This is the first in a series of redmails to review key lessons learnt over the past year ranging from the Hastie Group collapse to practical tips in utilising the PPSR, and to assess trends and issues to be encountered moving forward.
The Hastie Group collapse
Hastie Group’s administrators had significant difficulties reconciling the 995 PPSR registrations against the Hastie Group and the estimated $6.4 million of unclaimed plant and equipment. The major issues were poorly kept company records and insufficient details provided in the PPSR registrations, making the property relating to the security interest almost impossible to identify.
Although the administrators took a number of steps to clarify the security interests, approximately 77% of the plant and equipment remained unclaimed. To ensure there were no disputes about the performance of its duties, Hastie Group’s administrators applied to the Court seeking directions and orders to:
- sell the unclaimed plant and equipment;
- retain the net sale proceeds in trust for claims by creditors for a period of 3 months; and
- if the monies remained unclaimed, distribute the monies in the ordinary course of administration of the Hastie Group companies.
The Court considered that the administrator’s proposal was appropriate, especially given the difficult circumstances the administrators faced and the steps taken to clarify the security interests. Thus, directions and orders were made as per the administrator’s proposal and as such many creditors lost rights to their property, despite having registered on the PPSR.
How can you protect your interests?
This matter resulted in a great loss of equipment and monies for the creditors involved, and goes to show the major impact the PPSA could have on your business.
As such it is Redchip’s recommendations that you take the following actions to protect your security interests:
- Clearly describe the collateral to your security interest. Where possible, you should consider using serial numbers or identification numbers (for example, a motor vehicle or patent application number) to match your registration with the collateral.
- Ensure your contact information on the PPSR is kept up to date. Further, you should consider utilising a specific office email inbox to receive PPSR notices and assigning a staff-member(s) to monitor this address.
- Have adequate records and clear procedures to respond to any requests from insolvency practitioners regarding your security interests. Flowing on from the necessity for a specific email inbox, there should be a clear process for all notices to be referred to senior staff member(s) for appropriate review and action.
What you need to do
All businesses and individuals must ensure that they are equipped to deal with the PPSA and PPSR regime. In practical terms, this means that you should have:
- Accurate and timely registrations of all security interests on the PPSR;
- Proper systems, policies and procedures set up to deal with this new regime; and
- Continual reviews and checks to ensure compliance with and protection under the PPSA.
For more information
We would be pleased to assist you with any of the above steps, or to address any queries you may have in relation to the PPSA and PPSR generally. Please contact us on (07) 3223 6100 for further assistance.