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WOW Sight and Sound, the first major receivership since the
commencement of the Personal Property Securities Act 2009
(Cth) ("PPSA") on 30 January 2012,
has seen a large number of suppliers unable to reclaim goods
supplied to WOW on retention of title terms.
The suppliers received a rude awakening to the PPSA when
WOW's receivers, Ferrier Hodgson, apparently explained that
they would only recognise retention of title arrangements that were
registered on the Personal Property Securities Register
("PPSR") at the date of their
appointment. All other suppliers will be unsecured creditors of the
company.
The Impact
The receivers intend to realise all stock (subject to claims of
any supplier who had made a PPSR registration) and distribute the
proceeds to WOW's creditors according to priority. It appears
the majority of the proceeds will be distributed to WOW's
secured creditors and the suppliers, generally unsecured creditors,
will be left out of pocket. That position may also be subject to
the Receivers' consideration of any protection afforded to
retention of title or consignment suppliers by the transitional
provisions in the PPSA.
How did it happen?
The PPSA is one of the most significant reforms to Australian
commercial law in decades and it has dramatically changed, or
should have changed, core business practices for a wide-range of
Australian services and businesses. As WOW's suppliers have
discovered, the legislation affects not only banks and financiers,
but also retention of title suppliers and those that supply goods
on consignment or lease terms.
Although the PPSA protects unregistered retention of title and
consignment suppliers and leased goods for a 24 month transitional
period, those provisions don't protect arrangements entered on
or after 30 January 2012.
Recommendation
The message is clear. If you supply stock on retention of title,
consignment or lease terms then you MUST
ensure:
your credit terms have been reviewed for PPSA compliance;
and
any goods supplied on retention of title, consignment or lease
terms are protected by a PPSR registration.
Thynne & Macartney is assisting its clients navigate PPSA
risk and compliance issues. We can offer general PPSA advice and
also advice on specific issues of concern. We can also have a
member of our PPSA team attend your workplace to conduct a PPSA
seminar specifically tailored to your business needs.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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