Legally Speaking with Simpson Western Lawyers
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Suppliers and Lessees of Goods Can you reclaim your goods in a receivership or liquidation? With the recent increase in receiverships and liquidations, now is a good time for businesses that either lease goods or supply goods on credit to review their terms of trade, particularly to ensure they can reclaim their goods from receivers and liquidators. Since the introduction of the Personal Property Securities Act about 10 years ago, suppliers and lessees can no longer rely solely on their rights as the owner of the goods to reclaim them in a receivership or liquidation. Rather, they must first complete 3 important steps.
ownership rights in those goods and granting the lessor or supplier a security interest in them. Step 2 - Register Registering their security interest in the goods on the Personal Property Securities Register. Registration is completed online at www.ppsr.govt.nz and usually costs about $3.00 per registration. Step 3 - Maintain the security interest Ensuring the registration of the security interest is renewed within 5 years of its initial registration. If a supplier or lessee fails to complete these
…the courts are often not interested in who owns the goods. Rather, they will only be interested in who complied with the legislation and registered their security interest within the required timeframes. Step 1 - Agreement Ensuring their customers or lessees sign, or confirm their agreement in writing to, well drafted terms of trade or leases containing: 1. an adequate description of the supplier or lessor’s goods; and 2. clauses retaining the supplier or lessor’s
steps, and a customer goes into liquidation or receivership, another creditor of the customer (usually a bank) may repossess and claim ownership of the supplier or lessee’s goods. To illustrate the potential devastating effects of failing to register, you may remember the well publicised outcry from suppliers who lost their goods
when the well known New Zealand design store Eon “went bust” several years ago. Similarly, and in the case of a lessor, in 2004 Portacom, a lessor of portable buildings, lost several of their buildings to a bank that was recovering part of its losses from a defaulting customer. When it comes to the supply or leasing of goods, title will mean nothing in many cases unless the supplier or lessor has registered a security interest. Under the Personal Property Securities legislation, the courts are often not interested in who owns the goods. Rather, they will only be interested in who complied with the legislation and registered their security interest within the required timeframes. Now is a good time for suppliers and lessors to have their contracts and leases reviewed to ensure they can register a security interest and protect their goods from receivers, liquidators and other aggrieved creditors.
Nicola Russ is an Associate, specialising in Commercial Law, at Simpson Western – Lawyers of Takapuna and North Harbour. www.simpsonwestern.co.nz
Serving the Shore from two locations: Takapuna Office: Level 17, AIA Building, 5-7 Byron Ave, Takapuna
North Harbour Office: Cnr Apollo Dr. & Antares Pl. North Harbour (above Pickles)
SMARTER SOLUTIONS FROM SPECIALISTS Ph: 486 3058 | email: enquiries@simpsonwestern.co.nz www.simpsonwestern.co.nz
www.channelmag.co.nz Issue 4 - October 2010