In Carson, in the matter of Hastie Group Limited (No 3) [2012] FCA 719 the Federal Court ordered a process for disposal of goods which may have been the subject of a PPS security but which creditors had not specifically claimed.
The decision related to the assets of 33 companies in the MEP division of the Hastie Group which had been placed into administration including a large number of individual items of plant and equipment at 36 different locations.
There were 995 registrations noted against the companies in the Personal Property Securities Register. Poorly kept company records and inadequate details on the PPS Register meant that the administrators could not identified secured assets.
Judge Yates observed that “Given the level of generality of many of the registrations in the PPSR and the existence of many transitional security interests that are not registered, it has proved extremely difficult for the administrators to rely upon the PPSR for the purpose of identifying property that is subject to third party security interests.”
Because of the ongoing cost of rent of properties on which the equipment was located and the cost of moving the equipment to other sites, Judge Yates authorised a process of notifying secured creditors requesting details, failing which the goods would be sold and proceeds retained in escrow for 3 months following which the proceeds would be available for use by the administrators.
The problem arose because secured parties did not respond to administrators’ requests for details: it is not clear whether this was because they had kept insufficient records themselves.
The decision does not relate to claims of interests in property not registered on the PPS Register.
As the Judge observed, transitional interests are an issue: security interests in goods created before 30 January 2012 do not need to be registered until 29 January 2014. But if they are not registered insolvency administrators will not be able to identify them.
Suppliers of goods who continue to supply after 30 January 2012 should not assume they have until 2014 to register their interest: goods supplied on a retention of title basis after 30 January 2012 are not secured unless the interest is registered on the PPS Register.
