On July 15 at Dartbrook Commercial Pty Ltd’s first meeting of creditors, administrator and chairman Tim Heenan told those assembled: “The Receivers and Managers have also advised that mining production and processing have continued with the support of management, employees, contractors, and suppliers”.
This week receivers Ben Campbell and David McGrath from FTI Consulting were in court, defending proceedings brought by one of those suppliers after it discovered Campbell and McGrath think “support” flows one way.
The plaintiff in the proceedings commenced last month in the NSW Supreme Court is Wyong-based Mine & Tunnel Constructions Pty Ltd (MTC), which has two critical pieces of underground mining equipment on site and an unperfected security interest in the machines on the PPSR.
To rectify its parlous situation MTC must perfect the registration. Doing so will potentially deny Campbell and McGrath the windfall gain they’re currently enjoying by not paying for use of the equipment as they pursue a sale of the mine and expansion approval from the NSW Government.
But before perfection can be attempted MTC requires the court to grant it leave to undertake the exercise.
Whilst one continuous miner’s registration was made in time on the PPSR, it was not registered as a Purchase Money Security Interest (PMSI). The other machine was not registered in time or as a PMSI.
Vitol Asia Pte Ltd, the secured creditor and commodities trader that appointed Campbell and McGrath has an ALLPAP security interest. But as the court heard on Wednesday, its an ALLPAP “with exceptions”.
If MTC can perfect its registrations as PMSIs the receivers can no longer claim the machines vest with the company and will become liable for the equipment rent they’ve so far refused to pay totalling almost $600,000.
Unsurprisingly Campbell and McGrath are opposing MTC’s application and on Wednesday afternoon the parties were still slugging it out before Corporations List judge Ashley Black.
Whilst Dartbrook’s administrators are taking no part in the proceedings its worth noting that Deloitte duo Tim Heenan and colleague Richard Hughes came to the appointment having entered into a $400,000 funding deed with the receivers after already billing $125,000 for pre-appointment accounting and other advices sought by the Dartbook group’s lawyer and appointment referrer Scott Standen of GRT Lawyers on April 10.
The hearing is scheduled to resume on Monday at 2:00pm.
Further reading:
it has been the case with all relevant security interest recorded by way of perfection – assuming perfection is not by way of possession, that a security interest over “property” which has not been perfected is not effective against the company concerned upon the appointment of an external administrator – without of course orders of a court of competent jurisdiction. Any interest held by the secured creditor, upon the relevant event occurring vests back in the company and therefore is able to be held by a perfected security interest holder. The position therefore of the receivers and managers would appear to be reasonable. Whether Justice Black makes an order permitting perfection will depend upon the facts that are put before him and all other relevant issues associated with the exercise of the relevant judicial discretion.