The PPSA, which came into effect on 31 January 2012, has introduced radical changes to the rights of creditors and suppliers. One of these changes was to allow suppliers to register “retentions of title” on the Personal Property Securities Register (PPSR) in relation to stock that they supply. The upside to the PPSR is that suppliers are able to better protect their interests where a customer has a liquidator or receiver appointed. The downside however is that failure to register the retention of title can deprive a supplier of their rights.
The First Casualty
The reality of the PPSA has hit home in major way for WOW Sight & Sound suppliers. WOW’s receivers are refusing to let suppliers owed money reclaim their stock, preferring to sell it off at discounted prices in order to raise funds for the National Australia Bank (the secured creditor). Suppliers were told last week that unless they had registered on the PPSR they could not reclaim the stock. Suppliers are likely to lose out on recovering their stock and may not receive any of the sale proceeds given the large debt owed to the bank, who are a secured creditor.
THE MESSAGE IS CLEAR:
If you supply stock and seek to rely upon a retention of title then you must ensure you have:
- Accepted credit terms PPSA complaint with a valid retention of title clause
- Registered on the PPSR
Don’t Assume you are Registered: Missing Charges
Under the Act a new Personal Property Securities Register (PPSR) was established as the central register to record charges over all personal property (including company charges, bills of sale, retention of title etc). It was a massive undertaking to transfer the data from all the existing state and federal registries onto the PPSR. The process of migrating the register maintained by ASIC involved the data migration of over 1.5 million current company charges.
Not surprisingly, a number of technical issues have arisen. The PPS Registry has made the following announcements:
- Approximately 6000 records were not migrated to the PPSR from the ASIC Company Charges Register due to a technical issue. As ASIC cannot now migrate the affected charges, they must be registered on the PPS Register by or on behalf of each secured party (formerly called the ‘chargee’). That registration can be done at no cost up to and including 31 January 2014, and if it is done by that date the priority of the secured interest will not be affected
- Charges registered on the ASIC register of company charges with more than one chargee (secured party) were migrated to PPSR with only one secured party in the secured party group (at most 25,878 registrations affected). The proposed solution involves the re-registration of the security interests on the PPSR by the most appropriate external party, with the incorrectly migrated registrations to be discharged.
What you need to do – ACT NOW !
Step 1 – if you provide credit to a customer then you must investigate whether or not your lease agreements, credit applications, terms of trade and other commercial securities and charges will be impacted by the PPSA.
Step 2 – When dealing with third parties it is important to be able to search the PPSR to establish their credit worthiness and to discover whether interests are registered under a property that you intend to acquire.
Redchip’s PPSR solutions
We are providing fixed fee reviews including:
- Search, registration and release of security interest registered on the PPSR
- Areas of risk or concern for business owners including a review of trade in terms and conditions (including retentions of title), equipment leases and security documents.
Failure to register your interests, or search interests over third parties that you deal with, could have serious implications for your business including losing title to your goods.