Farmers urged to protect vital assets as national bankruptcy rates rise 

Farmers risk losing millions as bankruptcies rise nationally
A lawyer is urging farmers to register important assets with the government, to avoid losing them when business arrangements turn sour.
Recent figures from the Australian Financial Security Authority reveal a 7 per cent rise in personal bankruptcy nationally, with major regional centres like Townsville, with a population of 230,000, posting 154 cases last quarter, nearly a 40 per cent rise on the same quarter last year.
Farmers and agribusinesses most commonly run into serious financial problems as a result of carrying high debt loads over a long period of time, according to Bailiwick Legal director Phil Brunner.

PHOTO Farmers can secure their crops by registering them with the government’s

The Perth-based lawyer believes not enough farmers are making use of the government-run Personal Properties Security Register (PPSR), something that could save them hundreds of thousands of dollars if one of their business deals turns sour.
Pointing to examples in the livestock industry, where stock is agisted, and in the horticulture sector, where a farmers’ produce may change hands and ownership title frequently, Mr Brunner believes the register is an important tool for protecting vital assets.
“The PPSA is underpinned by legislation and it creates a hierarchy of security interests among creditors.
“If there was a bankruptcy, any of the registered security interests would take priority over unsecured creditors.”
If a farmer has agisted stock, then the benefit of registering comes if that landowner becomes involved, then that farmer is higher in the queue of people who get paid out.
But while urging farmers to make use of the PPSR, Mr Brunner admits it’s not a user-friendly website.
“There’s many reasons for the low adoption from farmers, a lot of them are still unaware, a lot think that it is too hard, a lot are conscious of the cost involved in drafting up contracts and registering the security interest.

“The cost of actual registration through the website is not necessarily high, but it is made difficult by the website’s design.”

That could be a problem, because a number of recent cases have highlighted the need for the asset to be registered in complete compliance and conformity with the PPSR’s rules.
“There have been a number of cases where errors in the registration have led to the court concluding that the registration is invalid,” Mr Brunner said.
“When you register you seek to give your self a priority amongst secured creditors, if your registration is invalid, you fall back into the unsecured creditors’ pool.”

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