You may have heard that the Cullen Construction Group collapsed at the end of December (their main project is the 129 unit 'Boheme' at Robina).

The Queensland Government wants an enquiry into why there were so many unsecured creditors-principally subcontractors and suppliers.  No doubt the bank will be okay though, so no need to worry about them.

The current issue is not the Government seeking to blame someone, because this won't achieve anything for the suppliers now, but it may result in toughening of the conditions of the QBCC.  It certainly won't recover any money for anyone from this situation.

The essential issue is how the supplier of goods can improve their chance of recovery of monies owed by their customer.

There is a simple, effective and affordable system in place already, through the Federal Personal Property Securities Act (PPS).

All businesses who supply goods and certain property or services can, after issuing an invoice, register the customer's account on the PPS Register.  A once-only registration and payment of a small fee can give a business lifetime cover in the event of a customer default.  If the customer goes into liquidation, the debt due becomes secured.  Registration also prevents the liquidator from claiming ownership of the goods already supplied.

The PPSR works because the debt is elevated in priority;  first are employees, then lenders secured by a mortgage, the PPSR then puts you before the liquidator, and finally unsecured trade creditors.  Priority depends on the timing of the PPSR registration date; those registered earlier have a higher priority.

Of course, it is never quite as simple as 'just registering'.  It is imperative with all supply of goods or property on account that a valid PPSR registration be in place within the set time limits and that there is an appropriate clause in customer invoices and agreements (the 'retention of title' condition).

This is only general information and not meant to be a 'how to do' list.  If you would like to discuss the PPSR and see whether it could help you, please call me.