BRISBANE – october 2018
Presentation to delegates on PPSR Renewals
melbourne – OCTOBER 2018
Exhibition and Conference Event
brisbane – march 2019
10 points in one day presentation to law delegates on PPSA Enforcement
What company is your case study about?
Terex had supplied about $800k worth of parts to Force Access when Force Access went bust.
What PPSR assistance did this customer need help with? What was their problem?
The IP rejected the claim as “they couldn’t identify which parts were in which machines”. Terex was dismayed at the rejection.
What were the repercussions this customer experienced? If they did not experience any repercussions, what potentially could have happened?
Terex could have accepted the IPs decision that their claim was rejected. They would have lost $800k.
What advice were you able to give them? What was your proposed recommendation?
Terex contacted Lynne Walton to ask if the rejection of their claim was justified. Lynne’s response was “Absolutely not”. Terex engaged Lynne to represent them in the claim. Lynne had two valid arguments and one strategy to win.
Argument one – Force Access operated a rental fleet of EWPs. The parts debt was less than 4 months old. The shortest part life was a filter which was guaranteed to last for 6 month. Most parts lasted up to 5 years. Therefore all parts not paid for were still in the rental fleet.
Argument two – PPSA states that a PMSI supplier retains title and interest to accessions (the parts) until the asset is sold ‘in the ordinary course of the customers business’. The IP sold the rental fleet to Coates Hire. Lynne’s valid argument was that the sale wasn’t ‘in the ordinary course of business and therefore title to the parts remained with Terex and didn’t pass to Coates Hire. The IP suggested we ‘try going to court’.
Our recommended strategy was quite different as often legal threats mean very little to IPs. We advised the IP that we would be advising Coates Hire that they hadn’t bought our parts when they purchased the rental fleet. Not surprisingly, the IP offered to settle the matter. Terex was delighted with the outcome.
How long did your PPSR recommendation take to implement?
The claim was settled within two weeks.
How does your customer manage their registrations now?
The customer uses Access PPSR’s system SIIP to manage its registrations.
Is there anything else that is important to this case study that you’d like to add?
It is important that secured parties don’t accept the rejection of a claim without proper consultation with a PPSA specialists like Access PPSR or a lawyer competent in PPS law.
What company is your case study about?
SteelForce had supplied $400k worth of steel to CR Steel in the lead up to insolvency.
What PPSR assistance did this customer need help with? What was their problem?
The IP rejected Steelforce’s PPSA claim as they “couldn’t identify which steel had been supplied by Steelforce and which by other steel suppliers”.
What were the repercussions this customer experienced? If they did not experience any repercussions, what potentially could have happened?
Steelforce were very annoyed at this because they had only delivered $100k of the balance outstanding the day before the IP appointment. They were also extremely concerned about a potential unfair preference claim being suggested by the IP for millions of dollars.
What advice were you able to give them? What was your proposed recommendation?
Lynne Walton happened to meet with Steelforce on another matter when the claim was discussed. EDX suggested that the rejection of their claim was arguable particularly in light of the delivery of $100k worth of stock the day before insolvency. Steelforce engaged Lynne Walton to represent them in the claim. Lynne had two valid arguments and one strategy to win.
Argument one – Lynne obtained an affidavit from a former employee of CR Steel confirming that the steel took circa 3 months to be processed through its system before sale or construction etc. The debt was no more than 4 months old. On the balance of probability, a significant proportion of the steel was still in course and the remainder was highly likely to be in debt created from the sale of the steel. Steelforce could quite reasonably claim the full amount of the debt as a PMSI which should be accepted and settled.
Argument two – related to the unfair prefence claim. S588 of the Corporations Act states that the supplier being paid must have been preferred over the general body of unsecured creditors. PPSA classes a PMSI holder as a secured creditor which means that he could not have been preferred over the unsecured creditors by being paid as he does not belong to that class of creditor being a secured creditor. EDX’s argument was that a preference claim did not exist. The IP suggested that ‘apportioning the stock and debtors between the steel suppliers would be too time consuming and difficult’.
Our recommended strategy was to suggest to the IP that we were contemplating amalgamating our claims with those of the other steel suppliers. This was a bluff but they didn’t know that. The IP offered to agree the matter on the basis that it made a full and final settlement payment to Steelforce for the stock and confirmed that it would not pursue any unfair preference payment. Steelforce was delighted with the result.
How long did your PPSR recommendation take to implement?
The claim was agreed and settled within a month.
Is there anything else that is important to this case study that you’d like to add?
It is important to understand your enhanced ROT rights under PPSA and be prepared to enforce them with vigour.
Providing PPSA consultancy and enforcement advice and PPSR registration services to clients in all sectors throughout Australia.