You are in the business of supplying surfboards.
Cool business to be in and you have a fine new range of surf boards made in Bali you want to get to market. You take your collection of surf boards to a local retailer and let him take ten on consignment. If the retailer sells them he will pay you. If he does not, you can go back to the store and collect your surf boards, maybe move them to a new store.
Now, a few weeks later the store goes into receivership. Shame, you think, but no problem, you simply go to the store to talk to the friendly receiver and ask for your surf boards back.
What happens next?
Despite the fact that the PPSR is ten years old, many New Zealand company directors will tell you that they would be able to collect the surf boards. After all, they belong to the surf board guy, and not the retailer. And they are wrong. The receiver will sell the surf boards and give the money to the General Security Holder, or GSA (a debenture in the old terminology), who placed the company into receivership. Typically this will be the bank. If the company is in liquidation, and someone has a GSA, the liquidator will also keep the surf boards.
Put simply, if you lease or supply goods to a company and you do not register the fact that they are your goods on the PPSR (www.ppsr.govt.nz) then you will most likely lose your goods if that company fails.
There is no space here to spell out why this is the case but too few company directors know this. The PPSR is a boring topic. Merely putting words PPSR anywhere in the body of a text guarantees people will not read it, which is proving to be great business for those who know what it is and how it works.
Usually the company director will find out the importance of the PPSR when an insolvency practitioner tells them that they have lost their asset, and it is a conversation those of us working in insolvency have most weeks. There is no excuse for not being informed about this regime and if you are not using it then you may as well leave your assets out on the street and hope for the best.
The PPSR is like safe sex. Inconvenient and a little dull but something you may come to wish dearly you had practiced if things go wrong.
If this has made you a little worried, talk to your accountant about the PPSR, and to your doctor if pain persists.