When Hastie Group Limited went bust a few months ago, it had $6.4 million in plant and equipment. Various creditors had registered 995 interests over this equipment, which was spread over 36 different sites.
When the administrators stepped in, they had problems working out which security interests related to which items, as the interests noted on the Personal Property Securities Register were too vague. They wrote to the creditors asking them to identify which specific items were theirs, but most were unable to even point out their own goods.
So the administrators applied to the Federal Court for orders allowing them to sell the goods which hadn't been claimed. The Court found that because the descriptions of the secured goods on the Register were too generic, and the creditors themselves weren't able to identify their secured goods, the administrators were able to sell the items and the funds fell into the general administration.
The percentage of goods where the security failed? 77%.
This is the first case looking at the Personal Property Securities Act regime. A 23% success rate is not a great scorecard.
Some things you can do to avoid being among the 77%:
- When describing your security interest on the PPSR, be specific! "Goods" is useless, but "Leapin' Lizards, It's Liberace! DVDs" would probably work.
- If you supply goods and some of the goods are paid for and others not, ensure that the unpaid goods are stored separately and identified; and
- If possible, brand your goods.
For more exciting commentary on the PPSA, see our previous updates here.
We do not disclaim anything about this article. We're quite proud of it really.
