If your interest is not protected on the Personal Property Securities Register (the PPSR), then an insolvency practitioner can sell your goods or avoid repaying your debt.
Do you sell stock, equipment or other goods on credit? Do you hire items out on lease? Do you allow people time to pay for your services? Do you lend money?
If you do any of these things and you aren’t registering your transaction on the Personal Property Securities Register (the PPSR) you are at risk.
The PPSR is a digital register which publicly records security interests in goods, vehicles and other personal property.
If you supply or lease goods on credit and you don’t register a security on the PPSR before you supply the items, if your customer becomes insolvent then you may be left high and dry – an unsecured creditor with no right to repossess your items or recover payment. This is because the PPSR is the single source of truth for who owns (or has an interest in) personal property.
The same applies where you lend money. If you haven’t registered a security over the borrower’s business property, you are an unsecured creditor – ranking behind those who have registered on the PPSR.
Unfortunately, the reality is that many businesses in Australia are feeling the economic pinch – meaning insolvencies may increase when the Government Covid-19 support ends.
If your interest is not protected on the PPSR then an insolvency practitioner can sell your goods or avoid repaying your debt.
It is critical that your terms of trade give you the right to register on the PPSR – and that you follow through with doing so. The PPSR can appear daunting, but is actually quite quick and cheap to use.
If you would like to understand your options in respect of the PPSR, ARA members are reminded they have access to a free 30 minute consultation with the ARA’s legal partner, Hitch Advisory which can be used to discuss this issue. For the wider retail community, you’re always welcome to reach out to us, we’re always happy to help.