Think Nicholsons

Oct 28

The importance of properly detailed registration on the PPSR

The matter of Re Carson; Hastie Group Ltd (No 3) [2012] FCA 719 relates to an application made by the administrators after the collapse of the Hastie Group.

By way of background, the Hastie Group involved 44 companies over 36 sites and was the subject of 995 registrations on the Personal Property Securities Register by secured creditors.

On their appointment, the administrators undertook attempts to identify the security interests of the 995 registrations held over the Hastie Group.  The administrators:

  • wrote to all secured creditors listed on the PPSR seeking particulars of the registration;
  • published newspaper advertisements for secured creditors to contact them;
  • wrote to 12 entities who appeared to hold security interests; and
  • emailed a further 3,000 creditors

After taking these steps, approximately 77% of the assets remained unclaimed by creditors.

Due to the administrators incurring significant costs in storing the assets, they applied to the Court for directions to:

  1. sell the assets at auction; and
  2. after writing to creditors again and waiting a three month period, to be allowed to apply the proceeds of the sale to the costs of the administration.

The Court granted the orders sought by the administrators and determined that the administrators had faced “genuine and substantial difficulties in identifying those items of plant and equipment that might be subject to a security interest”.

The important lessons that all secured creditors (regardless of the industry) can take from this case are:

  1. that secured creditors ought to ensure that all PPS registrations are registered in a timely manner, and properly identify the goods that are the subject of the registration.  Further, the secured creditor must ensure that it is able to properly and accurately identify its registered interests.
  2. that secured creditors should not be passive in enforcing its security interests and should be prepared to take swift action where necessary.

If you would like assistance with any of the issues mentioned above, or would like to discuss any insolvency issues, then please give us a call on (07) 3226 3944.