Key protections under the Personal Property Securities Act (PPSA) come to an end on 30 January 2014. Businesses that have been relying on the transitional rules to protect existing credit, hire or lease arrangements need to take action now or risk automatically losing their rights in their property or position as a secured creditor.
The PPSA affects arrangements such as:
- sale of goods on credit with retention of title;
- leases or licences of goods (particularly heavy vehicles or expensive equipment);
- business licence arrangements;
- arrangements where contractors store property on the principal’s land (e.g. portable site office or large equipment items);
- certain take-out rights under construction contracts;
- or security arrangements for loans and UPEs.
The PPSA provisions apply to related party as well as third party arrangements and, in our experience, the related party transactions are often overlooked.
An arrangement that is subject to the PPSA and that existed before 30 January 2012 may be protected until 30 January 2014 under the transitional provisions.
However, unless the interests have been correctly registered by 30 January 2014 they will no longer be automatically protected.
Businesses should identify assets and arrangements that are caught by the PPSA, and then take steps to protect those interests – usually by registering the interests on the PPS Register.
The registration process is very technical and a failure to correctly record an interest on the register may mean a client’s interest is not protected from claims by third parties. It is also important that clients who need to register interests start this process as soon as possible so that the registration is in place before the January deadline.
For further information on the PPSA click here or contact a member of our PPSA team.