WOW Sight and Sound Learn the hard way
Beware the lurking dangers of the Personal Property Securities Act (PPSA). Suppliers to electronics retailer WOW Sight & Sound have learnt the hard way the major impacts this new legislation can have, setting an example for other credit supplying businesses to ensure they don’t make the same mistakes and comply with the PPSA ASAP!
The PPSA, which came into effect on 31 January 2012, has introduced radical changes to the rights of creditors and suppliers. One of these changes was to allow suppliers to register “retentions of title” on the Personal Property Securities Register (PPSR) in relation to stock that they supply. The upside to the PPSR is that suppliers are able to better protect their interests where a customer has a liquidator or receiver appointed. The downside however is that failure to register the retention of title can deprive a supplier of their rights.
The reality of the PPSA has hit home in major way for WOW Sight & Sound suppliers. WOW’s receivers are refusing to let suppliers owed money reclaim their stock, preferring to sell it off at discounted prices in order to raise funds for the National Australia Bank (the secured creditor). Suppliers were told last week that unless they had registered on the PPSR they could not reclaim the stock. Suppliers are likely to lose out on recovering their stock and may not receive any of the sale proceeds given the large debt owed to the bank, who are a secured creditor