16 December 2012
In earlier posts CX detailed the extraordinary circumstances surrounding the closure of Jacksons Rare Guitars in Sydney’s inner west. At the time a large collection of rare and valuable guitars were seized by Deloittes, called in as ‘Administrators’. Problem is that many guitars, perhaps as much as a million dollars worth, were not ‘owned’ by the store. They were on ‘consignment’.
Early reports had Deloittes reassuring anxious owners that they could possibly reclaim their guitars. But at the first creditors meeting, Deloittes abruptly resigned – for proper probity reasons that are technical. Another administrator was appointed.
Then the new picture emerged, where the new administrator would simply rely on law – in particular, the little known and wide reaching Personal Property Security Register legislation. This is better known as PPSR, and has been chronicled previously in CX Magazine as a potential trap for companies renting equipment into a venue that goes broke. In that instance, if the equipment was not ‘registered’ on the PPSR specifically against the hire to the venue, an administrator could seize and sell.
Now the PPSR has reared to badly bite ALL the consignors of stock at Jacksons!
Here is one comment of note on an earlier story here at cxmagblog:
This is a classic case of someone getting rich out of going broke. I had 2 guitars in the shop at the time the suits went in. I am 1st time consignor. Jacksons emailed me when one of my guitars was listed for sale on eBay. They offered me my buy it now price & they would add 25%+GST. This was in aug’12. Any discounting will be deducted from their 25%.this all is documented in the email thread and shows my naïveté in the whole process.
I feel completely swindled! I walked into the shop with 4k worth of guitars and walked out with a piece of paper (goods received doc) that could be worthless according to Jamieson Louttit & Associates.
I had never heard of the so called PPSA & why would I. I don’t sell goods on consignment for a living. Jacksons never issued a formal consignment doc which should have a copy of the act on the back in fine print. Just like hire doc or a lease agreement. (They) failed to inform me of my rights to protection, and appear to have obtain my goods by deception.
Upon doing research the Liquidator has recommend that people like me register my situation withe Commercial Fraud Squad and he will happily give anyone the direct details to the officer managing the case.
If correct then Jamieson Louttit & Associates are being decent by assisting aggrieved owners attempting to obtain justice. Owners should be registered with Jamieson Louttit & Associates and have the contact details.
For firms like Jamieson Louttit & Associates, the PPSR is a miracle. It provides them with clearly defined legal title over the 1001 dusty things that get seized and removed from a failed business. Before PPSR they could/would have diverse and time consuming demands on goods, and have to wade through process to establish ownership.
Now they just sit and sell – after one easy query on the PPSR register against the failed firms name. That query quickly shows the finance firms who’ve leased stuff, and the (few) other firms who may have hired, consigned, or been in the process of installing, equipment.
Everyone else is locked in as an unsecured creditor.
For Jamieson Louttit & Associates, along with the rest of the insolvency profession, it cleans up process and in this case provides a lot of valuable stock, legally owned by maybe a hundred guitar collectors, that will be sold off. Jamieson Louttit & Associates will (rightly) take their fees, then divvy up the rest with the tax office and secured creditors having first swipe.
Have we recognized the PPSR as a modern problem yet?
UPDATE 18 DEC: Herald article on this is here.
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