The Personal Property Securities Act 2009 – A Practical Guide for Accountants Amy Sheggerud-Woods Partner Accredited Commercial Litigation Specialist Marsh & Maher Richmond Bennison Lawyers
• Commenced on 30 January 2012 • Contains default rules for the creation, priority and enforcement of security interests in Personal personal property Property • Created the Personal Property Securities Register (“ PPSR ”), a national public register of security interests in personal property Securities Act • PPSR subsumed and replaced multiple state and 2009 (Cth) national registers, including ASIC Register of Company Charges, state and territory registers of encumbered vehicles, and state and territory bills of sale, stock, wool and crop registers
New terminology in PPSA https://www.ppsr.gov.au/ppsr-overview
An interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation, such as: Security - charges (fixed or floating) - chattel mortgage interest - conditional sale agreement (i.e. retention of (PPSA s12) title clause) - hire purchase agreement - consignment - lease of goods
Broad definition, including tangible and intangible property: Personal -not land -not fixtures property -not liens, charges or security interests (PPSA s8 & provided for under statute or general law s10) -other specific exclusions under PPSA
Purchase The security interest of a Secured Party in collateral for: money - the purchase price of the personal property security - the value given to enable a Grantor to acquire interest rights personal property (“PMSI”) - a commercial consignment (PPSA s14) - a PPS lease
• “ Title to the goods shall remain vested in the seller and shall not pass to the buyer until the purchase price for the goods has been paid in full and received by the seller.” PMSI: • Seller has a registrable security interest on the Retention of PPSR as a PMSI title clause • Terms and conditions of sale should be updated to refer to PPSA for the avoidance of doubt - Central Cleaning Supplies (Aust) Pty Ltd v Elkerton [2015] VSCA 92
• A lease or bailment of goods: - for more than 2 years; - for up to 2 years if automatically renewable; - for an indefinite period once the possession by PMSI: the lessee exceeds 2 years by a lessor that is regularly engaged in the business of leasing goods PPS Lease • Lessor has a registrable security interest on the (PPSA s13) PPSR as a PMSI - Maiden Civil v QES [2013] NSWSC 852 - Power Rental Op Co Australia, LLC v Forge Group Power Pty Ltd (in liq) (receivers and managers appointed) [2017] NSWCA 8
• Registration of the PMSI on the PPSR gives the Secured Party priority over other Secured Parties in the same collateral • Example: PMSI - A seller of goods pursuant to a retention of title clause; or Super-priority - A lessor of equipment; (PPSA s62) would have priority over a bank with a general security interest • However, PMSI does not have priority over security interests in crops or livestock for the value given to develop them
• Secured party who has given value to a Grantor to enable: - crops to be produced; or Agricultural - livestock to be fed or developed; security has priority over any other security interests in the crops, livestock (including fish) or proceeds interests if: (PPSA s85 & - the crops are growing at the time of the making of the security agreement, or grown 86) within 6 months thereafter - the livestock are held at the time of the making of the security agreement, or acquired within 6 months thereafter
• Since commencement of PPSA, fixed and floating charges have been replaced in practice by General Security Agreement (“GSA”) Fixed and • PPSA does not provide for fixed and floating floating charges other than: charges - Fixed charge is taken to be a security interest over personal property that is not a (PPSA s339) circulating asset - Floating charge is taken to be security interest over personal property that is a circulating security asset
• Personal property for which the Secured Party has given the Grantor authority to deal with and sell in the ordinary course of the business free Circulating of the security interest asset • Usually inventory and accounts in the ordinary (PPSA s340) course of business - Langdon, in the matter of Forge Group Ltd (Receivers and Managers Appointed) (In Liquidation) [2017] FCA 170
