The Supreme Court of Victoria Court of Appeal recently handed down its decision in Dura (Australia) Constructions Pty Ltd (ACN 004 284 191) (In Liquidation)(Receivers and Managers Appointed) v Hue Boutique Living Pty Ltd (Formerly SC Land Richmond Pty Ltd) (ACN 106 117 506) & Ors [2014] VSCA 326, which dealt with the issue of whether a payment into court is a security interest for the purposes of the Personal Property Securities Act 2009 (Cth)(PPSA).

Australia is a member of both the Basel Committee and the G20 and in November, Brisbane was host to the G20 Leaders' Summit.

The agenda focussed on increasing global growth, jobs and economic stability.  Despite the positive G20 intentions, David Cameron was quoted as saying "red warning lights are once again flashing on the dashboard of the global economy".

The respondent in this matter, Mr Culleton, owed Macquarie Leasing Pty Limited (Macquarie) a debt arising out of two chattel mortgage agreements.

Macquarie obtained judgment against Mr Culleton in the amount of $94,304. The judgment debt was not paid and Macquarie petitioned for a sequestration order to be made against Mr Culleton’s estate.

Macquarie served the Bankruptcy Notice on Mr Culleton by affixing it to a padlocked gate at his last known address.

In the decision of Re Arcabi Pty Ltd (Receivers & Managers Appointed) (in liq) [2014] WASC 310 the court considered:

• the application of the Personal Property Securities Act 2009 (Cth) (PPSA) to goods being held on a bailment or consignment basis by a company in receivership and liquidation; and
• the receivers’ rights to be indemnified for costs and expenses related to investigating and protecting the property of third parties.

What is the significance?

Key Points:

A forbearance arrangement is a useful instrument to ensure that both the lender and the customer are aligned on the proposed turnaround or workout.

The Federal Court affirms that a secured creditor may be subrogated to the entitlements of priority creditors, to the extent that the Receivers’ payments to priority creditors have diminished its security.

When a Bank appoints a receiver under a charge, section 433 of theCorporations Act 2001 (Act) requires the proceeds of certain chargedassets to be used by the Receiver to satisfy certain employee entitlementsin priority to the Bank. Section 561 of the Act has a similar effect where acompany is in liquidation, but only if there are insufficient uncharged assets available.

The decision in White & Anor v Spiers Earthworks Pty Ltd (SE) & Anor has examined the vesting provisions contained within the Personal Property Securities Act 2009 (Cth) (PPSA) and confirmed their effect where one party asserts to have an unperfected Security Interest at the time of an event of insolvency according to section 267 (2) of the PPSA.

Background

A recent decision of the Supreme Court of Western Australia highlights the importance of properly registering security interests under the Personal Property Securities Act 2009 (Cth) (the Act).

The recent WA Supreme Court decision in White v Spiers Earthworks Pty Ltd [2014] WASC 139, highlights the consequences of not registering a security interest under the Personal Property Securities Act 2009 (PPSA) when a company becomes insolvent.

The case also provides guidance about certain PPSA savings provisions, the treatment of transitional security interests and the primacy of PPSA over pre-PPSA legislation.

BACKGROUND