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Scenario

Mr Nguyen has incorporated Healthy Eats Limited (HEL) to operate a new restaurant he is opening. HEL borrowed a large sum from Auckland Bank secured under a General Security Agreement (GSA). The GSA was signed, the overdraft made available and a financing statement registered two years ago. The GSA gives the Bank a security interest (SI) over all the company's assets both present and future and, also, gives the Bank the power to appoint a receiver. HEL also borrowed $20,000.00 from a finance company for the purpose of purchasing a new commercial high quality espresso maker. The loan was secured by an SI over the espresso maker. The money was advanced by the finance company in February of this year and the espresso maker was bought and delivered immediately. A financing statement was registered at the Personal Property Securities Register by the finance company in March.

HEL defaults under the GSA by missing several payments to the Bank. The Bank appoints a receiver, Jessica, immediately to take control. Mr Nguyen believes that HEL can be made profitable again and tells Jessica this. However, Jessica forms the view that HEL is no longer profitable and should be shut down and the assets sold to repay the bank. She contacts the finance company and asks them to send a copy of their signed security agreement with HEL and she is surprised when they dont send it straight away. After several more requests Jessica starts to suspect that the finance company omitted to obtain a signed security agreement when the loan was advanced.

Question:

Briefly outline to Jessica her role as receiver of HEL including to which person or persons she owes duties. Advise Jessica in respect of who has priority over the espresso maker under the Personal Property Securities Act 1999 including what more information is needed if any.

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