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Wholesale

What may be affected?

  • selling goods on retention of title to retailers for on-sale to the public
  • selling materials for use or installation in manufacturing, agriculture or any other process
  • borrowing funds for your business on the security of your property.

What is not affected?

  • land, buildings and fixtures.

Benefits group

Protection and risk

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.

Increased financing options

The PPSR improves financing opportunities for wholesalers. Financiers, such as a bank, can view interests registered against your goods or assets.

That makes it easier for them to decide whether or not to lend to you and on what terms.

That makes it easier for you to, for example, borrow against a broader range of assets (collateral) such as your inventory and stock, or your entire present and future property.

 

Innovation

The PPSR is helping to drive innovation in the wholesale sector, by making it easier for wholesalers to enforce their rights in goods supplied on credit, and to obtain loans secured against a broader range of their business assets.