Leasing company leases vehicle to retail business for use as equipment

Case study
This case study does not cover every step of the registration process, but instead highlights some of the key questions.
Comic depicts person unloaded with ton of cupcakes pouring out from van.

Notes showing Financing statement and Verification statementUtes-R-Us Pty Ltd leases a delivery van to Cupcakes-2-U Pty Ltd for four years. Both parties sign the lease. Before delivery of the vehicle to Cupcakes, Utes-R-Us registers a financing statement on the PPSR.

Six months later, Cupcakes-2-U goes bust. Utes-R-Us gets their van back, while other similar creditors who didn't register their interest on the PPSR have to line-up with other unsecured creditors and will only get a small portion of what they were owed.

Create Secured Party Group: a secured party group is needed to complete a registration

a

Secured party: Organisation including partnerships with an ABN

Secured Party Details - this is the organisation identifier — insert Australian Company Number (ACN) of Utes-R-Us

Utes-R-Us is an incorporated company which means you must use the ACN, not the company name or ABN. The ACN is the number ASIC (Australian Securities and Investments Commission) issues when a company is incorporated.

b

Display input fields for Secured party group contact details showing Recipient name, Email, Mailing address, Suburb, State, Postcode and Country

Address for service — insert the registered office and email address of Utes-R-Us

This address allows searchers of the PPSR to contact the secured party. It will be the address details entered when setting up the SPG. The email 'address for service' receives the verification statement with registration number and token unique to that registration number.

Create a registration:

c

What is the collateral type? Commercial.

Collateral type — select commercial

As the van is used to further a business it is commercial property. Note: in this case study Utes-R-Us could register against Cupcakes-2-U which is the customer/grantor without specifying the specific motor vehicle. However, if Utes-R-Us choose this option it will be disadvantaged, should Cupcake-2-U on-sell the van because the third party buyer of the van would 'take free'. For more information about taking free, see third party protections, section 4, page 36 of the Business Guide.

d

Screenshot about case study - descriptions as follows

Collateral class — select motor vehicle

Motor vehicles are a separate collateral class for registration purposes. Note: Utes-R-Us need to select they are registering against a specific motor vehicle and enter the serial number.

e
f
g
h

Description as per text in heading e, f, g and h.

e

Registration period — for this case study 5 years has been selected

For serial-numbered property, registration can be for any period up to 7 years. In this case, the lease is for 4 years so the secured party may have chosen to ensure that the registration is in place for just longer than the lease.

f

Purchase money security interest (PMSI)? tick the box

The lease is for more than one year and so is a PPS lease, which is a super-priority purchase money security interest (PMSI). For more information about a PMSI, see section 4, page 36 of the Business Guide.

g

Inventory? leave box blank

You must state in the case of commercial property whether or not it may form part of the inventory of the grantor. As this is a delivery van to be used in Cupcakes-2-U's business, it is not 'inventory'. For more information about inventory, see section 4, page 43.

h

Proceeds? for this case study, this should appear as automatically ticked and the words all present and after acquired property then displays in the text box below

As the 'proceeds' box is automatically ticked this enables Utes-R-Us to continue their security interest into the proceeds of any unauthorised dealings with the van Cupcakes-2-U may enter into, while it has possession, under the lease. The default type of proceeds, all present and after acquired property, means Utes-R-Us is protected if Cupcakes-2-U deals with the van. For more information about proceeds, see section 4, page 40 of the Business Guide.