- Rural practitioners may find that harvest is the right time to remind clients of their potentially improved position under the Personal Property Securities Act 2009.
- Under the Act, sellers of goods have an opportunity to ensure that their contractual terms provide for a security interest in their favour. Together with appropriate registration of that security interest, a seller can be elevated to the rank of secured creditor.
Rural practitioners may find that harvest is the right time to remind clients of their potentially improved position under the Personal Property Securities Act 2009 (‘PPSA’).
Farmers in Australia are accustomed to running the gauntlet of ‘drought and flooding rain’. A less common but very real risk is that faced by growers when grain buyers run into financial difficulty. When a farmer sells their harvested crop on credit terms, and the grain buyer then runs into difficulty, the farmer can miss out badly. For many, that will mean the loss of their primary income for the year.
The Land recently reported that Barooga Agri Products had ‘gone bust leaving a trail of farmer creditors across Victoria and southern NSW’ (‘Grain Company Leaves Debts’, The Land, 16 August 2016) There have been several insolvencies involving grain buyers in the last few years, often resulting in significant losses to grain growers.
The article in The Land bore a comment that ‘[h]istory shows that farmers, as unsecured creditors, don’t tend to get a lot back’. Historically, that may be correct, but in the brave ‘new’ world of PPSA, there are new avenues available to manage that risk. Although LSJ readers will no doubt be well aware of the operation of the PPSA, anecdotally, the message does not always seem to be getting through to rural and regional clients. Farmers, familiar with managing adverse natural conditions, are not always taking the precautions they could to improve their position in the event of the failure of a grain buyer.