Properly registering your interest in goods supplied by you on retention of title terms, can protect that interest should any of your customers not pay or go broke, or if registered secured creditors, like banks, take enforcement action against your customers.
As a wholesaler you can be protected when your goods are sold on, mixed with, installed in, or made into, other products.
If you don’t make a registration about your security interests in goods and your customer goes into insolvency (including receivership) before they have fully paid you, your stuff may be sold to pay other secured creditors.
You will be an unsecured creditor and may not recover much, if anything, of what you are owed.
Protection when you sell goods on retention of title
Properly registering will put you in the best position to enforce your interest in the goods you supplied or other debts owing by that customer, but will also protect you if those goods are fixed or installed into other goods (‘accessions’).
For example if you supply components which are installed but removable, you may still be able to repossess the components even after installation, or be paid their value.
Protection when your goods are mixed, made or processed into something else (‘Commingling’)
Goods you supply to your customers may be mixed with other property, processed or made into a new product, so that your supplied inputs are no longer separately identifiable or practically capable of restoration to their original state
They are known as ‘commingled’ goods.
In this case, provided you have properly registered your interest over the goods you supplied, you have an interest in the new or processed product up to their supplied value, and proportional to the interest of other suppliers who properly registered for other ingredients that went into the mix or process.
Protection when your goods are sold on (‘Proceeds’)
Wholesalers sell goods to their retailer customers, who sell the goods on to the public.
Proper registration means that you have an interest in the proceeds (usually money or a debt, but it can include other property) when they are sold on.
Provided you properly register your interest in the original items supplied (which includes ticking the ‘proceeds’ box on the financing statement), this proceeds claim is, in most cases, automatic.
If your supplies become accessions or are commingled by your customer, your proceeds claim over the original goods also applies in the same way to their proceeds of the final product.