IF YOU HIRE OR LEND EQUIPMENT
Another court case regarding PPSR proves that it doesn’t matter how big your business is you can still get caught!
If you own or are financing equipment and you hire or lend this to a third party (even a friend) you could lose ownership if that third party becomes insolvent.
Unfortunately, correctly registering your interest on the Property Securities Register (PPSR) – https://www.ppsr.gov.au is no longer an option, it is essential.
In a recent court case, there is a clear winner – The Voluntary Administrators of OneSteel Manufacturing Pty Ltd (OneSteel).
And the loser? Alleasing Pty Ltd (Alleasing), a lender who lost plant and spare parts with a cost value of more than $23 million.
Whilst a Financier in this case lost their equipment the facts are frighteningly simple in that any business could lose assets under the same circumstances.
The background of the case is as follows:
- In 2014, Alleasing leases to OneSteel assets with a value of $23 million.
- Alleasing performs a Personal Property Securities Register (“PPSR”) registration against OneSteel using its Australian Business Number (“ABN”) as the identifier. This Registration is done to show that Alleasing has an interest in the goods they own on the PPSR.
- On 7th April 2016, OneSteel appoints Voluntary Administrators.
- On 10th June 2016, the Administrators advise Allleasing that they will be keeping their equipment as their registration is invalid. They should have used the Australian Company Number (“ACN”) and not the (“ABN”).
- On 31 January 2017, the NSW Supreme Court confirms that OneSteel has lost its assets to the Administrators.
As the company OneSteel Manufacturing Pty Ltd was the entity that hired the assets, then the registration should have been performed against its ACN and not it’s ABN. That’s all that was incorrect to lose $23 million!
Since the commencement of the PPSR, we have advised that when registering a company, you should use its ACN and not it’s ABN. The heart of the issue is that anyone searching the PPS Register using the correct identifier (it’s ACN) would not have been aware of Alleasing’s registration. As a result, the Court ruled that Alleasing’s registration was defective and seriously misleading.
The harsh lesson learnt – a business must register a customer by an ACN if it has one. A company has an ACN.
How do you seek advice?
Call us and have a chat and if required we can introduce you to EDX who are specialists in all matters relating to the Personal Property Securities Register. Further details are available from their website – www.edxppsr.com.au.