We have written previously on this website about the Personal Property Securities Act 2009 and the wide ranging implications that its introduction had in 2012.
The importance of registration is clearly demonstrated by a recent matter we acted in. We acted for a client who was providing stock on credit to a retailer who subsequently went into liquidation.
The Credit Agreements that our client had with the retailer were all entered into prior to the Personal Property Securities Act being introduced and had not been updated subsequently to include references to the Act. This was further complicated by the fact that our client had not registered the Credit Agreement on the Personal Property Securities Register.
Upon the company going into liquidation, our client attempted to negotiate with the liquidator to go into the warehouses and stores of the retailer and take back that stock as they had done previously under their existing retention of trade clauses under their terms and conditions.
In this case however, the liquidator refused to honour our client’s claim as they did not have priority interest under the Act.
Under the Personal Property Securities Act, there is an obligation on parties who are enforcing Security Agreements to register their interests on a central register at the time of, or soon after, entering into the agreement.
Because our client had failed to do so, they were unable to protect their interests and as a result were unable to reclaim any of their loss as a result of liquidation of their former client.
This case highlights the importance of ensuring that all of your Credit Agreements are appropriately drafted and registered on the register.
If you wish us to look at any of your Credit Agreements to advise on whether you are covered under the Act, we offer a fixed fee for review of your company’s terms and conditions — Please feel free to email our Commercial team at firstname.lastname@example.org or call 1300 HATZIS (1300 428 947) .