The Personal Property and Security Act 2009 (Cth) (“PPSA”) came into effect on 30 January 2012 (“the Act”). The Act caused a major overhaul of the way personal property is secured in Australia.
Of particular note is the effect the Act has on the enforceability of Retention of Title (“RoT”) Clauses.
RoT clauses are often used by suppliers to retain ownership of or title to goods until the buyer makes full payment. The Act now requires any RoT interests to be recorded on the PPSA register.
The receivers of Wow Audio Visual Superstores Pty Ltd trading as Wow Sight and Sound are the first to test the RoT provisions of the Act.
Recent reports indicate that receivers for Wow Sight and Sound will only recognise those RoT interests that have been registered on the PPSA Register.
Those suppliers who have distributed stock to Wow Sight and Sound on RoT arrangements, and have failed to register their interest on the PPSA Register could be left unprotected and unsecured. That unsecured stock will be sold by the receivers to pay the company’s secured creditors.
The financial effect on the unregistered suppliers could be devastating. They have potentially lost their right to thousands of dollars worth of stock, and may not recover anything in return.
Don’t let this happen to you. If your business relies on RoT clauses, this serves as a warning to review your contracts and register your interests before it’s too late.
We strongly recommend that any client who currently has some interest registered over personal property to consider the following:-
- Review your current securities.
- Check whether your registered securities will be transferred to the new PPSR.
- Contact us should you require any assistance or are unsure about the process.
If you have further questions relating to Personal Property and Security Act, please contact Attwood Marshall on 07 5536 9777 or email email@example.com.