Have You Taken Security for Money Owing to You?

Have You Taken Security for Money Owing to You?

Written by Eugene Reinboth (Adelaide Commerical Lawyer)

The Personal Property Securities Register (PPSR) is the single, national online database of security interests in personal property in Australia. It protects businesses that sell on terms, such as retention of title or consignment, or hiring, renting or leasing out valuable goods, machinery, vehicles and equipment. It also protects lenders.

Businesses can register their interest in goods they have yet to receive payment for, helping them to recover the debt and lessen the risk of losing the goods if the customer does not pay or becomes insolvent. Lenders can also register their interest for loans provided to businesses or individuals using stock or other personal property as collateral.

The PPSR legally defines the priority of security interests, with a ‘first in, best dressed’ principle. It is, therefore, necessary to register the security interest at the earliest and in time.

The legislation provides for extensions of time to register in certain circumstances. The Supreme Court of Western Australia recently considered the following circumstances.

In November 2014 the borrower company by its director requested that the lender provide short-term financial accommodation to provide working capital to the borrower company whilst it undertook a capital raising. The lender was not usually engaged in the business of lending either secured or unsecured loans. Around 28 November 2014, the lender provided financial accommodation to the company pursuant to a loan agreement.  On the same day, the company granted to the lender a General Security Deed (GSD) overall its present and after-acquired property. The GSD was registered on or about 31 May 2016. The delay in the registration of the interest was some 18 months. In these special circumstances, the Court was prepared to grant an extension with some conditions.

You may wish to review your circumstances and contact Charlie Belperio or Eugene Reinbothfrom our commercial team on (08) 8212 1322 during office hours.

close slider

Contact us