The Personal Properties Securities Act 2009 (Cth)
(PPSA) commenced on 30 January 2012. The PPSA
makes significant changes to the concept of security interests over
Central to the PPSA is the Personal Properties Securities
Register (PPSR). Primacy of the register is a
fundamental to the Act. Therefore it is essential that secured
creditors are aware of their security interests recorded against a
company in the PPSR. This places creditors in a position to respond
efficiently to requests as to a claim or for further information
about the registration from insolvency plaintiffs appointed to a
company, and staves off potential sale of the secured assets.
Knowledge of the particulars of the security interests is very
important. Currently the general nature of registrations on the
PPSR and the number of unregistered transitional security interests
makes it difficult for insolvency administrators to rely on the
PPSR to identify particular property that is subject to a third
party interest. This issue was highlighted in the following
In Carson, in the matter of Hastie Group Limited (No 3)
 FCA 719, the Federal Court found that administrators were
justified in selling unclaimed plant and equipment.
Administrators were appointed on 28 May 2012 to the Hastie Group
of companies. At the time of their appointment the Hastie Group
held a large number of individual items of plant and equipment at
different locations with an estimated total auction value of $6.4
million. There were 995 registrations on the PPSR: many were very
general as to the nature of the security interest claimed.
Inadequate record keeping by the company meant that the nature and
location of all the plant and equipment could not be
The administrators undertook extensive efforts to determine
claims upon the equipment, including personal correspondence and
advertising in national newspapers.
Yates J found that:
Three weeks after the initial correspondence, approximately 80%
of the secured creditors had failed to respond;
The creditors that did respond could not adequately
particularise the equipment or the security agreement under which
the security interest arose;
Despite their best efforts, the administrators continued to
face great difficulty identifying the property in which a security
interest might be claimed. In addition there were ongoing costs,
including significant rental costs of storage of the plant and
equipment, being incurred.
Yates J found that it was in the best interests of the companies
and their creditors to make directions to the administrators to
sell the unclaimed plant and equipment.
His Honour also made directions that the administrators hold the
proceeds of sale in a separate account and apply them:
First towards the payment of the administrators'
Then towards any valid claim in relation to the currently
unclaimed plant and equipment, and then;
After three months, distributing the balance of the sale
proceeds in the ordinary course of the administration of the
In similar circumstances, it is advisable for administrators to
seek equivalent Court directions. This case demonstrates
willingness from the Courts to assist 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.
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When determining if a DOCA is to be terminated, public interest can, and often will, outweigh any benefit to creditors.
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