An email recently hit my inbox from Dominion Group (thanks John Wood) which I thought I would share with you. You may have encountered them from time to time if you work in the Insolvency industry as they do a lot of valuation and auction work of assets owned by distressed entities (Among the other work they do).
This email discussed the potential recovery associated with the registration fees paid by the company to the various state road registration bodies in relation to the vehicles that they own. As you would be aware, when you cancel a vehicle’s registration, a refund for the unused portion of that vehicle’s 12 month registration period will be issued. As the company paid for the registration, this is an asset of the estate rather than a benefit that should flow to any financier secured over this vehicle.
Dominion note that, upon appointment, a search of vehicles registered with the company or individual is performed by the Insolvency Practitioner with VicRoads, Roads & Maritime Services (NSW) or relevant Government department in other states. It is at this time, using the schedule of registration fees listed on each of the relevant Government websites, that Dominion recommend that you calculate the unused registration remaining on each of the vehicles relating to your administration. This will then provide you with a fairly close approximation of what refund should be coming your way in the event you send these vehicles to auction (or disclaim the leases associated with them and return them to the financiers to sell)
Should these vehicles be leased, this potential refund provides you with leverage when dealing with the finance company to either adopt or terminate the lease. By bringing this issue to their attention and the benefit to them (through selling a registered vs unregistered vehicle) if they make a payment to you for the unused portion. Obviously, in many instances, by selling a vehicle with registration this should bring a higher price at auction than a vehicle without. If the financier is unwilling to do a deal on the refund potentially claimable, then it is open to you to cancel the registrations and obtain the refunds from the relevant registration organisation in your State.
To highlight this issue, Dominion highlight the following case-study
Case Study #1.
Royal Taxis was in administration and being controlled by Andrew Beck of RSM Bird Cameron.
On first inspection, the administrator was seriously considering whether they should take the appointment as the motor vehicles were all leased and the taxi licenses were owned by a third party.
The bulk of the vehicles were sold with the finance companies making a modest contribution to the administrator’s costs.
However, in what was a windfall result, the refunds available from VicRoads for the unused portion of registration returned $94,500 to the administrator.