I’ve been doing a number of presentations on the PPSA around the country over the past 12 months and have come across a number of observations… I thought I would share them with you:
- A significant area of uncertainty continues within the legal and insolvency community around the 24 month transitional period protection afforded to agreements that existed prior to 30 January 2012, predominantly supply agreements / terms and conditions that incorporate ROT clauses. Whilst many lawyers who act for suppliers who have done no registrations continue to push the “24 month protection” angle in order to recover their goods, the majority of lawyers that I talk to agree that such protection does not exist for orders and deliveries post 30 January. However, until this goes to court IPs will continue to pay out to settle such claims.
- Intercompany transactions are also another to watch for where Holding Co. provides assets to Trading Co. but does not register its interest. A spin on this is Banker leasing assets to Holding Co. who then provides them to Trading Co. (without registration). In both instances if Trading Co. falls over then the assets will be lost (unless the transitional protection rules apply)
- Comingling of goods is another area of confusion, particularly concerning proportionate sharing and dividing up the proceeds.
- Landlords need to register security interest should they fund fitout of a leased premises. Whilst leases are out as they relate to real estate, the demountable fit-out may arguably be personal property
- Agri is a niche area and I haven’t dealt much with yet. However, the ability to trace through a Agri PMSI in fertilizer used to grow grass to feed cows who then produce milk is going to be a fun one when the fertilizer supplier seeks to enforce over the “proceeds” being the funds from the sale of the milk.
- Experience in far north Queensland is that suppliers of yellow goods into mines are not registering as “Bazza knows they are my graders and that’s not how we do business up here in the North”
Goods on consignment will continue to impact ‘Joe public’ and this is a typical example of what we may see more of in the future:
Here is also a link to an article that I wrote which appeared in the Australian Insolvency Journal in early 2012 (link)
The Deloitte website also has some really good stuff if you want to read futher (link)
Adrian Hunter 