Will some of Forge’s creditors be $50 million richer?
On 26 July 2014 Amanda Saunders of the Sydney Morning Herald reported that KordaMentha, receivers for the Forge Group, were issuing proceedings in the New South Wales Supreme Court seeking control of four gas turbines from APR Energy (“APR”), which had leased the turbines to the Forge Group for power station construction.
She stated that the reason for the proceedings was that APR had failed to register its security interest in the turbines under the Personal Properties Securities Act 2009 (Cth) (“PPSA”), such that the receiver would argue that all assets not registered under the PPSA vested with Forge, with the potential windfall to Forge’s creditors.
A search of the New South Wales Supreme Court list identified that Mr Justice Hammerschlag was listed to provide directions on Friday, 15 August 2014 in relation to the matter (case number 201400226778), and the outcome of the case is awaited with much interest.
Michael McCagh: PPSA and Construction Projects, Canberra Law Review (2012) 11(2), 167 at 175], wrote that section 12(3)(c) of the PPSA provides that a lessor has a security interest in an equipment lease, which by virtue of section 14(1)(c) of the PPSA is a Personal Money Security Interest (“PMSI”), providing it is not a sale and leaseback to the seller [s14(2)(a) of the PPSA], which then takes priority over non-PMSI registered Security interests [ section 62(2) of the PPSA ] .
However, Registration is the key, and the PPSA has taken over earlier regulation of security interests in relation to personal property by means of an online register, and each asset costs $16 to register. As Amanda Saunders said, the Court may find that the failure to register, “could turn out to be a $50 million mistake.”
We will follow up with the outcome of this case when it is reported, but in the meanwhile please contact us on (07) 3220 0299 about registration under the PPSA in case you have any questions.