The Personal Property Securities Act 2009 (“the PPS Act”) creates a framework for companies and individuals to secure debts and obligations, by way of registration on the Personal Property Security Register (“PPSR”). The PPSR is a single searchable register on which people can register their interest in personal property, in order to secure that interest. A failure to register a security interest correctly can have serious consequences. For example, priority against other secured parties may be lost, third parties may take the subject property free of the interest or in if the grantor becomes insolvent, the security interest may be lost altogether. Therefore it is imperative to be aware of the legislative requirements for registration, such as time restraints. Section 588FL of the Corporations Act 2001 (Cth) provides that a secured party must register their security interest within 20 business days of entering into the agreement to avoid the collateral vesting with the grantor. In the case of Kaizen Global Investments Ltd v Australia New Agribusiness & Chemical Group (in liq) [2017] FCA 431, the grantee (Kaizen) loaned $5 million to an Australian company, secured by a share mortgage. Kaizen did not register its security interest within 20 business days of the agreement and ultimately became an unsecured creditor when the grantor company went into liquidation. This is one of many examples demonstrating the importance of securing your interests on time. Contact M+E to have your security interests registered properly and ensure that you are protected.
