If you answered yes to any of these questions you need
to understand the impact of the new Personal Property Security
From 31 January 2012 if you do not register your interest, your
security may be useless and title and ownership of goods you
supply, or equipment you rent, may be lost.
The Personal Property Security Legislation is intended to create
a simple online registration system for all security interests. It
applies to goods but does not apply to land interests.
The main areas of application are:
1. Retention of Title ("Romalpa")
These are clauses in your contracts of sale that allow you to
keep title to goods that you sell until they are paid for. If your
debtor defaults you may take back the goods. Your title has
priority over liquidators. Under the Personal Property Security
Rules you will need to register your contract (one registration
covers multiple sales to the same customer) for all new contracts
after 30 January 2012 or the clause will not be effective. For
existing contracts you must register by 30 January 2014 for the
clause to be effective.
2. Leases of goods for more than 12 months (or
90 days for serial numbered goods).
If you lease goods to someone and they fail to pay the rent you
may be able to take the goods back, even if there is a liquidator
appointed. Under the Personal Property Security Rules this right
will be lost unless you register your lease (and you may be able to
register it as a Purchase Money Security Interest "PMSI"
which has super priority!) For existing leases you have a 2 year
window in which to register or your priority may be lost.
You may find your existing suppliers or lenders contacting you
to confirm security or trading arrangements under the guise of
these rules. You should ensure that these confirmations
don't increase the priority of these people or result in
your giving further security. Maybe you should secure your personal
loans to your business!
The register is to be maintained by the Insolvency Trustee and
Services Australia ("ITSA"). At this stage the register
is not online!
Once the register is running you should confirm any interests
registered by you or against you by doing a search.
This part will cover the legal position in relation to promotional materials and misleading and deceptive conduct.
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