When the Personal Property Securities Act 2009 (Cth) (PPSA) was introduced in January 2012, a transitional period was provided which allowed businesses to protect their security interests for the transitional period (Transitional Security Interest). A Transitional Security Interest arises for security interests that arose before the commencement of the PPSA. Key protections surrounding these transitional rules will be coming to an end on 31 January 2014. Businesses that have relied on these transitional provisions need to act now or risk automatically losing their rights in their personal property or a position as a secured creditor.
Key interests that will be affected include:
- Retention of title arrangements;
- Equipment and finance leases;
- Commercial consignments.
Steps you should take to protect your interests
- Identify all of the security interests held by your business;
- Document each security interest (including those that have been subject to the transitional provisions);
Implement steps to perfect your security interests:
- before 31 January 2014 for security interests subject to the transitional provisions; and
- ASAP for all other security interests.
If you do not take steps to protect your security interests in the property subject to the transitional provisions, then they cease to be perfected after 31 January 2014. This is a risk due to the event of insolvency of your counter party; you will only be an unsecured creditor as opposed to a secured creditor, despite the fact that you may own the goods.
If you register your transitional security interest after 1 February 2014, the date of your security interest will be from the date you register. However, if you register before 31 January 2014, the reflection date of registration is still 30 January 2012. Therefore, late registration may affect the priority of your interest.