Personal Property Security could save your bacon

If your business is a company, you've probably had to give a personal guarantee to your bank and maybe to some suppliers, too.  If your business runs into trouble, you're going to have to find personal money to pay off those debts.

Often our clients are owed money by their companies from loans they have made and salaries they have not fully drawn out. These debts are treated as unsecured creditors when a company goes broke. The debt is added to the other debts owing and our client will only get his/her share of any cash left over.

You can be paid ahead of these other creditors by registering a Personal Property Security for the debt owing to you by your business. Alternatively, you could let a supplier (to whom you are giving a personal guarantee) have a Personal Property Security over your company. The Personal Property Security would be taken into account in any adjustment made between you and the supplier. Once the security is in place, it has to be renewed every five years. The registrar charges a small fee – about $20 – for renewal.