The PPSR transitional period has now expired – as of 31 January 2014. So what sense of security can be gleaned?
The Personal Property Securities Act 2009 (PPSA) came into operation on 30 January 2012 as the first national register of security interests of personal property.
Prior to the PPSA, creditors and stakeholders with security interests against companies were required by the Corporations Act to register with the Australian Securities & Investments Commission. In addition there were countless other registers for the likes of motor vehicles encumbrances, bills of sales etc which were in operation across the various states and territories Australia wide. Adding to the confusion was that not all security interests had to be registered, such as credit terms for retention of title to stock.
The PPSA enacted the Personal Property Securities Register (PPSR) as a single register covering all personal property. The PPSR is administered by the Australian Financial Securities Authority (AFSA). Securities interests covered by the PPSA include charges, mortgages and pledges, conditional sale agreements (such as retaining title to stock and its proceeds), hire purchase agreements, consignments and leases.
With the introduction of the PPSA Act came a two year transition period to allow creditors to register their existing interests against the grantor and relevant property that was not registered on the old registers prior to PPSA. The transition period has now come to pass.
This now means that the PPSR can be relied upon to know exactly who is claiming a security interest against your assets. Conversely you also confidently assess the security interests position of anyone you are currently, or considering doing business with.
Creditors who are involved in an insolvency administration who haven’t registered their security interests over assets from 1 February this year need to know that their claims will be dealt with differently. Simply put – their securities will in most cases ‘go to the back of the line’ behind those other creditors have registered security interests. Consideration as to when and how you became a secured creditor is no longer as relevant if there is no registration.
It doesn’t matter if you were first in line to give credit and take security – an unregistered interest equates to being the last in line of secured creditors.