BILLS OF SALE AND OTHER INSTRUMENTS ACT 1955
Section 18 Effect of failure to register a security interest
In October 2005 we ran an article on Bills of Sale and the need to have them registered to make them enforceable against Trustees in Bankruptcy and Liquidators etc. Interestingly we have recently had a number of creditors attempt to enforce Bills of Sale or other securities against assets only to find that they are unregistered and not enforceable. Some big institutions are amongst these creditors.
Readers will be aware that most securities must be registered with the ASIC to be enforceable against a company's assets. There are number of articles on this issue archived on our website.
The October 2005 article concentrated on enforceability against assets in a bankrupt estate. The section in the Queensland Act states:
(1) An unregistered security interest has no effect against a person who is not a party to the instrument creating the interest.
A trustee in bankruptcy is not a party to the instrument. Creditors should ensure that any security that they hold is registered with the appropriate authority to remove any doubt that may be unenforceable for want of registration.