The biggest change the Personal Property Securities Act (PPSA) has introduced is that ‘title is no longer king’. If businesses fail to register their security interest, created under the PPSA legislation and if there’s an insolvency event of the business’ customer, which would be evidenced by the appointment of an administrator, liquidator, receiver or trustee in bankruptcy, then the original owner of the goods or assets may lose the benefits of those assets, because the insolvency practitioner may be able to sell those goods or assets on behalf of a secured creditor.
We emphasise that registration of a title is not mandatory but is voluntary. It is up to individual businesses to decide whether to self-insure and not register, or to register for some or all of their customers.
Businesses should consider establishing a sum of money and, if an invoice exceeds that sum, then that transaction would be protected by lodging a security interest on the PPSR. Businesses should also determine a minimum value of assets. If assets located on someone else’s property are valued at more than the ‘minimum’ amount, consideration should be given to registering those assets on the PPSR.
This is very important legislation. If you would like to discuss it with us, please don’t hesitate to contact us.
