The Personal Property Securities Act – Transition Period ends on 30 January 2014 – Are you ready?
By Phillip Leaman
29 October 2013
The Personal Property Securities Act 2009 (“the Act”) provided for a transition period to allow affected parties to implement documentation to ensure that their interests were not adversely affected by the Act. This transition period ends on 30 January 2014.
Who does the end of the transition period affect?
Some of the affected parties include:
- you are a supplier of goods on credit (i.e. retention of title/consignment claims);
- you lease/bailment of chattels to others;
- you have loaned monies to another party with charging rights over assets of the borrower;
- You are in the business of leasing property with chattels (i.e. furniture/fit-outs);
- You have rights under a shareholder or joint venture and have a security interest/charge over another’s assets in the case of a default
and you had an arrangement in place prior to 30 January 2012 which has not subsequently been perfected/registered in the Personal Property Securities Act Register.
Under the Act such parties had special temporary protection so they could enforce their rights under the Act notwithstanding that they had not registered their interests in accordance with the Act (prior to giving up possession of their goods/property).
Please note that if you had a charge/security interest which occurred prior to 30 January 2012 and it was registered prior to this time (for example a fixed and floating charge registered with the Australian Securities and Investments Commission or another interest registered on a state registry ) then such charges should have been automatically migrated to the new register. However, you should check to make sure that this has been done and that you have claimed such registrations in the system to avoiding any issues.
So what does this mean for me?
If you have a security interest, you must get your documents in order and register your security interest in the relevant goods/property prior to 30 January 2014 in order to perfect your security interest to get protection under the Act.
What happens if I do not register my interest?
If you do not register your security interest then after 30 January 2014 then you will lose your priority in the subject property and in the event of a dispute as to a claim to those goods (i.e. in the case that the grantor (person with possession of the goods) becomes insolvent) then you will stand in line with all unsecured creditors and not have priority in recouping your goods/property.
What should I do now?
You need to evaluate your documentation and register security interests where appropriate. For example, if you supply goods on credit, review your trading terms and register security interests on your customers where goods are supplied. This must be done no later than by 30 January 2014.
If you have a security interest in goods/property then you should ensure that any future transactions are also appropriately documented and you register a security interest on the Personal Property Securities Act register to ensure that your interest is protected. See our post on the PPS here for more details.