Posted on December 15, 2018
We wish to reiterate the importance of registering your security interests on the Personal Property Securities Register (PPSR) as numerous individuals and businesses continue to be affected by not properly registering their assets.
Superannuation assets can also be caught out as proven by the Pozzebon case in August 2014.
As trustees of their super fund in December 2013, the Pozzebon Family agreed to lend $250,000 to Australian Gaming and Entertainment Limited (AGEL), which was in the process of preparing to list on the ASX.
A loan agreement was signed, security was granted in the form of a personal property security interest in all of AGEL’s assets, and the money was handed over. After this transaction took place, the Pozzebon family didn’t register this particular security interest on the PPSR.
On 9th May 2014, AGEL announced it wouldn’t be proceeding with the public offer. Several days following this decision, the Pozzebon family registered the security interest granted by AGEL in December 2013.
On 26th May 2014, AGEL appointed administrators, who later became liquidators. When the administrators were appointed, AGEL had $860,000 in cash reserves. The liquidator’s position was that the Pozzebons interest in those funds was extinguished when the administration commenced, due to the late registration of their super funds security interest.
Corporate security interests need to be registered within the relevant timeframe (20 business days), according to Section 588FL of the Act. Any security interests not registered within this timeframe are vulnerable if a company later becomes insolvent.
Given the relatively insignificant cost of only $16 to register assets under the Personal Property Securities Act (PPSA) (excluding any legal fees required in the transaction), this was an expensive oversight for the Pozzebon family, resulting in a loss of $250,000 from their Superannuation Fund.
Why you should register your assets on the PPSR
If you provide finance, supply, lease, hire or loan assets to third parties, we strongly recommend you obtain appropriate advice and register your ‘security’ interest in the assets to protect your position. Failing to properly register may result in the loss of your assets in the event of insolvency, as was the case of the Pozzebons and their Superannuation Fund.
Posted on December 15, 2018
In February this year the mining services company, Forge Group, went into receivership owing $800m.
The firm’s receivers Korda Mentha are going to the Supreme Court of NSW to try to wrest control of four gas turbines owned by US giant APR Energy.
APR was leasing the turbines to Forge Group for power station construction work but did not register the assets under the Personal Property Securities Act (PPSA) which came into force in early 2012. This could turn out to be $50 million mistake. If successful, the receivers will deliver a $50 million windfall to Forge’s creditors.
Don’t make the same mistake! If you have assets held on the premises of another party make sure that you register your interest now.
It costs just $16 to register assets but that can increase to $2000 if legal fees are included. It is well worth it if you have assets worth millions at stake!
“The Act reduces the concept of property ownership to an interest” says Perth based insolvency expert Richard Johnson who ran a case under the PPSA for KPMG, the creditors of collapsed BEM Equipment, against Spiers Earthworks. The Supreme Court of WA ruled in favour if KPMG.
Our message to you is: are your assets under threat and how prepared are you to legally protect them?
It is not too late to start now! For more information about the PPSA, read our articles published in February “Easy come, easy go: The PPSR & your business” and March “Personal Property Securities Register (PPSR) – Are you ready?”
(Quotes from SMH article written by Amanda Saunders, July 26-27)