Insolvency practitioners have warned that small and medium-sized enterprises are still struggling with the new Personal Property Securities Register more than eight months after its arrival.
The register was brought in as part of legislation that replaced numerous registers and laws around the country dealing with property that is subject to a security interest.
Businesses register interests in assets held by other parties, such as where they extend credit or lease equipment. The intention is that creditors have a greater chance of having assets returned in the event that the business becomes insolvent.
For clients of Krystiana Conomos, a senior associate in the commercial recovery and insolvency practice at law firm Holman Webb, the latest confusion has come in the form of Section 64 notices from banks and other financiers, which she says “provides a financier with a super priority over suppliers”.
If a supplier provides goods to a customer on credit terms, they can register their security interest. But if that customer has a debt facility with a financier, the financier can serve a notice to the supplier indicating it has a “super priority” over the proceeds (that is, cash) of those goods in the event the customer’s business collapses.
Such a provision limits what a supplier is “entitled to recover should their customer go into some
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