26 September 2018

Be prepared for a difficult road ahead if you’ve decided to go it alone on the PPSR. There’s no doubt you’ll encounter endless obstacles and numerous potholes. You may take wrong turns and find out that one accident can lose you thousands. Check out what happened to these companies.

Some businesses choose to register on the Personal Properties Securities Register (PPSR) the hard way, by not seeking expert help. Others choose not to register at all. Here are their stories (the names have been concealed for their protection).

Company # 1: Baby clothing distributor

The company registered its largest customer (Mothercare - in Administration) but didn’t validate the customer data. They also registered the incorrect legal contracting entity.

The result was a total loss of the security.

Company # 2: Medical product distributor

This distributor made incorrect registration selections, including failing to claim a Purchase Money Security Interest (PMSI), when registering with the PPSR on its own.

The distributor also failed to enter an end date and had to pay $131.00 in Registrar’s fees for each registration (rather than the more cost-effective seven-year registration, $7.40 at the time).

Fortunately, the distributor's trade credit insurer recommended it seek expert assistance, so it didn't incur a loss. Our PPSR experts re-did the registrations correctly.

Company # 3: Agriculture equipment (including tractors) sales and hire 

This company self-registered on the PPSR and made the common mistake of selecting collateral class ‘agriculture’ – that is, secured crops and livestock – instead of ‘motor vehicles’ or ‘other goods’. This registration offers no protection for goods sold and hired.

They contacted our specialist PPSR team to help reregister them correctly.

Company # 4: Fast moving consumer goods sales 

This company failed to register its customers on the PPSR despite knowing and understanding the risks of failing to do so. This decision came back to bite them when one of their largest customers, WOW Audiovisuals, went into receivership.

In an attempt to recover their goods, the company tried to use the Transitional Provisions as a defence but were facing significant legal costs to challenge the receiver.

Fortunately, the initiation of court proceedings led the receiver to concede, and the company recovered their goods. A registration costing less than $10 would have avoided this legal battle.

Company # 5: Food ingredients supplier

One of the company’s customers did not accept the company’s terms & conditions. The terms & conditions contained the Retention of Title (ROT) clause, which created and provided for the security interest.

The result was a lost claim. The company also had to re-issue the terms & conditions to all its other customers.

Company # 6: Pet food supplier

This pet food supplier lost hundreds of thousands of dollars when one of its primary pet shop customers collapsed financially. A failure to incorporate ROT and comply with the PPSA made the supplier powerless to stop the franchisor of the pet shop chain walk in and take over the pet shops, including all the stock.

Company # 7: Takeaway coffee distributor

A failure to register its interest in the coffee machines it provided on bailment to cafés resulted in this national coffee distributor losing several machines when a café was sold.

The café owners had performed checks of the PPSR and found no interest registered for the machines, allowing them to take the machines free of the machine owner’s interest.

To avoid the prospect of losing more coffee machines in the future, the distributor has since complied with the PPSA.

Company # 8: Earth-moving equipment hire 

Two errors made when processing their registrations on the PPSR could have caused an equipment hire company a significant loss. With more than $500,000 of equipment at stake, this was a serious issue.

First, they accidentally transposed some numbers which meant an incorrect vehicle serial number was registered.

Second, the registrations were made more than 15 business days after possession of the equipment passed to the customer. Accordingly, the hire company’s security interest lost its super priority as a PMSI.

While the first error could be corrected, the second error required the company to pursue alternative strategies to recover its loss.

Decided the risks are too high to go it alone on the PPSR? Email us and we’ll show you how to protect your business.

Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstance before acting on it, and where appropriate, seek professional advice from a finance professional such as an adviser.