A common company structure established by an accountant or a solicitor is to have a holding company or a trust that retains ownership of all plant and equipment and a separate trading entity that uses it.
The goal is to protect the assets from being seized if the trading entity is financially attacked or goes into liquidation or bankruptcy.
If this should occur, the accountant or solicitor would instruct the company director to retrieve all of the trusts equipment and start a new business and leave the trading entity to be liquidated by the administrators.
This would have worked under the old regime.
However since the introduction of the Personal Property Security Act (PPSA), the holding company, or trust, must now secure entitlement over plant equipment by registering its interest on the PPSR (Personal Property Security Register).
Otherwise it will be required to return its assets to the administrator.
At Australian Credit Risk Management we have developed a chattel lease agreement that is unique to us and hence to our many clients.
It allows us to register the entire asset list of a holding company with just one registration and is written in a way that allows for the asset list to be maintained in the trust’s own system without the need to continuously modify the registration.