The Federal Court decision in Carson, in the matter of Hastie Group Limited (No 3) has highlighted the need for creditors to do more than simply register their interests on the Personal Property Securities Register (PPSR).
When the Hastie Group, consisting of 44 companies which held plant and equipment across 37 different sites, entered into administration, the Administrators discovered 995 interests noted against the Hastie Group companies on the PPSR. Many of the descriptions in the PPSR were recorded in terms too general to be relied upon.
The Administrators took a number of steps to try to identify the security interests registered to the plant and equipment, including:
- Writing to each creditor requesting particulars of their secured interests –80% of the creditors failed to respond;
- Publishing advise in The Australian newspaper that unless creditors contacted the Administrators, their security interests would be assumed waived; and
- Emailing 3,000 creditors in similar terms to the newspaper.
After taking these steps, 77% of the Assets remained unclaimed. Due to the ongoing cost of renting premises to hold the Assets, the Administrators asked the Court to allow them to sell the Assets at auction, and to allow them to apply the sale proceeds to the Hastie Group administration. The total estimated value of the plant and equipment at auction was $6.4 million.
At the time of the decision, approximately 3684 items of plant and equipment remained “unclaimed” by creditors. The Court allowed the Administrators to sell the Assets with the proceeds to be held in escrow for three months. The Court held that the Administrators had faced “genuine and substantial difficulties” in identifying the Assets and had done their best to contact the creditors for the purpose of obtaining further information.
Ensuring that the contact details on your PPSR registrations are ...