June 2, 2014

Make sure you register your security interests on the Personal Property Securities Register (PPSR)

The PPSR is a single point of contact register for consumers, businesses and the finance industry. Operators can search the PPSR when they need to know whether certain personal property has a security interest registered against it.

It is important for businesses to manage their credit risk by ensuring they register their security interests for any goods they supply or lease on the PPSR. If you do not properly register your security interest and a debtor is placed into liquidation or bankruptcy, your position will be similar to that of an unsecured creditor, who rank behind secured creditors when payments are made or assets distributed.

Case Study – Ensuring your security interests are registered properly

SV Partners were appointed Liquidators of a company in January 2014. The company previously operated a franchise which ceased trading prior to our appointment, and owned equipment which we intended to realise.

The franchisor claimed to be a secured creditor over the company’s assets, but they registered their security interest on the PPSR incorrectly. Instead of registering it by their Australian Company Number, they acknowledged they registered it to an Australian Registered Scheme Number.

The franchisor’s claim as a secured creditor was rejected, however, the franchisor and the company had a franchise agreement where the franchisor had first right to purchase the equipment.

If the franchisor had correctly registered their security interest on the PPSR, the franchisor could have taken possession of the equipment and deducted the value of it from their outstanding debt. In this instance, a dividend would not be paid to any creditor, however, due to the incorrect registration of their security interest, the franchisor had to pay us market value for the equipment, incurring a monetary loss of approximately $33,000.

SV Partners are now paying a dividend to priority creditors. This matter is an example as to the importance of why secured creditors need to ensure they register their security interests on the PPSR correctly. If they do not, then they may lose their security over a company’s assets.

PPSR Register Statistics – AFSA March 2014 Statistics

AFSA have released the March quarter 2014 PPSR statistics, which saw the highest number of searches for a quarter since the PPSR started in 2012. There were 1,777,943 searches conducted, a total increase of 21.3% compared to the 2013 March quarter. In summary:

  • There were 891,187 registrations amended on the PPSR in the March quarter 2014.
  • In the March quarter 2014, 323,444 registrations on the PPSR were discharged or removed.
  • Motor vehicles are the most common collateral class listed on registrations on the PPSR. As at 31 March 2014, there were 4,179,454 current registrations of this class on the PPSR.
  • Commercial property is the most common kind of collateral. As at 31 March 2014, there were 5,367,886 current registrations of this kind on the PPSR.

If you would like more advice on how SV Partners can assist you with registering your security interests or any advice on PPSR matters, please contact one of our expert advisors on 1800 246 801.

Related Articles:

Construction alert: Changes to the QLD Security of Payment Legislation

Retention of Title and the Personal Property and Security Act

Issues to consider before you decide to outsource legal services

Proposed ASFA changes for insolvency fees

Relieving the burden on small business – Review of the Personal Property Securities Act

Are you concerned about your financial position? Contact us now for an obligation free consultation on