Company creditor managers wrestle with PPS Register

7-May-2013 Commercial Disputes By admin

The Personal Property and Securities Act is causing many sleepless nights for credit managers wondering if they have acquired sufficient security in exchange for extending credit.

The introduction of the Personal Properties Security Register more than a year ago has caused some confusion in the business world, with many companies uncertain about whether their credit is secured.

One of the major issues when companies enter external administration is determining the priority rights attached to assets held by the company. Under Pre-PPS laws, priority rights attached to assets held by the company were determined by whichever party held superior title.

“Gone are the days where credit managers could sleep at night knowing they had an executed agreement with a retention of title clause (also known as a ‘rompala’ clause),” said Streeterlaw solicitor Evatt Styles.

“We strongly recommend companies review their company’s supply agreement and terms of trade to ensure they have the right to possess goods supplied under a valid retention of title contract, based on ownership and repossession rights under the Agreement.”

But this retention of title provision is no longer enough. You need an express term in a written agreement that entitles the creditor to register their interest on the PPS Register.

Property is frequently sold or leased on the basis that the buyer takes possession of the item concerned without acquiring legal title to it until full payment is made. Under the PPS Act, such arrangements create a security interest in the property leased or sold.

If such security interests are not registered on the PPS Register, the vendor/lessor’s rights in that property may be lost in the event that the buyer/hirer becomes insolvent.

“If an administrator has been appointed, assets of the company are generally considered to be available to reimburse secured creditors unless the true holder of the title registers ‘security’ over them,” Mr Styles explained.

“Title itself does not equate to rights over property in these circumstances and failure to register an interest may result in your business having no claim to the asset in this external administration scenario.”

Mr Styles said it’s so important companies ensure they have registered their security interests with the PPS Register.

The Solution

Contact Streeterlaw immediately to arrange for a Case Appraisal Conference to discuss and advise you on:

  1. Identifying assets affected and transactions that need to be registered on the PPSR
  2. Reviewing the Terms and Conditions and Contract Documentation in relation to: Retention of Title Clauses, Personal Guarantees, Charging clauses and Registration on the PPSR.
  3. Developing new internal policies and procedures for registering transactions and the associated documentation processes.

Please begin compiling the following information now:

  1. Security agreements that may have been registered; and
  2. Full details of stock that is still in the debtor company’s possession.

Contact Streeterlaw solicitor Evatt Styles for further information on 8197 0105 or by email at

* For more information on the Personal Properties Security Register, see our article published in November 2012 – Secure your stock or risk losing money owed to you

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