Local companies have literally lost millions of dollars of equipment overnight in the collapse of Caledon’s Cook Colliery mine. This is a scary reminder of the importance of correctly registering on the Personal Property Securities Register. It is a cut throat system and ownership means nothing!

We see many mining contractors that try to diligently register, but make simple errors which invalidate the registrations.

The top 5 mistakes we see made are:

1.Registering over the wrong party: You NEED to know who the true hirer is. Is it Joe Bloggs? Or Joe Bloggs Pty Ltd; or Joe Bloggs Pty Ltd as trustee of the JB Trust; or Joe Bloggs in partnership with John Citizen?

2.Using the wrong identifier: There are strict rules about which identifier you must use for the relevant Grantor – ie. ACN or ABN;

3.Not ticking the “PMSI” box appropriately. If you tick the PMSI box in a registration when the nature of the security interest is not a Purchase Money Security Interest (PMSI), then the whole registration is invalid!

4.Not registering within the correct timeframes to ensure priority and validity:

For example, to obtain “super priority” as a Purchase Money Security Interest, you need to register:

a) If the Collateral (ie equipment) is inventory – BEFORE the supply;

b) If the Collateral is not inventory – within 15 business days of the supply;

Also, if hiring to a Company, you need to register within 20 business days of the written agreement. Otherwise, if the Company goes into liquidation within 6 months, your equipment will go to their creditors!

5.Not ensuring perfection over the “chain” of registration:

You hire your equipment to A and register on the PPSR properly over A. Unbeknown to you though, A cross-hires/gives possession of your equipment to B. A does not register over B.

B goes into administration…creditors take YOUR equipment!!

Unfortunately in this scenario, because A has not registered over B, the “chain” of registration has not been perfected and so, the equipment is not necessarily protected by your registration over A.

This is a huge practical issue in the industry. We have some practical tips on how you can manage this risk.

Registering on the PPSR is a very complex process and requires legal knowledge of the system.

It is essential to obtain legal advice from a lawyer experienced in the PPSR regime and ensure your registrations are completed properly. Otherwise, it may be you that I am writing about in the next edition, having lost equipment to creditors!

Suzanne Brown

[email protected]

07 4963 0820

Other Groundbreaker articles you may be interested in:

PIMS Group – Positioning for Success
The New Labour Hire Law, Don’t Be Caught Out!
Are You at Risk of Losing Millions Overnight?
Protecting Your Invention or Great Idea
Terms and conditions go hand-in-hand with owning a business
Residential real estate overview