The liquidator of an iconic rare guitar store in Sydney has taken the Federal Government to task over the introduction of its Personal Property Securities Register, saying he’s attempting to help the suppliers of the store’s guitars get their property back.
The criticism comes as experts have warned more cases like this will emerge as companies collapse and suppliers realise their property hasn’t been properly documented – leaving it in jeopardy.
“I just think the government hasn’t understood the difficulties for the consumer here,” insolvency expert Jamieson Louttit told SmartCompany this morning. Louttit is managing the liquidation of Sydney store Jackson’s Rare Guitars.
“I don’t think it’s been marketed very well, and they’ve done a very poor job in advertising it.”
Louttit is facing a complex issue. Jackson’s Rare Guitars sells stock on consignment from guitar makers, and right now the store is holding about $800,000 worth of product that hasn’t been sold.
The problem is that suppliers are now required to register their property under the Personal Property Securities Register – introduced earlier this year as part of the Personal Properties Securities Act 2009 – in case a company like Jackson’s goes under. That way, their property is fully registered and they’ll be able to claim it.
But most of the guitar makers involved in Jackson’s didn’t do this, meaning they can’t get their property back easily.
Now, Louttit says he’s going to fix things another way: by making an application to the court to have the suppliers heard.
“I’ll be seeking a direction of the court, looking for an opportunity for them to be heard. I want to give them the opportunity to speak.”
The issue has made the complicated nature of the collapse even more confusing.
“There are some massive issues and holes within this that the layperson, and the average small to medium sized business, isn’t aware of.”
“It’s just a very grey area and it’s going to continue to be an issue.”
Insolvency experts have warned SmartCompany the issue will become worse as the years go by, as practitioners will have to deal with a huge backlog of property registered by suppliers. But in the first few years, experts say cases such as Jackson’s Rare Guitars show how important it is for SMEs to be up to speed.
“I just think the government has done a poor job of explaining this,” says Louttit.
The collapse of Jackson’s Rare Guitars has been a blow to the Sydney music scene. Louttit told SmartCompany this morning the owner, Steve Jackson, took out a $400,000 loan for the business, of which some was used for personal expenses.
Jackson is selling a collection of vintage cars in order to capitalise the business, which owes another $800,000 to guitar owners whose stock has been sold but have not yet received any cash.
“So it’s not just the consignment issue that is making this complex,” Louttit says. “There are just some massive holes in the system.”