Registering a security interest on the Personal Property Securities Register (PPSR) can be a daunting task for anyone, let alone first time users.

With terminology very rarely used outside of the PPSR process, it is easy for a financier or supplier to simply tick the wrong box or overlook a piece of information which requires further disclosure.

Common mistakes which we have seen from creditors when attempting to register their security interest on the PPSR include the following:

  • Claiming a security interest is transitional when it is not
  • Error in the serial number of a serial numbered good
  • Selection of incorrect collateral class
  • Failure to identify grantor in required manner, including, but not limited to, the following:
    • A company acting in its own capacity must be identified using its Australian Company Number (ACN)
    • A trust which has its own Australian Business Number (ABN) must be identified by said ABN, not by the ACN of its corporate trustee
    • A trust which does not have its own ABN, but has a corporate trustee, must be identified using the ACN of the corporate trustee
    • If a grantor’s situation changes, a secured party must update its Personal Property Securities Registration within 5 business days of becoming aware of any such change

Any of the above mistakes are likely to render a registration on the PPSR as ineffective.

Furthermore, there are additional intricacies to the PPSR which can trip a creditor up when registering their security interest, some of which are discussed below.

Purchase Money Security Interests

Another term utilised by the PPSR, which is likely foreign to most is the term Purchase Money Security Interest (PMSI).

A security interest will generally be a PMSI when the money lent (or credit provided) by a creditor is for the purpose of funding all or part of the purchase price of the personal property for which security is granted by the grantor.

A PMSI generally provides a creditor’s security interest with priority over any other party’s security interest in the same property, even if the other party registered their interest on the PPSR before the PMSI registration; and is often referred to as ‘super-priority’.

However, there are some common pitfalls encountered by creditors when dealing with PMSI registrations, including the following:

  • Failure to claim a PMSI when the security is a PMSI will likely result in the super-priority of the PMSI being lost, with priority being determined by other rules (most often being the first to register)
  • Registration of PMSI outside of specified time limits will, in most circumstances, result in the super-priority of the PMSI being lost, with priority again being determined by other rules (as above)
  • Claiming a PMSI where there is none could cause the entire registration to be ineffective

Insolvency of Grantor (*when grantor is a company*)

A registration of a security interest, by a creditor, more than 20 business days after the security agreement was created, will be set aside if the grantor is a company and becomes insolvent within six months of the date of registration.

The mistakes listed above are by no means exhaustive.

The PPSR presents a myriad of potential stumbling blocks for creditors when registering their security interest and utmost care must be taken when registering any security interest, as any minor mistake can have major (and usually costly) repercussions.

Should you have any queries in relation to the PPSR specifically or in general, please reach out to our office for further advice.

About the author

Benjamin Mitchell is a Senior Insolvency Accountant at HLB Mann Judd Insolvency WA. Benjamin assists the Partners with the many Corporate and Personal insolvency appointments managed by the HLB Insolvency team.

If you have any queries about insolvency matters, please feel free to contact the team on 08 9215 7900.


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