Are Your Pre-PPSA Security Interests Registered?
The Personal Property Securities Act 2009 (Cth) (PPSA) established a two-year temporary protection period for security interests created before 30 January 2012. During this period, such interests are deemed to be temporarily perfected, even if they are not registered on the Personal Property Securities Register (PPS Register) or perfected by another means.
The two-year temporary protection period ends on 31 January 2014. If you do not register before this date your security interests will be UNPROTECTED!
What Are the Risks?
If you do not take action to perfect your pre-PPSA security interests prior to 31 January 2014, you risk:
- allowing your security interests to become “unperfected”, which are afforded the lowest priority under the PPSA;
- having your security interests defeated by third parties with a perfected security interest, even if they came into existence after yours; and
- your security interest being ineffective in an insolvency situation.
You May Not Realise You Have a Security Interest!
Under the PPSA, a “security interest” is defined broadly as “an interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation.”
This broad definition of “security interest” includes interests which have not traditionally been considered to be security interests. For example:
- a conditional sale agreement (including an agreement to sell subject to retention of title);
- a hire purchase agreement;
- a trust receipt;
- a consignment (retention of title by the consignor);
- a lease of goods (e.g. a lease of a car or equipment);
- a bailment (e.g. an electricity supplier provides a generator to a customer and the supplier charges the customer for electricity provided – there is a security interest over the generator in favour of the supplier);
- a fit-out incentive provided to a tenant where the landlord retains ownership of the fit-out;
- step-in rights (e.g. the right for a principal to take possession of a contractor’s equipment upon default);
- a cash security deposit or retention monies (e.g. a cash deposit paid by a tenant and held by a landlord to secure the tenant’s obligations under a lease); and
- a transfer of title (where legal title to goods is transferred prior to payment).
If any of the above arrangements apply, you need to take action to protect your rights and interests!
Security Interests Registered with ASIC, REVS, etc.
Security interests that were registered on a pre-PPSA register (such as the ASIC register of company charges, REVS, etc.) should have been automatically migrated to the PPS Register upon commencement of the PPSA.
However, in order to remain perfected, these security interests must be “claimed” prior to the expiration of the transitional period.