Winery supplying stock on consignment to distributor

A group of wine bottles with red labels lined up

Westvine Winery supplies bottles of its high quality wine on consignment to a wholesale wine distributor – Quality Wine Distributions Pty Ltd. Both have been in the business of dealing with wine for some time.

Their written contract agreed that Quality Wine would on-sell Westvine’s wine to restaurants for a share of the sale price. It was also agreed that Westvine still owned the wine until Quality Wine sold it. 

Quality Wine was hit hard by the COVID-19 crisis because of restaurant closures. Finally, the loss of a major customer caused Quality Wine to end up insolvent. A liquidator took over control of Quality Wine and all of its assets, including Westvine’s wines supplied to it on consignment.

Westvine were shocked to hear they’d lost all legal rights to get their wine back or what they were owed. This includes the rights they could have had if they’d registered their commercial consignment security interest on the Australian Government’s Personal Property Securities Register (PPSR).

Worse still, they ended up buying their own stock back at the market rate to prevent the receiver from selling it via online auction houses – as this would have potentially destroyed their brand value.

The PPSR is a powerful tool suppliers can use to help support them in these times. A $6 registration, along with your contract, can help protect your business if one of your customers goes broke.

To learn more, read our guide Your customer has gone broke and an insolvency practitioner has been appointed — what happens now?

Download the case study

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