Putting credit on a more secure footing

I wasn’t too familiar with this government initiative. Nor, it seems, are many of you – when we ran a weekly poll about the PPSR, only 42% of voters said they had even heard of it.

But the PPSR, which is an avenue to protect unsecured creditors in the event of an insolvency, is suddenly front and centre in the industry. In light of the rash of company collapses this year, headlined by Geon, many suppliers are hoping that registering a security interest with the PPSR will provide a better chance of a recovery.

Solicitor Ben Sewell has gone into some depth about the PPSR in his article. He explains: “The main commercial benefit is that the printer becomes a secured creditor against their work product and also intellectual property when it sits in the hands of their client’s liquidator. If the banks register on the PPSR, printers should too.”

It would certainly add a spot of hope when discussing company insolvencies. Stories of huge write-offs among paper merchants and trade suppliers are all too common. None of us are sheltered from the domino effect of bad debt; it is now apparent that suppliers are responding by tightening up their credit policies, with Heidelberg leading the way by moving to 30-day terms.

But there are still a lot of unknowns about the PPSR. The legislation has never really been put through its paces. It looks certain it will get a proper road test by the printing industry. It is thought there are hundreds of thousands of dollars tied up in pallets of paper at Geon’s old facilities, much of which has been registered on the PPSR by paper merchants. Likewise, my understanding of the PPSR is that it extends to work that has been produced, so that as money flows from debtors to the receivers, some should also flow back to the paper merchants.

I’m told there will be much legal wrangling over retention of title before any debts are recovered. But I will be suitably delighted if the PPSR provides a way for the poor, battered suppliers to see some of their money back rather than face yet another bad debt.

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