Personal Property Securities Register

Posted on.
By Watkins Tapsell.

The Personal Property Securities Act which changed the Law regarding Retention of Title, trading and payment for personal property, commenced in January 2012. It is now almost 18 months since it started and we are seeing the results of people not acting quickly enough to protect themselves.

Take, for example, our client who provides goods and services to a number of distributors on credit. The distributors also hold a number of items on display for sale. One of the distributors was having financial difficulties and started making payments later for the goods it was selling for our client. This meant that the debt owed to our client was gradually increasing. There were also goods on display and able to be sold.

The distributor ultimately went under and had a liquidator appointed. The liquidator was able to hold all of the goods that had been provided by our client notwithstanding that there was a Retention of Title provision in the Supply Agreement with the distributor. The liquidator was appointed before our client had registered their interest on the Personal Property Securities Register (PPSR). Our client did not have any security and could not recover the goods that they had provided to the distributor on credit. They then joined a long queue of unsecured creditors.

The PPSR, which was established under the Personal Property Securities Act, permits registration of interests including where goods have been supplied on credit. Registration is a process carried out electronically, and once you know the process it is relatively straight forward. If you get it right and do it at the right time then you get ‘super priority’ for goods supplied on credit that have not been paid for. In other words you may be in front of the long queue of unsecured creditors and even at the front of the line of secured creditors. You may also be able to recover your goods that have not been sold and the proceeds of sale of any of your goods that have been sold.

It is important to register as soon as you arranged to supply goods as this gives you security. Supply of goods includes a lease or licence to someone or any other interest in personal property. The time of registration, and those who have registered before you, affects your ability to recover and which other suppliers are competing with you for payment if the distributor or client of yours goes under. In other words, how close to the front of the queue of secured creditors you are.

1. Review your terms and conditions of trade. You need a legal right to register your interest.

2. Register your interest over the people/companies to whom you supply goods, in the correct way and at the correct time.
Notify the person over whom you have registered as required under the Act.

3. Check who is registering over you. A search can be conducted on the PPSR to check this. If there are people who have registered incorrectly over you either because they have no interest or the interest they have registered is wider than that which they should have registered, then you may be in the position to require them to remove or modify their registration.

4. Speak to our experienced Commercial Business Team at Watkins Tapsell to assist you with this complex area of the Law and the processes involved.

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