In the case of Carson, in the matter of Hastie Group Limited (No 3) [2012] FCA 719, Yates J determined an application brought by the administrators of the Hastie Group of 43 companies to collect signed but undated creditors voluntary liquidation appointment documents for directions under section 447D of the Corporations Act 2001 (Cth) permitting them to dispose of certain plant and equipment.
The administrators’ investigations revealed that the Hastie Group held at the time of their appointment, a large number of individual items of plant and equipment at 36 different locations with an estimated total auction value of $6.4 million.
There were 995 registrations noted against the various companies that comprise the Hastie Group on the Personal Property Securities Register (PPSR). In an attempt to identify such security interests the administrators undertook the following:
· Wrote to all creditors who had an interest recorded against the companies on the PPSR requesting each creditor to provide details of any security interest held. Approximately 80% failed to respond and many of the responses received did not adequately particularise the equipment or the security agreement under which the security interest was said to arise.
· Wrote to 12 financiers who appeared from the books and records of the company to have a secured claim in respect of the plant and equipment.
· Caused an advertisement to appear in various newspapers across Australia.
· Sent an email to 3,000 creditors requesting that they advise of any claims in relation to the plant and equipment.
The administrators claimed that given the level of generality of many of the registrations on the PPSR and the existence of many transitional security interests that were not registered, it proved extremely difficult for the administrators to rely upon the PPSR for the purpose of identifying property that was subject to third party security interests.
Further, as a result of the administrators’ examination of the available books and records, approximately $2 million worth of assets belonging to third parties were identified, leaving approximately 77% of the total plant and equipment “unclaimed”.
Given the ongoing cost to store and maintain the plant and equipment, and the efforts undertaken to establish the existence of all claimants, the administrators sought directions that the administrators:
· Place an advertisement in the Australian newspaper advising of the proposed auction of the unclaimed plant and equipment.
· Instruct Grays Auctions to conduct the auctions.
· Hold the net proceeds of sale in a separate escrow account for 3 months
· Upon completion, write to all known creditors advising of the realisation of the assets and the escrow period.
· After 3 month period apply to the proceeds of sale in the ordinary course of the administration.
Yates J granted the relief and was satisfied that the administrations faced genuine and substantial difficulties in identifying the items of plant of equipment that may be subject to a security interest. The court was further satisfied that the administrators took a number of steps to attempt to clarify the security interests.
This case illustrates the difficulties which can arise when security interests registered on the PPSR do not adequately identify the property which is secured and the ability of the court to make directions of the sale of “unclaimed” property.
Should you wish to discuss any aspect of the PPSR, please do not hesitate the directors of our Insolvency and Corporate Restructuring Group:
Jeffrey Brown 9806 7446 jeffreyb@matthewsfolbigg.com.au
Stephen Mullette 9806 7459 stephenm@matthewsfolbigg.com.au
