There can be significant benefits to be gained by Retention of Title (“ROT”) suppliers that embrace PPSA and the loss of previously available ROT recovery sources for those that do not. PPSA deems all suppliers that supply goods subject to ROT and that register on PPSR to be ‘secured creditors’. When it comes to enforcement in an insolvency administration, the creditor with the highest ranking security interest is able to seize and sell the goods for their own benefit.
Specifically, a supplier of goods, subject to ROT will be able to:-• Repossess its goods if they are still in the customer’s possession• Recover goods where they have become affixed to other goods – such as wheels installed on a motor vehicle.• Retain rights in commingled or mixed goods – such as fuel in a fuel tank where other suppliers are involved• Obtain security in manufactured goods where the goods supplied form part such as where flour has been supplied to make bread.• Have security in ‘proceeds’ – which are book debts derived from the sale of the ROT supplies.
There are additional benefits, which do not come directly from PPSA:-• Registration on PPSR could be a defence against a claim for a unfair preference or preferential payment claim from a liquidator.• Customers selling their businesses will be forced to obtain a discharge from you guaranteeing you get paid.
There are powerful benefits to be gained by ROT suppliers that register on PPSR. It is a very different story for those who don’t. If your customer becomes insolvent and you haven’t registered, you will lose your goods and become an unsecured creditor for what you are owed.
The PPSA is extremely harsh on equipment renters and bailers (parties that provide equipment on loan to a customer as part of a wider commercial arrangement). The previous law treated these types of businesses fairly in that he lessor or person making goods available for hire or loan would at all times own the goods. If the customer defaults or becomes insolvent, the equipment owner was simply able to repossess their goods, as they did not form part of the insolvent estate.
PPSA has completely reversed this position. In brief terms, if:-1. a business leases, rents or bails equipment to its customers, and;2. the arrangement creates what PPSA calls a PPS Lease, and;3. the business fails to register on PPSR, then;4. the equipment owner will most likely lose their equipment on the insolvency of the customer.
Meaning that the equipment will be sold by the insolvency practitioner and the proceeds applied to the ‘insolvency pot’. This may seem unfair but it is correct. It is therefore, critical to know whether your agreements create a ‘PPS Lease’ and, if so, to understand how to achieve protection with minimum cost and impact on your business.
Our expertise lies in assessing how the legislation will affect businesses and putting in place the necessary strategies (and registration profiles) to achieve the desired level of protection whilst minimising registration cost, business disruption and labour resources. Our solution also provides continuity when key staff leave.
Our consultancy service can be tailored to an individual business’s needs. Generally, a report is supplied that includes a registration strategy and registration profiles for your business.
As well as having the necessary registrations on PPSR, it is vital to have Terms and Conditions of Trade that create a suitable security agreement. We can also provide an assessment your Standard Terms and Conditions of Trade for PPSA compliance. This will highlight deficiencies and suggests improvements to make enforcement easier.
Access PPSR will help you to navigate your way through all this so that you can ensure that you have an Enforceable Security Interest (and not just a registration) when the time comes.
Processing using our registration platform SIIP is effortless. It will reduce or eliminate registration errors, minimise the time taken to process registrations, alleviate the burden of registration on company staff and provide continuity if employees leave your business.
Our registration platform SIIP features superior PPSR portfolio management alongside all functionality available on the PPSR website with pre-programmed templates and build in validation prior to processing.
SIIP is also capable of bulk transaction and data cleansing uploads and exportable reporting downloads.
PPSR portfolios are visible through a dynamically driven dashboard giving users a unique snapshot of registration numbers and types, collateral classes, grantor types. The dashboard also provides an extremely useful snapshots of registrations due to expire and registrations that do not comply with grantor identification rules or approved registration profiles.
Many of the registrations processed on day one were for 7 years and so they will expire on 30 January 2019 and continuously thereafter. In the circumstances that a security interest continues to exist beyond registration expiry, there is a requirement to renew that registration prior to the expiry date to achieve ‘continuous perfection’ and the highest PPSA priority.
We can take care of your Renewals project if you supply us with details of the registrations requiring renewal and which ones you wish to allow to expire.
Not surprisingly, given the new regime and its complexity, we have found that many of the registrations on PPSR are incorrect most commonly in terms of registration profile (ticking the correct boxes) and grantor (customer) identification.
Our focus is on ensuring that our clients’ registrations are sound so that you are able to enforce your PPSA rights effectively when the time comes.
At Access PPSR, we see your Renewals Project as an opportunity to ensure the completeness and validity of your registrations portfolio before you go to the expense of renewing. We can perform a registration analysis and report our findings before processing correction and renewal transactions. We have taken a sensible approach to your renewals project with the aim being to achieve a portfolio of useful PPSA registrations which achieve the highest PPSA priority in the most economic way.
Our renewals project focuses on categorising your registrations into four groups:-
Renew – for those needed post expiry Expire – for those not needed post expiryCorrect* and extend – for those found to be incorrect in some wayNew – for registration not performed at all that should have been
* PPSR may not allow all required corrections. We can assist in navigating what can and cannot be amended and offer alternative solutions where amendments needed are prohibited.
The output is a comprehensive report (and analysed dataset) detailing the recommended action and transaction processing costs. Clients have very little to do. Access PPSR takes care of everything. The project is finalised following the delivery of a transactions processed file to the client.
Of course, clients do not have to take advantage of this Compliance Review service to process renewals through Access PPSR. It is optional. We can process renewals transactions upon instruction from you without analysing your registration portfolio.
Experience tells us that, unfortunately, many secured parties have registrations on PPSR that are incorrect.
There can be numerous reasons for this including:-• Poor initial advice• Inconsistency in processing registrations• Lack of staff understanding or knowledge• Staff turnover and knowledge handover failure
We can analyse your registration portfolio and provide you with a report (and analysed dataset) outlining which registrations comply with your approved registration profiles and grantor identification rules and which do not.
Lynne Walton has provided a PPSR Analysis and Compliance Reviews to three major Australian banks and one large finance company so clients can be confident in a first class service.
As with the Renewals project (outlined above), the output is a comprehensive report (and analysed dataset) detailing the recommended action and transaction processing costs.
Your security interest and your ability to enforce your PPSA rights are dependent upon the quality of your Terms and Conditions. We can assess these and provide a detailed report on which aspects are deficient and suggest improvements as required.
The introduction of PPSA has rendered this protection mechanism ineffective thereby placing assets at risk of seizure. To address this and reinstate the protection, a suitable operating lease between the entities and appropriate registrations on PPSR are required.
Access PPSR offers this service as a package.
Examples are:-• where a business is being sold, we can assist with providing evidence that the business assets are free of encumbrances• where an asset is being purchased, sold or financed we can assist in demonstrating that it is free of security
In line with our unparalleled reputation for PPSA knowledge, you will have a free direct line to our specialist PPSA advisors with any legal, insolvency or other query you may have. Most of these can be answered immediately without the need for formal Time in Line Services
We normally perform this work on a ‘No Win, No Fee’ basis. All cases are considered and priced on the merits / strength of the claim.
