Contact: Carter Newell (Queensland, Australia)
Key points
-
The transitional period under the PPSA ends on 30 January 2014.
-
Security interests created prior to 30 January 2012 should be perfected prior to this time (for example, by registration on the PPSR).
-
Failure to perfect a transitional security interest prior to this date may result in a loss of priority in the collateral to an earlier perfected security interest or the security interest becoming void on insolvency of the grantor (and a secured creditor's claim becoming unsecured).
-
Businesses at particular risk include:
- financiers of assets or equipment under equipment leases or hire/purchase arrangements;
- lessors offering vehicles, aircraft, vessels, equipment or machinery for hire;
- suppliers who provide goods on a retention of title basis;
- owners of goods, such as inventory, stored in shops or warehouses belonging to third
parties; and
- landlords retaining ownership of chattels (such as valuable equipment, machinery or fit-
out material).
A number of Australian corporate entities are still coming to terms with the impact of the Personal Property Securities Act 2009 (Cth) (PPSA) on their business activities. These entities may not be aware that some security arrangements put in place on or prior to 31 January 2012 need to be 'perfected' for the purposes of the PPSA prior to 30 January 2014 to continue to be effective.
As highlighted in the recent decision of the Supreme Court of New South Wales in the Maiden Civil case,(1) the impact of failing to take adequate steps to protect security interests in personal property can be severe. This article explains the consequences of failing to perfect a transitional security interest prior to 30 January 2014, identifies those businesses which are most likely to be at risk and provides suggestions for action which should be taken prior to the end of the transitional period.
