Customer Gone Broke, Selling Stock That They Do Not Own on Grays Online?

Hi Guys.

just a quick question, hopefully someone can provide a quick answer on the following. (have not called for legal advice just yet).

We are manufacturers. We sold product to a customer who has since gone bankrupt. Administrators have stepped in and have control of the company.

Our agreement to the customer, and on all invoices stated, that "Good remain the property of CompanyX, until paid for in full".

All the products from our last invoice to them are now listed on grays online for auction.

After calling the company they responded with, the administrators have advised us that if its within our building the products are ours.

Are they legally allowed to unload products in this situation on grays, when the entire stock supplied to them on the invoice is sitting in auction listings? total invoice value is approx $7000.00

Thanks.

Comments

  • +3

    Sounds like you may need legal advice - saying that is it worth the cost of legal advice to recover $7k? Probably not. I suspect you are screwed.

  • Retention of title – weaknesses and reforms This may or may not be helpful or even current. But does give some examples.

    Probably no quick answer. The problem you have is to be able to enforce your rights (if any). ie better call Saul

  • -1

    Sounds like they purchased it with the intention of taking it by calling in the admins! lol

  • -1

    This is a question for YOUR lawyers, not ozbargain

  • Their administrators are not capable of telling you that your policy and agreement with the customer is invalid - as others have suggested, try to get your own legal counsel to confirm your rights and recommend next steps to recover your assets or receive payment.

  • +1

    Thanks guys.

    Just thought i would post here as the Database of users here is quite large, and alot of threads get alot of useful replies first.
    SO thanks to those who did.

    Cheers

  • +2

    better call saul?

  • Saul + bikies seems like the way we will go :)

    • Surely Mike will be enough, no need for bikies with him around.

      • Sauly Bikies perhaps? A sauly gang would get results for sure…

  • +1

    name and shame…

  • +7

    Get a mate to offer to buy it all from them and arrange to go pick it all up, then just take the stuff

    • That sounds like a job for O. J. Simpson.

  • +1

    The administrators own it all now so talk to them and show them your evidence

  • I think technically, and logically, when you sell an item to some company, the company owns the product. Otherwise the whole trading thing will be a mess, as you as the owner of the product, can sue the company for selling "your" items. If they owe you money from that transaction, they are your debtor, and you are their creditor.

    When administrator steps in, they will sell/auction off all the products in stock, and the money recovered from the liquidation will be distributed to creditors, based on priority.

    http://download.asic.gov.au/media/1340240/Liquidation_guide_…

  • +3

    There are a bunch of cases on Romalpa/retention of title clauses. Unfortunately I think it is quite technical so would likely need to speak with a commercial lawyer.

    Also all this may have changed with the introduction of the PPSR/A from memory, and now the retention of title is supposed to be registered?

    • +1

      ^^^ Bingo.
      The PPSR scheme has drastically changed this field.
      You should have registered your interest if the goods were out of your possession but title not yet transferred.
      I think you will find the bulk of recent cases on these types of issues favour the administrators.

  • +1

    From my experience when a company goes into administration all contracts with the company is voided and the administrator own everything within the building as of administration date.
    To get your money or product from them you will need to fill in all the necessary paperwork correctly (a simple typo will cost you
    ) in which case they might give you a specific time frame to take your product back. However if you miss your time frame then there is no chance.
    However the fact that the administrators are selling your goods indicate you may have already missed the opportunity to take the product back unfortunately.
    Make sure you are registered as a creditor at least.

  • +1

    Don't get a lawyer for this & lose more money. Most of the advice you have got here is right. Fill the forms & wait your turn. I sympathize with your situation but when a organization goes into bankruptcy it's a sad turn of events.

  • I would still definitely consult legal advice, though I do not think your prospects are very good, since I doubt that you have perfected your security interest by registering it under the Personal Property Securities Act's Register (online process + fees + strict time-frames) despite the Romalpa (retention of title + all monies) clause in your contracts/invoices. Ordinarily, non-registration would be okay, because of your written contract etc., but insolvency puts a spanner into the works.

    Other provisions that could affect your rights are ss 46 and 47 of the Goods Act 1958 (Vic) and other state equivalents, depending on your jurisdiction.

    Depending on other facts, there may also be equitable interests at play.

    In short, go talk to a lawyer who specialises in small commercial transactions.

  • Did you register as creditor?

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