A recent Supreme Court of Queensland decision has exposed a loophole concerning future property that could leave first-ranking secured creditors unprotected, even when comprehensive security deeds are in place. The case highlights the risks of relying solely on standard PPSA definitions when securing interests in future property.
Confused by security interests under the Personal Properties Securities Act? Our associate David Lee Lewes explains.
The Personal Property Securities Act 2009 (Cth) establishes a set of rules to determine the priority between competing security interests. These rules generally provide that a purchase money security interest (PMSI) over collateral that is perfected by registration will have priority over a non PMSI security interest that is granted by the same grantor in the same collateral. However, section 64 of the Act reverses this position and allows a non-PMSI to take priority over a PMSI for an interest in an account as proceeds of inventory.
The Personal Properties Securities Register (PPSR) will be seven years old on 30 January 2019; accordingly, security interests with seven year registration periods will, unless renewed, expire from 30 January 2019.
The PPS Bill that proposed amendments to the meaning of a ‘PPS Lease’ in the Personal Property Securities Act has been passed.
Important proposed amendments to the meaning of a ‘PPS Lease’ in the Personal Property Securities Act.
On 6 February 2017, the New South Wales Court of Appeal dismissed an appeal against the well-known decision of the Supreme Court where a lessor lost its interest in turbines (worth US$44 million) because of its failure to register on the Personal Property Securities Register (PPSR).
Last week the Supreme Court of New South Wales provided another timely reminder to ensure that all security interests are correctly registered on the Personal Property and Securities Register (PPSR) through the decision In the matter of OneSteel Manufacturing Pty Ltd (administrators appointed) [2017] NSWSC 21.
Failing to register a lessor’s security interest on the PPSR over plant and equipment at leased premises can result in the lessor’s unperfected security interest passing to the administrator of the lessee.
Implications for bailment, consignment and retention of title creditors with a PMSI. In Re Arcabi Pty Ltd (Receivers & Managers Appointed) (in liq) [2014] WASC 310 a receiver who had been appointed by a bank under its security interest carried out extensive enquiries to ascertain whether goods held by the company were subject to any security interest under the Personal Property Securities Act 2009 (Cth) (PPSA).
If your terms of trade documents don’t have the correct provisions, you can lose goods supplied to a customer that becomes insolvent, even though you may have title to the goods.
The Personal Property Securities Amendment (Deregulatory Measures) Bill 2014 proposes to amend the definition of ‘PPS Lease’ in the Personal Property Securities Act 2009 (PPSA) so that leases of serial numbered personal property for less than one year will not create a PPS Lease security interest.