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Becoming a Secured Creditor

I am super proud to be partnering with EC Credit Control to assist businesses small and large. 

Do you know what it means to become a secured creditor?

Becoming a Secured creditor, by completing Personal Properties Securities Registrations (PPSR), is super important.  

A PPSR, in conjunction with really robust terms of trade, will enable businesses to be in the best possible position in the event that any of the clients, that they are working with or have worked with in the recent past, go into liquidation.

Four key areas of risk as an unsecured creditor include -

Any outstanding funds that are owed to you are less likely to be paid in the event of a liquidation, as secured creditors are paid in priority over unsecured creditors. 

If a site gets shut down due to a company going into liquidation, then any of your assets (such as equipment, tools, machinery, scaffolding,etc), and/or items not yet paid for by your clients (including products and materials, etc) that are on that site, could be seized as part of that liquidation.

As an unsecured creditor you may be more likely to be exposed to Preferential Payment Claw back through Voidable Transactions - this means that money that has been paid to you for up to two years prior to your client going into liquidation could be clawed back.

Something else that is really important for business owners to understand is that, if they are releasing goods to their clients prior to being paid in full, a Title and Ownership Clause by itself may not be sufficient to recover the goods.  Businesses need to have the correct PPSR clause in their terms of trade documents and be loading your interest in those goods through the PPSR process.

It is vital to seek expert help to ensure that you do have the correct clauses in your terms of trade and that your interests are correctly loaded through the PPSR process. 

The EC Credit Control PPSR team are fully aware of all legislative requirements covering the Personal Properties Securities Act (PPSA) as they have been dealing with PPSA in NZ since 2002.  They have the expertise to assist you, so that you have the knowledge that your registration (PPSR) is correct and most importantly, valid.

Helen Laidlaw, Togetherness Co. | Business Advisor Waikato


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