Secured creditors at risk from vague registrations
Carson, in the matter of Hastie Group Limited (no.3) [2012] FCA 719 / (2012) APPSR.
After the collapse of the Hastie Group (the Company), the appointed administrator encountered significant difficulty in identifying and matching the plant and equipment assets of the Company to the secured parties listed in the 995 registrations on the Personal Property Securities Register (PPSR).
The court held that the administrators were justified in selling the unclaimed plant and equipment, which amounted to approximately 77% of the plant and equipment in the Company's possession, and distributing the proceeds in the ordinary course of the administration as result of the vagueness of many of the registrations made by some of the secured creditors.
One of the main aims in implementing the Personal Property Securities Act 2009 (PPSA) and establishing the PPSR was to create transparency with respect to the apparent wealth of a company that holds assets which are the subject of lease or finance arrangements. However, this case demonstrated two significant problems:
- even though there were numerous registrations, which appear to have related to the plant and equipment in the Company's possession, the administrators were not able to identify the particular assets linked to the registrations
- where a claim was made, the secured parties failed to appropriately identify the asset to which their registered interest related.
The court made particular note of the generality of the PPSR registrations and the difficulty the administrators encountered in identifying the property the subject of the registered interests despite taking a number of steps including, writing to the secured parties and publishing notices in newspapers.
This highlights the need for secured parties to:
- ensure that where possible and commercially appropriate, their registrations specifically identify the goods that are the subject of their registration
- have systems to respond promptly and accurately to enquiries by administrators so that their registered interests can be acknowledged and supported by the administrator.
Middletons' Banking, Insolvency and Disputes team has expertise in advising secured parties and administrators and can assist with:
- ensuring that your registrations are effective
- responding to and preparing appropriate notices from administrators.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
