Repossessing plant and machinery in marginal locations

June 05, 2013 0 Comments Bloggies by Graham Penrose

Jurisdictions vary wildly with respect to the protection afforded to creditors when they seek to enforce their rights regarding missing, mis-appropriated or overheld plant and machinery assets. Normally if the original lease or loan agreement was executed in the jurisdiction in which the repossession is sought or the asset resides then the challenges faced are less acute - but not always. The difficulties arise in particular when the asset has been moved out of the original jurisdiction of purchase. In cases where this has been done without the permission or knowledge of the asset owner the repossession firm in some cases can enlist the support of local police authorities or law enforcement but only if the original owner has reported the matter as a theft or has been granted a local court order that compels action by the local authorities.

A common misconception is that the law enforcement community are obliged to assist in cases where this is not the case. It is normally their concern to ensure that trespass by the repossession agent on private property does not occur during the attempt to repossess assets, that no damage is done to private property when trying to gain access to machinery that has been positively identified or to assess claims by debtors that methods have been used which are unfair or even threatening. The last accusation by debtors when repossession of the plant and machinery is imminent is used often times to avoid this inevitability and can result in an instruction by law enforcement that the matter is civil in nature and until the local courts make an assessment on the claims of the debtor that repossession cannot occur. These directions from local police authorities must be adhered to.

When repossessing assets even though the machine or vehicle may be within feet of the agents after months of tracking and the ownership is not disputed - if the local police authorities determine that there is any value to the claims of the debtor then all expenditure on asset tracing, surveillance and the cost of labour and equipment can be lost. Surprise is the main advantage when repossessing vehicles, plant or machinery - this pause then allows the debtor time to once again conceal or move the asset and previous investment in locating the asset is as good as valueless. Unless the asset is a high ticket item the cost justification for initiating local legal proceedings and again attempting to locate the asset if these are successful; is prohibitive.

There are also a variety of complicating factors when dealing with the un-authorised movement of high value vehicles and machinery:

  • The asset may have been sold to third party who now disputes ownership and claims that the vehicle or machine was bought in good faith;
  • The asset may have been moved to another jurisdiction and then sold and the local laws may then find in favour of the new "owner" or have a standing policy that the burden of proof of ownership is on the claimant and not the new "owner". This can be further complicated by limited access for asset sighting and inspection and normally in these cases trackers have been removed, machines re-painted and / or serial numbers tampered with.
  • In many cases over recent years insurance fraud is also a factor whereby assets have been sold to international gangs specialising in this trade, the original owner has - after an agreed period of time - then made an insurance claim and the asset has - in the meantime - been moved / sold into a jurisdiction that makes it almost impossible to retrieve either as a result of the cost or risk profile.
The business of international asset location and recovery is a complicated one and there are few providers who can offer the skills and expertise to firstly determine the location of high value assets whether vehicles or machinery; and then offer a business case for the retrieval of same including an accurate risk assessment and cost analysis. Equally as important is an awareness of the culture and legal system of the country in which the asset is now located.