The Personal Properties Securities Bill 2009 (Cth) (PPS) completed passage of both Houses of Parliament on 26 November 2009. PPS, and amending legislation, will receive royal assent shortly, probably within a week or so.
PPS is expected to come into force in May 2011. PPS will have a significant impact on the way banks, and receiver and managers appointed by them, deal with personal property as security for payment of debts or performance of other obligations.
The property covered by PPS will include tangible property such as motor vehicles, plant and equipment, office furniture, currency, art works and stock in trade. It will also cover crops and livestock, accessories and co-mingled goods, and intangible property such as licences and contractual rights, uncertified shares and other investment instruments, negotiable interests and accounts receivable, and intellectual property rights.
PPS will include new rules for sorting out priorities between competing security interests, and for acquisitions free of security interests. Further, PPS will set up enforcement provisions in relation to personal property security which will involve new rights, and new duties, on banks as secured creditors. PPS will introduce new concepts such as attachment and perfection.
A key part of the new regime will be a registration system which will be modern and technologically advanced. The PPS Register (The Register) is to provide notice to the world of security interests, actual or prospective, in personal property. The Register will be operated by ITSA, as Registrar. The system will also play a major part in resolving priority disputes. While PPS will not abolish floating charges, it will render the distinction between fixed and floating charges irrelevant so far as priorities are concerned.
Prior to PPS coming into force, there will be a process of ‘migration’, by which interests that are currently registered on other registers will be transferred to The Register. At the end of that period there will probably be a further period within which parties can effect their own registration of existing interests.
PPS is a substantial piece of legislation, comprising over 300 provisions, and will radically change the law in relation to personal property securities. Banks and insolvency practitioners should familiarise themselves with PPS provisions and their effect well in advance of the expected commencement date. For more, see the Attorney-General’s Department website at:
http://www.ag.gov.au/www/agd/agd.nsf/Page/Consultationsreformsandreviews_personalpropertysecuritiesreform_PPSNewsletter
If you have any further queries, please contact Tim Coyle on 9288 6761 or Jim O’Donovan on 9288 6804.
