PPSR Registrations: Are you still protected?

The Personal Properties Securities Register (PPSR) commenced on 30 January 2012. The PPSR is used to determine priority for secured creditors in the case of debtor default or liquidation. It has now been 7 years since the PPSR commenced which means registrations will begin to naturally expire from 30 January 2019. For secured creditors who have a registered interest on the PPSR, it will be important to review current registrations within the next few months to ensure they don’t lapse or expire.

What’s the risk?

If your registrations are not renewed before they lapse or expire there is a real risk that you could lose priority in the personal property with a secured interest and you would ultimately become ‘unsecured’ and your interest ‘unperfected’.

Unperfected security interests could result in secured creditors’ interests taking priority over yours. If the PPSA retention of title property provisions of the Corporations Act 2001 apply (which deals with personal property used, occupied by or in possession of a corporation to which the corporation does not have title to) then if a company is would up or an administrator is appointed and a security interest is unperfected, the security interest will vest in the company immediately before it is wound up or administered. If personal property is involved, such as goods, then the goods will fall within the pool of assets and will be available for distribution to the company creditors.  The supplier will then become an unsecured creditor.  If an individual grantor becomes bankrupt, then as a result of the lapsed registration, the interest will not be enforceable.

What you can do to check the status of a registration

The PPSR has a free online search tool which sets out the steps you need to take to check when your registrations will expire. You can:

1. Get a free report to view your registrations - https://www.ppsr.gov.au/how-get-your-registrations-due-expire-report ; or
2. Manage a Secured Party Group (SPG) workbench - https://www.ppsr.gov.au/how-view-your-registrations-your-spg-workbench

How to protect your current registrations

You can take steps to protect your current registrations before they expire or lapse. You may do this by either renewing a registration or extending the expiry date of the registration.

It is important to be aware that you can only renew or amend a registration on the PPSR before its expiry date. If the registration has expired or lapsed, it cannot be renewed. To ensure the interest in the personal property remains protected, a new security interest would need to be registered. However, there is a risk that the new registration may not have the same priority as the original registration.

Don’t leave it too late! Make sure you take the necessary steps to keep your secured interests protected and avoid disappointment.