Small businesses have once again been warned about the importance of being up to speed with the new Personal Properties Security Registry, after the collapse of a rare guitar store in Sydney has left suppliers empty-handed and confused.
The administration of Jackson’s Rare Guitars in Sydney has left some 100 guitar sellers empty-handed, after they had provided custom guitars to the store.
Experts have been warning SMEs for months that they need to have a better understanding of the registry, and especially how it can affect them in the event of a corporate collapse.
“As an insolvency practitioner I always thought it was going to be a nightmare,” says Dissolve liquidator Cliff Sanderson. “And it will become increasingly so as the years go by.”
Jackson’s Rare Guitars, a staple in the Sydney music community for decades, was placed in administration last month. The move comes just weeks after Australian icon Allans Billy Hyde also collapsed, although it was later purchased and several locations remain open.
The Jacksons store gained a name for itself after selling instruments to famous musicians, including country star Keith Urban and former Beatle George Harrison.
Administrator Jamieson Louttit & Associates was contacted this morning, but did not reply prior to publication.
The collapse is complicated by the store’s sale of guitars contributed on consignment by local guitar makers, which is where the new Personal Properties Security Registry comes in.
Earlier this year, the registry was set up so that any person or company which has personal property involved in a business needs to register that property, in the event of a corporate collapse.
That property extends to almost everything except most buildings.
The importance of the registry is this: if you register your property, you’ll be treated as a secured creditor, rather than an unsecured creditor, in the event of a company collapse.
But the registry is new, and many people aren’t up to speed with how it works. Sanderson says it will take time for property owners – like the guitar makers – to become familiar with the system and how to register.
“I’ve always thought the PPSR is a good idea, but it guarantees the insolvency profession will become more complicated, and this is an example of that,” says Sanderson.
Sanderson says it’s now crucial for businesses and suppliers to better understand the registry, as it is one of the biggest changes to insolvency law in quite some time.
“For suppliers, it’s not so bad, you just need to register and then leave it. And if they cease to supply to that business, it doesn’t matter, the registration remains.”
“If you’re a supplier, then just register, register, register. Set and forget.”
Steve Jackson, owner of Jackson’s Rare Guitars, said last month to creditors he had attempted to save the business but it was ultimately too far gone.
“It is not easy, after 30 years of building the business to such heights, to watch it deteriorate,” he said, according to Fairfax.
Fairfax also reports Jackson signed an enforceable undertaking to sell a collection of vintage cars in order to pay debts owed to creditors.