• “ All present and after-acquired property ” ALLPAAP • Personal property over which the Grantor has an interest at the time of registration on the (PPS Regs, PPSR and personal property acquired after the registration s1.6) • GSA of Banks will often provide for creation of a security interest over ALLPAAP of the Grantor
• Most effective way for Secured Party to protect security interest Perfection by • Online registration with a “financing statement” (PPSA, s153 & PPS Regulations Schedule 1) registration • A “verification statement” is produced and on PPSR emailed to the Secured Party once the registration is made (PPSA, s155 & s 156) (PPSA s21) • Secured Party must provide a copy of the verification statement to the Grantor (PPSA, s157)
• Seriously misleading defect in registration if requirements of PPS Regulations are not met with the consequence that the registration is ineffective • Extension of time for registration of security Defective interests (PPSA, s293; Corporations Act 2001, s588FM) registration – -Accolade Wines Australia Ltd [2016] NSWSC 1023 -In the matter of OneSteel Manufacturing Pty Limited general rule (administrators appointed) [2017] NSWSC 21 -Re Appleyard Capital Pty Ltd [2014] NSWSC 782 (PPSA s165) - Kaizen Global Investments Limited , [2017] FCA 431 • Ineffectiveness of a registration does not affect the validity of the underlying security agreement, but may result in a loss of priority (PPSA Explanatory Memorandum, 5.80)
• Grantor Identifier • Manufacturer Name‘s for aircraft, helicopter, or aircraft • Grantor DOB engine • Grantor Name • Manufacturer‘s generic model description for aircraft, • Any serial number in a serial helicopter, or aircraft engine number field Registration • Secured Party Group (this is • PMSI achieved by the Transfer a • Inventory Registration transaction) items that • Assets subject to control • Attachment file name • Collateral Type • Attachment free text cannot be description. It can only be • Collateral Class added and removed with the associated attachment • Kind (of registration) (i.e. amended security interest, court order, • Registration Number hoon lien, other prescribed • Change Number property or proceeds of crime) • Transitional Indicator • Start Date/Time • Migrated Indicator • Earlier registration number
• Insolvency – loss of unregistered security interest by vesting in Grantor Consequences (PPSA s267, s267A ; Corporations Act 2001 s588FL) of unperfected - Maiden Civil v QES [2013] NSWSC 852 registrations - Re Carpenter International Pty Ltd (administrators appointed) [2016] VSC 118 - Power Rental v Forge Group [2017] NSWCA 8
• Transaction resulting in a creditor receiving more in respect of an unsecured debt than would be received if the proving for the debt in Unfair liquidation of the company preferences ( Corporations Act 2001 s588FA) • Transaction giving creditor a preference, priority and security or advantage over other creditors interests ( Bankruptcy Act 1966, s122) - Hussain v CSR Building Products Ltd [2016] FCA 392
• Grantor / Secured party: -Full name -Date of birth (for individuals, partners and PPSR Search- trustees) -ACN (for companies) usual -ABN (for partnerships and trusts) information -ARBN (for foreign companies/registrable Australian bodies) required -ARSN (for managed investment schemes) • Serial number of goods • PPSR registration number
Search the PPSR
Before: ASIC register of charges
After: Migrated registration to PPSR
• Secured Party has the group number, access code and token number required to discharge registered security interest on PPSR Discharge • Deed of release gives Grantor evidence of registrations full or partial release of security interest on the PPSR • Grantor may seek discharge or amendment of PPSR registration via Amendment Demand process if Secured Party fails to discharge
• The Secured Party may seize collateral by any method permitted by law if the debtor is in default under the security agreement • Security agreement may provide for Enforcement: enforcement general rule - Knauf Plasterboard Pty Ltd v Plasterboard West Pty Ltd (In Liquidation) (Receivers and (PPSA s123) Manager Appointed) [2017] FCA 866; • Court orders for possession - BOQ Credit Pty Ltd v Chatah [2017] NSWSC 1444
Enforcement: • Secured party may take possession of crops, crops and harvest, and/or sell livestock • Secured party may take possession of livestock (PPSA s138B (including fish), slaughter, extract products, and/or sell & 138C
https:/www.ppsr.gov.au/business-resources .
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