When Jacksons Rare Guitars went broke last month guitar customers suddenly faced immediate loss. For many years the Sydney firm had sold rare guitars on consignment and were slow to pay owners. Now it appears unsold guitars, totalling almost $1 million worth, may not be returned to angry owners.
A year ago CX reported the new PPSR (Personal Property Security Register ) could prevent firms reclaiming hired equipment if a venue went broke. We missed the panic in the collectable art community where works are almost always sold on consignment. Several prominent resellers failed, and artworks were flogged off by liquidators despite being ‘owned’ by others.
Now Jacksons clients face the same heartbreak, some with guitars that were valued at 50 grand.
Other Jackson clients had their axe sold by the firm but hadn’t been paid, or were owed some of the proceeds. They are unsecured creditors and in a bizarre twist will be better off because of PPSR.
Here’s a couple of PPSR links:
From that second link:
“Under the PPSA, arrangements that involve selling goods on a retention of title or consignment basis will be treated as any other security interest. This means that these types of arrangements will only be enforceable, and given priority, against competing third party security interests if they are “perfected” through registration on the PPSR. Therefore, sellers who are unprepared for the changes risk losing out under PPSA.”
Someone with a guitar seized by the liquidators faces the loss of the guitar. They then become an unsecured creditor, like the guy whose guitar was sold but is still owned money.
All of the above will eventually get something from the liquidator – after expenses and after secured creditors and tax. Maybe as little as 1 cent in the dollar.
The collectable value of a classic guitar is now redefined, since Jacksons themselves (like all major dealers) talked up the market value of select vintages.
CX has a blog on this, which has attracted over 50 user comments. Read it here.
SUMMARY: When passing possession of anything (on hire or consignment, or installed before full payment) make sure it is REGISTERED on the PPSR. http://www.ppsr.gov.au/Pages/ppsr.aspx