PPSR and retention of title claims: recovering goods when a customer becomes insolvent

A retention of title clause only protects a supplier if it is perfected, usually by a correct registration on the PPSR. If it is not, the goods vest in the insolvent customer and the supplier becomes an unsecured creditor. Timing, grantor details and the clause’s wording decide most claims.

Send us an enquiry Email us

Key points

A retention of title clause is a security interest under the Personal Property Securities Act 2009 (Cth) (PPSA).
Unperfected security interests vest in the customer on liquidation, administration, a deed of company arrangement or a small business restructuring.
Registrations made late, close to the customer’s insolvency, can also vest (s 588FL).
Purchase money security interests (PMSIs) get super-priority only if registered on time and flagged as a PMSI.
A registration against the wrong identifier, such as an ABN instead of an ACN, can be fatal.

General guidance only – not legal advice. Please obtain legal advice before relying on any of this information. The law is stated as at October 2026.

What is a retention of title clause under the PPSA?

A retention of title (ROT) clause says the supplier keeps ownership until the goods are paid for. Under the PPSA, an interest that secures payment is a security interest, and s 12(2)(d) expressly includes a sale subject to retention of title.

To be enforceable against third parties, the security agreement must generally be in writing and signed or adopted by the customer (s 20). It is perfected mainly by registration on the Personal Property Securities Register (PPSR) (s 21).

Some leases and hire arrangements are also caught as “PPS leases” (s 13). Since 20 May 2017, a lease of goods is a PPS lease if its term exceeds two years. An indefinite-term lease is caught once possession passes two years. The lessor must be regularly engaged in the business of leasing goods. An unregistered lessor lost gas turbines worth about US$44 million. See Power Rental Op Co Australia, LLC v Forge Group Power Pty Ltd (in liq) [2017] NSWCA 8.

What happens to unregistered goods when a customer becomes insolvent?

Under s 267, an unperfected security interest vests in the company immediately before it enters liquidation, administration or a deed of company arrangement. The same rule applies when a small business restructuring practitioner is appointed. No court order can revive an unperfected interest.

Late registration is a separate trap. Under s 588FL of the Corporations Act 2001 (Cth), an interest perfected only by registration can vest if registered:

in the six months before the administration, restructuring or winding up began, and
more than 20 business days after the security agreement came into force.

In Carrafa v Doka Formwork Australia Pty Ltd [2014] VSC 570, a hire company registered one day late. It lost about $1 million of formwork. The court can extend the time if just and equitable (s 588FM), as in K.J. Renfrey Nominees Pty Ltd v OneSteel Manufacturing Pty Ltd [2017] FCA 325. Relief is discretionary and is best sought before any insolvency event.

How do PMSI priority and registration errors affect a claim?

A PMSI secures the purchase price of the goods supplied (s 14). It can rank ahead of an earlier general security, such as a bank’s all-assets registration (s 62). The deadlines are strict:

Inventory (stock for resale): register before the customer obtains possession.
Other goods: register within 15 business days after the customer obtains possession.

The registration must also claim PMSI status. If the PMSI box is not ticked, the supplier keeps a perfected interest but loses super-priority. Time runs from when the customer obtains possession as grantor under the supplier’s terms. Earlier possession under another arrangement does not start the clock. See Allied Distribution Finance Pty Ltd v Samwise Holdings Pty Ltd [2017] SASC 163, upheld in [2018] SASCFC 95.

The registration must also use the right grantor details. Companies are registered against their ACN, and individuals against their name and date of birth. A defect is fatal if it is “seriously misleading” (ss 164–165). In Re OneSteel Manufacturing Pty Limited (administrators appointed) [2017] NSWSC 21, registrations against the ABN were ineffective. Crushing equipment worth more than $23 million vested in the company. It did not matter that no one was actually misled.

Errors in the secured party’s own details are treated more leniently, because searches run by grantor. See AMAL Security Services Pty Ltd v 452HM Pty Ltd [2025] FCA 603.

Motor vehicles, watercraft and aircraft are “serial-numbered goods”. Consumer property of these kinds must be registered by serial number; for commercial goods it is optional but safer. Registrations can run for seven years, 25 years or with no end time, but serial-numbered and consumer registrations are capped at seven years.

What if the goods have been sold, mixed or built in?

ROT claims are strongest where the goods are still identifiable. Otherwise:

Sold on. A buyer of stock in the ordinary course of the customer’s business usually takes it free of the supplier’s interest (s 46).
Proceeds. The security interest continues in identifiable or traceable proceeds of sale, such as the customer’s receivables (ss 31–33). The registration should describe proceeds, or perfection in them may be only temporary.
Accessions. Goods installed in other goods, such as a motor in a machine, remain subject to the interest (Part 3.3).
Commingled goods. If goods are processed or mixed into a product, the interest can continue in it, within value limits (Part 3.4).
Construction. Materials built into a building usually become fixtures, meaning goods affixed to land under common law tests. The PPSA does not apply to fixtures (s 8(1)(j)), so ROT rights are generally lost. See construction insolvency.

