Practical Implications of the Personal Property Securities Act (PPSA)
Financiers and clients who supply goods on credit have been greatly impacted by the Federal Government’s Personal Property Securities Act which came into force on 30 January 2012.
The PPSA provides that:
- Creditors have a 2 year transitional period in which to register a charge for any goods supplied before 30 January 2012.
- The supplier only has security over goods supplied after 30 January 02012 if the supplier registers their security interest before delivery.
- If the registration is not completed, then the charge is then technically invalid.
- If a liquidator is appointed, these goods become company assets regardless of ROT clauses.
- There is no protection for suppliers if the registration does not occur prior to the delivery of goods to the customer.
Suppliers of goods with substantial value must protect themselves by registering their security over any goods supplied, and they must do so before delivery.