Debtset – Bailiff-Sheriff Aust MEMBER Login
Time is running out to register Personal Property Securities interests
JANUARY 31 is the deadline for registering property interests on the Personal Property Securities Register (PPSR) under the Federal Government’s transitional provisions.
While organisations can still register a transitional security interest (TSI) on the PPSR after January 31, 2014, registering until after that date will result in losing the benefit of the transitional provisions – which could mean losing your current payment priority after a default.
The ‘perfected’ status of the security interest will only begin from the time of registration on the PPSR, instead of the earlier date allowable under the transitional provisions of the Personal Property Securities Act 2009 (PPS Act) if registered before midnight of January 31, 2014, Canberra time.
If a security interest loses its ‘perfected’ status its priority ranking will not be preserved. Another person or organisation with a security interest in the same collateral with a higher priority ranking (for example, a secured party who registered during the transitional period) will be paid out ahead of your organisation in the case of a default.
There is also the risk that if the grantor enters bankruptcy or insolvency, and a security interest has not been perfected at relevant times, the security holder will lose their security interest altogether.
From January 30 2012, the PPS Act established a new system for the creation, priority and enforcement of security interests in personal property, which it describes as all property other than land, fixtures and certain statutory interests.
The PPS Act generally applies to security interests in goods located in Australia, or to the grantor of the security interest being an Australian entity.
The centrepiece of the PPS Act is the national Personal Property Securities Register (PPSR) on which security interests in personal property are registered.
A TSI is an interest in personal property that, in substance, secures payment or performance of an obligation which existed prior to January 30, 2012.
TSIs also include security interests that did not exist at January 30, 2012, but were created under a security agreement that existed prior to that date and continued to exist after that time.
An example of this could be goods supplied in 2013 under a retention of title (ROT) agreement that was created in 2011.
TSIs can include ‘PPS leases’, which are generally leases for a term of more than a year, or more than 90 days for certain serial numbered goods, such as a car.
Secured parties need to register their TSIs on the PPSR before midnight on January 31, 2014, Canberra time, to take advantage of ‘temporary perfection’ and preserve the priority status of that TSI. Temporary perfection for the TSI will not apply from February 1, 2014. Registration of a TSI is free.
Examples of commercial arrangements that may be TSIs not yet registered on the PPSR include leases/hiring agreements, retention of title supplies and commercial consignments.
If not registered, the ‘perfected’ status of a security interest will only begin from the time of registration on the PPSR, instead of the earlier date allowable under the transitional provisions.
ends
