In the first Court decision since the proclamation of the Personal Property Securities Act (PPSA), the Federal Court in Carson, in the matter of Hastie Group Limited (No 3)  FCA 719 (5 July 2012) ("Hastie") has illustrated that protecting your property interests may require more than mere registration on the Personal Properties Security Register (PPSR).
Administrators appointed to a number of companies that comprise the Hastie Group applied to the Court for permission to dispose of plant and equipment held by various companies in the Hastie Group across 36 different locations. The total estimated auction value of the plant and equipment was $6.4 million.
There were 995 registrations recorded against the companies in the PPSR. The administrators sent letters to all creditors who had an interest recorded against the companies on the PPSR. Each creditor was requested to provide notification of its interest. Approximately 80% of those secured creditors did not respond to the letter and the responses received by administrators did not adequately particularise the relevant property or security agreement. Administrators had great difficulty identifying property that is subject to the security interests of third parties. To add to the complexity, property had been relocated to various sites owned by the Hastic Group making it difficult to identify the location of property belonging to creditors. Additionally, administrators had difficulty relying on the PPSR for the purpose of identifying property subject to security interests of third parties because many of the descriptions were too general.
At the time of the decision, approximately 3684 items of plant and equipment remained "unclaimed". The ongoing storage and maintenance of that plant and equipment represented a significant cost to administrators. The Court was satisfied that there had been genuine and substantial difficulties in identifying those items of plant and equipment that might be subject to a security interest and other claims, and that the administrators had taken a number of steps to attempt to identify security holders. The Court allowed the administrators to sell the unclaimed plant and equipment by public online auction. The proceeds of sale were then to be held in a separate account to be distributed first towards the payment of administrators' costs incurred in the sale, second towards any claim in respect of the unclaimed property and finally, after a period of three months, the balance would be distributed in the ordinary course of the administration.
The decision in Hastie serves as a warning to creditors that they should actively take steps to protect their property interests beyond mere registration on the PPSR. We recommend that creditors:
Cronin Litigation Lawyers comprises lawyers who are dedicated to protecting and enforcing interests in personal property. Our team has in-depth experience in dealing with companies under administration and in liquidation. If you are seeking to protect or enforce your interest in personal property, please contact Derek Cronin at Cronin Litigation Lawyers on (07) 5592 6633 to find out how we may be of assistance.
In Other News
Yesterday the Federal Government released the National Cabinet Mandatory Code of Conduct which provides a set of good faith leasing principles to aid the management of cashflow for...continue...
We are proud to announce the promotion of Chelsey Grbcic to the position of Associate. Chelsey joined the firm in October last year and was quick to establish herself as an integra...continue...
Cronin Miller Litigation is a Gold Coast based law firm specialising in resolving commercial disputes, and providing effective results for persons who have a claim of a commercial nature.Contact us today