The Personal Property Securities Register first came into being in 2012, but on January 31 this year, the transitional period around its implementation will end, meaning all businesses will have to register their security interests on the register to be sure to keep them.
“It’s been PPSA-lite for the past two years,” says liquidator Cliff Sanderson of Dissolve. “At the end of this month, it’s fully operational. That means there are no provisions to get you out of jail free.”
The PPSA is a register of security interests. If a business goes under and its creditors have not secured their interests on the register, those creditors risk having their security being available to all unsecured creditors, and not just returned to them.
Businesses with pre-existing relationships with other businesses have been able to avoid using the PPSA for the past two years. But from February 2014, everyone has to use the PPSA or risk losing their securities.
The register should theoretically give businesses more security in recovering their assets in case another business goes belly-up.
But many businesses don’t know about the register, and in the past two years, several have found themselves unable to access their securities in liquidated businesses.
For example, when Jackson’s Rare Guitars collapsed in Sydney in 2012, 100 guitar sellers were left empty-handed after they provided custom guitars for sale to the store. Many had not registered their guitars on the register, and so were told they wouldn’t get them back (the administrator eventually agreed to return the guitars, worth over $1 million, saying it was the “right thing to do”).
Ignorance of the register has not held up as a legal excuse, says PPSA Protection’s Rick Nash.
“Businesses need to create PPSA compliant terms of trade, and register their interests on the register. If they do those two things, they can get all the benefits,” he tells SmartCompany.
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Myriam Robin is a reporter for SmartCompany and its sister site LeadingCompany. She has degrees in economics, international studies and journalism. She likes writing about businesses taking risks and doing new things.
