The transitional period under the Personal Property Securities Act 2009 (PPSA) ends on 30 January 2014.
It is imperative that companies and individuals ensure that all transitional security interests created in their favour prior to the introduction of the PPSA are registered on the Personal Property Securities Register (PPSR) before the end of the transitional period.
A “transitional security interest”
A 'transitional security interest' is defined under the PPSA as a security interest under a security agreement which was:
- granted prior to 30 January 2012; or
- granted on or after 30 January 2012 under an agreement entered into prior to 30 January 2012.
The transitional provisions of the PPSA were intended to provide temporary protection for businesses and individuals that held security interests prior to the commencement of the PPSA on 30 January 2012.
Temporary Perfection of Transitional Security Interests
All transitional security interests were temporarily perfected from immediately before 30 January 2012. This means that any security interest that arose before January 30 2012 was enforceable despite not being registered on the PPSR.
'Migrated' versus 'Non-Migrated' Transitional Security Interests
A transitional security interest may fall within one of two categories, that is 'migrated' and 'non-migrated' transitional security interests.
A migrated transitional security interest is one which was previously registered on a designated register immediately before 30 January 2012 (for example, charges under the Corporations Act). No further steps are required to perfect migrated transitional security interests as these were automatically migrated to the PPSR. However, we strongly recommend that secured parties ensure that all transitional security interests from the designated registers have migrated successfully by carrying out searches on the PPSR. Not all were successfully migrated and if they have not been then they need to be registered before 30 January 2014.
A non-migrated transitional security interest is one which was not capable of being registered on a designated register prior to 30 January 2012 (such as retention of title arrangements, bailments and leases of personal property). All non-migrated transitional security interests were afforded temporary perfection under the transitional provisions of the PPSA.
What do I need to do before January 2014?
All companies and individuals who have the benefit of a non-migrated transitional security interest must ensure that their interest is perfected by registration (or otherwise by control or possession), prior to 30 January 2014.
Failure to do so may result in the secured party losing priority of their interest to another secured party with an interest in the same collateral. In addition, the secured party may become an unsecured creditor in the event of insolvency.