When the Hastie Group Limited went into administration a few months ago it had $6.4 million in plant and equipment. Administrators faced 995 registered interests over this equipment on the Personal Properties Securities Register (“PPSR”).
Administrators had trouble identifying which security interests related to which items because of the vague language used on the register. They emailed creditors asking them to identify which items were theirs and placed ads in major Australian newspapers. Most of the creditors failed to respond or were unable to point out their own goods.
Eventually, an order was successfully sought by the administrators to sell the unclaimed equipment.
The court found that the language used to describe the equipment was too general, making it extremely difficult for the administrators to rely on it.
This was the first case looking at the new Personal Property Securities Act (2011) (“The Act”). The Act failed to securely register 77% of the items held for creditors against the Hastie Group.
This case makes it clear that registering equipment will not guarantee its security. To avoid losing equipment Bayston Group suggests the following:
– All goods should be registered as soon as possible. Relying on the transitional 24 month period will afford your goods less protection than being on the register.
– Goods should be registered using specific, detailed and clear language.
– Ensure that you have adequate communication systems in place to respond to all requests from creditors.
– Hire businesses and other equipment lessors should monitor their equipment and the status of their customers.
– If possible brand your goods.
If you need advice about whether you should be registering interests on the PPSR Register, or what language you should be using when you do, please contact Leisa Bayston.