PPSR: seven year itch?
The Personal Property Securities Register (PPSR) commenced on 30 January 2012 following the enactment of the Personal Property Securities Act.
This register records a security interest in an asset that, in substance, secures payment of a debt or obligation.
Under the legislation, specific collateral registration in relation to serial numbered property such as motor vehicles, watercraft, aircraft and some other types of intellectual property may have been registered for a seven-year period, given this was the maximum period these registrations could be registered until.
In addition, all pre-existing company charges previously registered with ASIC and other securities registered previously under other systems (for example Bill of Sales) were automatically migrated and registered on the PPSR.
These migrated registrations will automatically expire if not renewed by 30 January 2019. Directors and advisors must be aware that these positions may have expired and could require new registration.
What is the impact of a new registration?
If expired, only a new registration (there are some exceptions) will enable the priority of a particular security interest to be held, as there is no extension or renewal provision that continues the security interest. It is, therefore, important to ascertain when the security interest expires and act well in advance. In addition, when a new security is registered, in accordance with the Corporations Act, this registration will be ineffective for a period of six months, given it will be a registration made more than 20 business days after the creation of the security agreement. Registrations should be reviewed via the PPSR website and renewed as relevant.
What else should you consider?
Consideration should be given to the following for your business or your client’s business:
- Is the management of PPSR registrations incorporated into business-as-usual processes to ensure expiring positions are managed effectively?
- Is there concern that the party to the contract is insolvent or likely to be insolvent whilst the security is being perfected?
- Have the contract terms relating to any arrangement changed, and what is the ipso facto position in the event of insolvency?
- Has the business conducted a review to ascertain if security interests are relevant and effective across all types of assets held?
We can provide you with the right guidance in relation to PPSR, including a review of customer solvency positions, a review of business processes/positions or getting you the right support from our network. For further guidance, please contact one of our partners in your state.
How can Cor Cordis assist?
If you require further information or want a confidential discussion, please contact one of our partners at our office near you.