An administrator may sell secured goods in the ordinary course of business, or with consent or the court’s leave (s 442C). Leave requires arrangements that adequately protect the secured party, as in Jones (Administrator) v Realtek Semiconductor Corporation [2025] FCA 267. Suppliers cannot repossess without the administrator’s written consent or leave (s 440B).

Worked example: a supplier’s ROT claim to an administrator

A Brisbane wholesaler supplies packaging to a food manufacturer on signed ROT terms. It registered a PMSI over inventory and proceeds before the first delivery. The manufacturer appoints administrators owing $120,000.

A stocktake finds $45,000 of unused packaging, identifiable by batch codes. The administrators release it, or account for its value, because the PMSI outranks the bank. A further $30,000 was used in production. The supplier can claim an interest in the finished product, capped at the value of its packaging. The rest was sold before the appointment. The supplier traces $20,000 into identifiable receivables as proceeds and proves for the shortfall as an unsecured creditor.

Had the registration used the manufacturer’s ABN, or been made six weeks after supply started, the whole $120,000 would likely be unsecured.

What should you do if your customer enters administration or liquidation?

Act quickly. Administrators often sell stock or the business within weeks.

Write to the administrator or liquidator promptly, asserting your ROT claim.
Provide your signed terms, PPSR verification statement and unpaid invoices.
Identify the goods by product code, batch or serial number, and request a stocktake or site inspection.
Ask that the goods be quarantined and not sold without accounting for proceeds.
Do not remove goods without written consent. Self-help can expose you to liability.
Lodge a proof of debt for any shortfall, and attend the creditors’ meetings.
If you were paid in the six months before the collapse, consider unfair preference exposure.

Are PPSA reforms coming?

Yes, but slowly. On 22 September 2023 the Government released an exposure draft Personal Property Securities Amendment (Framework Reform) Bill 2023. It accepted 345 of the 2015 Whittaker review’s 394 recommendations. Consultation closed on 17 November 2023. The draft would remove the PMSI tick box, simplify collateral classes and end registration against a trust’s ABN. PPS policy moved to Treasury in May 2025. As at 5 October 2026, the Bill has not been introduced into Parliament, so the current rules apply.

How Taylor David can help

We act across Australia for suppliers, financiers, administrators, liquidators and receivers. We can:

audit your terms of trade and PPSR registrations, and correct defects
prepare and press ROT claims, including in voluntary administrations and receiverships
apply for s 588FM extensions of time before an insolvency event
advise insolvency practitioners on assessing claims and on applications for directions
run disputes in the Supreme Court of Queensland and Federal Court, and pursue debt recovery.

This work sits within our insolvency and litigation practices.

Frequently asked questions

Questions we are often asked

Is a retention of title clause enough on its own?

No. Under the PPSA a retention of title clause is a security interest. Without perfection, usually by PPSR registration, it vests in the customer on liquidation, administration, a deed of company arrangement or small business restructuring. The supplier then ranks as an unsecured creditor. The clause must also be in a written agreement the customer signed or adopted. Terms printed only on invoices may not be enough.

Can an administrator sell goods I supplied on retention of title terms?

Sometimes. An administrator can dispose of property subject to a security interest in the ordinary course of the company’s business. Otherwise, the administrator needs your written consent or the court’s leave (s 442C). Leave requires arrangements that adequately protect your interests, and courts weigh the return to all creditors. A perfected supplier should insist the proceeds are held or accounted for.

What is the 20 business day rule?

Section 588FL of the Corporations Act targets late registrations. An interest can vest if registered more than 20 business days after the security agreement came into force. It must also fall within six months before the administration, restructuring or winding up. One day late was enough in Carrafa v Doka Formwork. The court can extend time (s 588FM), but relief is discretionary and best sought early.

Can I register against my customer’s ABN?

Not if the customer is a company. Company grantors must be registered against their ACN. Using an ABN can make the registration seriously misleading and ineffective, as in OneSteel [2017] NSWSC 21. Sole traders are registered against their name and date of birth, not their ABN. Trusts with an ABN are registered against that ABN. Check the identifier against ASIC records before registering.

How can suppliers protect themselves now?

Audit your terms. Make sure they include a clear ROT clause, cover proceeds and are signed by the customer. Register on the PPSR as soon as each agreement starts, and before delivery for stock. Tick the PMSI box, check the grantor details, and track expiry dates so registrations are renewed in time. Review registrations when customers change entities or restructure.

General guidance only – not legal advice. Please obtain legal advice before relying on any of this information. The law is stated as at October 2026.

Related expertise

Insolvency →Litigation →Reconstruction & Turnaround →

The earlier we talk, the more options you have.

To discuss your situation in confidence, call us on +61 7 3229 9800, email [email protected] or send us an enquiry online.

Send an enquiry Email us