Insolvency costs tipped to spike following growing securities registry entries
Tuesday, April 30, 2013/
There were 7.2 million registrations on the personal property securities register on March 31, with half a million new registrations in the March quarter, according to new figures from the Insolvency and Trustee Service Australia (ITSA).
Searches based on motor vehicle serial numbers were the most common type of search. There were nearly one million such searches in the three months to March 31, and 1.4 million searches in total.
The PPSR, which is administered by the ITSA, allows clients or suppliers to register their interests in assets held by a business. This means should the business go insolvent, liquidators know which assets can be sold, and which need to be returned to their owners.
The register was launched in January 2012 to replace a series of item-specific and state-based registers. However, the roll-out has been criticised, with some experts saying the registry has not been widely publicised.
Veronique Ingram, the chief executive of ITSA, said in a statement that the million new registrations since January represent a “very strong rate of activity”.
“Businesses are now actively using the PPSR as the single national noticeboard of security interests in personal property,” she said.
“If a business does not register its security interest in goods it risks losing its claim over the collateral,” she added. “Business owners should seek advice from a professional adviser about their specific circumstances.”
Cliff Sanderson, an insolvency expert and company liquidator at Dissolve, said the register provided protection to suppliers.
However, he said he was concerned there was no requirement to remove entries from the register over time, meaning the entries in it would become less relevant. Just over 300,000 entries were removed from the register in the March quarter, but Sanderson says there’s no requirement to do this.
“Every time we get [an insolvency job], there is a raft of registrations on the PPSR. Before selling the assets, you’ve got to work through those registrations to see whether anyone else has rights to them. At the moment, it’s not a huge problem. Not everyone is registered yet.
“My concern is, 10 years from now, how am I going to do my job? There’s no requirement for anyone to delete a registration when they no longer own an asset.”
“It’s going to increase the cost of insolvencies, and we already cop a lot of flak for the high costs of insolvencies.”
Previously, liquidators have criticised the PPSR for not being well advertised. When Sydney store Jackson’s Rare Guitars went bust late last year, most of the guitars in the store, which were being sold on consignment, were not registered with the PPSR.
This led the store’s liquidator Jamieson Louttit to say the register hadn’t been well promoted.
“I don’t think it’s been marketed very well, and they’ve done a very poor job in advertising it,” he told SmartCompany at the time.