KordMentha Pty Ltd (“KordaMentha”) has issued proceedings in the Supreme Court of NSW, claiming that four gas turbines worth $50 million leased to Forge Group Limited (“Forge“) by APR Energy PLC (“APR“) may be sold to recover debts as the lease was not registered on the Personal Properties Security Register (“PPSR“). This is the largest case under the Personal Property Securities Act 2009 (Cth) to date.
In early 2014, ANZ appointed KordaMentha as receivers and managers of the mining services firm, Forge. Of approximately $500 million of secured debts, an estimated $200 million was owed to ANZ .
While the turbines were always intended to remain the property of APR, KordaMentha argue that as the turbines were not registered on the PPSR, they vested in Forge meaning KordaMentha is entitled to sell them to repay debts to ANZ and any other creditors.
At this stage, it is unclear as to why the gas turbines were not registered on the PPSR.
We will update further when the outcome of the case is known but the circumstances of these proceedings serve as a strong reminder of the potentially significant implications of failing to register a security interest on the PPSR.
We will also report on the outcomes of the statutory review of the Act. This is underway with an interim report being published in July (available at http://www.ag.gov.au/Consultations/Documents/ReviewOfThePersonalPropertySecuritiesAct2009-InterimReport-accessible.pdf ) and the final report due in January 2015.