recapitalisation proposal was considered.The judge identified seven factors behind her decision not to grant a further two-week adjournment, which, she said, had had "a cumulative effect":* the complexity and execution risk, and the time required for the recapitalisation proposal to go ahead* the lack of support from The Trust Company for the proposal in its role as trustee for the note-holders* the requirement of The Trust Company to explain the proposal - which it opposed - to a meeting of note-holders * the need for ongoing court supervision to facilitate progress of the proposal* the inappropriateness of an ongoing process in which GSI would incur the legal costs of dealing with the recapitalisation proposal * the need to resolve the impasse between the wishes of the rescue group and the need to protect the note-holders* and, although The Trust Company had not sought to