The presumed compliance through the transition period will end on 30 January 2014.
What is the PPSA and why should I know about it?
The PPSA has been working as a register of securities since January 2012 and operates as a noticeboard of securities held over personal property. It is broad reaching as to the personal property that is covered. Old presumptions and the traditional thinking about ownership, proper title and priorities are somewhat skewed. Effective registration can see creditors take priority and being able to enforce against personal property, whether subject to insolvency scenarios or just generally, resulting in them being better off than those who fail to register. A failure to register can result the debtor being able to transfer goods with clear title and a presumption that there is no one claiming security.
What happens to existing arrangements?
Existing documentation and concepts of security agreements are still effective to an extent to be used in the registration process. It is essential however to know how the PPSA treats property and its proceeds to ensure that the security will be able to be effectively enforced. Failures at the stage of drafting the security agreement or through registering the interest will lead to lost property.
If you are working on a retention of title basis and seeking to secure goods in the usual course of business then the right to claw back may not exist without a proper registration. If you want to claim a right over the proceeds of the goods following a sale in the usual course of business then the situation can become even trickier, with a need to ensure that the security agreement properly describes the goods and extends to the proceeds.
In addition, there are strict times limits to register certain security interests and you will lose priority over other creditors if you do not meet the deadlines.
Agreements in place prior to January 2012 will be given some level of protection through the transitional period ending on 30 January 2014. Any interest established after January 2012 should have been registered. From February 2014 every thing becomes fair game, with the end of the transition period meaning that there is no safety net, with interests in personal property being lost without registration.
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Those who take the initiative to become familiar with the PPSA and the register will be better placed to ensure future interests, to be able to take property satisfied in the knowledge that there are no competing interests, which will naturally lead to benefits in business.
For more information on the PPSA go to www.ppsr.gov.au
If you need assistance to ensure documents are appropriate and interests are properly registered contact David Robensfor a free quote or send an email request by clicking on the ‘Make An Enquiry’ button on the right hand side of this page.