08.01 2014

Transitional protections under PPSA about to expire

The Personal Properties Securities Act 2009 (PPSA) commenced on 30 January 2012, establishing the Personal Property Securities Register (PPSR) as the single national register for recording security interests (e.g. security over personal property such as goods, vehicles, IP and shares (but which specifically excludes land)).

 

The transitional provisions that preserved the pre-PPSA status of security interests created prior to 30 January 2012 expire at the end of this month (30 January 2014). While most pre-PPSA registers (for example, fixed and floating charges previously on the ASIC register) were automatically migrated to the PPSR, there have been instances where registrations have been lost or incorrectly recorded due to technical difficulties in amalgamating the various pre-PPSA security registers. In essence, this means if you have a security interest that was created prior to 30 January 2012, before 30 January 2014 you should:

 

  • review those security interests migrated over to the PPSR from other registers to ensure:

……….– they have been awarded the appropriate priority;

……….– all details of registration are correct; and

……….– include all required details for registration on the PPSR (i.e additional information may be required that was not required on ………….previous register/s).

  • if your interest was never registered prior to the commencement of the PPSA, register the interest on the PPSR. This is particularly important in retention of title arrangements, as registration was not required under the pre-PPSA regime.

 

Consequences of not registering or ensuring registration is correct by the deadline, could mean that:

 

  • your security interest may lose priority to competing security interests. This risk was highlighted in the recent case of Maiden Civil (P&E) Pty & Ors v Queensland Excavation Services Pty Ltd & Ors [2013] NSWSC 852. In this case, the equipment lessor lost its right to enforce its security interest in leased equipment to subsequent security interest holders because it failed to register its security interest on the PPSR, this was the case notwithstanding that the equipment lessor retained legal title to the equipment;
  • enforceability of your security interest will be limited to the person who granted the interest and to the extent it was enforceable under the law before the PPSA; and
  • you will not be able to enforce your security interest against an administrator or liquidator, in the event the person who granted the interest becomes insolvent. You will be an unsecured creditor.

 

Please contact GRT Lawyers if you need any assistance with helping to ensure your security interest is registered.


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