SIZE DOESN’T MATTER - Whether dealing with big or small companies, PPSR Registration is vital

Over the last 12 months our office has given advice to a number of creditors with respect to various issues arising from registrations, or crucially the failure to do so, on the Personal Property Securities Register (PPSR). Most recently in relation to the collapse of Dick Smith Holdings Ltd and its associated entities. As such, we felt a timely reminder should be sent regarding the need to register interests on the PPSR.

We stress that the size of the business you deal with does not matter. That is, irrespective of whether you are dealing with a sole director/family owned and operated company or a large national organisation, it is essential that you take steps to secure your interest in the goods you are suppling to those companies, especially when doing so on credit terms.

Perfected registration must be in place over any goods supplied on credit, otherwise if a liquidator is appointed to the company you supplied, then by virtue of subsection 267(2) of the Personal Property Securities Act 2010, any goods with unperfected security will automatically vest with the liquidator, from the date of the appointment of the liquidator. Reliance on retention of title clauses will no longer be valid to claim title on goods and further an attempt to repossess those goods may result in action being taken against you by the liquidator.

Questions to ask yourself:

1. Do I have updated and/or adequate security provisions in my contract’s terms and conditions?; and

2. Have I properly registered my interests on the PPSR?

Generally, where repeated supplies of goods are being made to the same company, under the same terms, then you may only need to make a single registration on the PPSR against that company. That is, you do not need to make a registration for each supply of goods. This is because a single registration is valid for one or more security interests. However, we emphasize that an initial perfected registration is essential to be able to rely upon that registration for multiple transactions.

For further information or should you require any assistance in reviewing and/or amending your contract’s terms and conditions and PPSR processes, please contact John Fairgray (Partner) jfairgray@bbwlaw.com.au or Luis Ormazabal (Associate) lormazabal@bbwlaw.com.au on 02 9210 9100.

This is general commentary and should not be relied upon as if it were legal advice. No part of this publication may be reproduced by any process without written permission from BBW Lawyers.