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12 December 2013 31 January 2014 - PPSR problems are you ready?

By Angela Harvey, Partner and Euge Power, Solicitor


IN BRIEF

The transitional measures in relation to the Personal Properties Securities Act 2009 and Personal Properties Securities Register will come to a close at the end of January 2014. Failing to register relevant interests by that date may lead to grave implications for you, your business or your clients. In this article Angela Harvey, partner, and Euge Power, solicitor, show you why you should take perfection and the end of the PPSR grace period seriously.


When the Personal Properties Securities Register (PPSR) opened for business, by virtue of the Personal Properties Securities Act 2009 (the Act), certain types of securities existing at the time were given protection for two years to enable the holders of such security interests time to register. The protection consisted of deemed 'perfection' of the interest during the grace period where 'perfection' consists of correct and timely registration of the security interest on the PPSR.
 
If the security interest is not properly registered when the grace period comes to an end on 1 February 2014, although you will still be able to register any security interest, you will lose the 'perfected' status obtained via the grace period. This means the priority ranking your security interest may have had in the grace period against other registered security interest holders will be lost. Therefore, if there is a default by the grantor of the security interest, all other security interest holders will be paid out ahead of you. Further, if the grantor of the security interest becomes insolvent or enters bankruptcy without the security interest being perfected, you may lose the security interest altogether.
 
With the end of the grace period imminent, now is the time to consider the steps you need to take to protect your interests, or deal with the risk associated with losing the perfected status. Do not underestimate the impact the passing of the grace period may have upon your financial security or the financial security of your business.
 
The first, and most obvious, step may be registration of the security interest on the PPSR before the end of the grace period, or to make fresh arrangements in regard to the security and register those new interests on the PPSR. Though despite the importance of addressing the above deadline, there may be other ways of managing risks associated with security interests. However it is important your option of perfecting the interest by registration is not relinquished before all options are assessed.
 
Do not let your interests be defeated by a mere deadline. Speak to an expert in relation to the PPSR and risk management of security interests to ensure 1 February 2014 is a perfect day.
 
For further information in relation to the PPSR, please see the following articles by Swaab Attorneys, linked below.

It's got to be perfect! Are your security interests in goods properly recorded on the PPSR?
Possession really is 9/10s of the law. Are you ready for the end to PPSA transition arrangements?

For further information, please contact:

Angela Harvey, Partner  |  Phone: +61 2 9233 5544  |  Email: axh@swaab.com.au

If you would like to republish this article, it is generally approved, but prior to doing so please contact the Marketing team at marketing@swaab.com.au

This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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