If you’re a business owner providing goods on credit, lending money to your own company, or extending any kind of financial assistance, understanding the Personal Property Securities Register (PPSR) could save your business – and your peace of mind.
What Is the PPSR?
The PPSR is a registry where businesses and individuals can secure their interests over personal property (anything that’s not real estate). Just as banks register mortgages on homes, the PPSR allows businesses to register their security interests on assets like vehicles, intellectual property, and goods sold under retention-of-title clauses. This ensures that in the event of insolvency, your rights to those assets are legally recognised.
“It is important to realise that ownership no longer guarantees recovery of equipment that has been leased out. Registering is a simple process, for your goods to remain secure.”
Liam Bailey
Why Is PPSR Registration so Important?
Liam Bailey, Managing Partner at O’Brien Palmer, and Angelina Kozary, Partner at Holman Webb Lawyers, explain the devastating consequences of not registering on the PPSR in this week’s episode. Here are a few key takeaways from their discussion:
- Unprotected Assets Are At Risk
If you fail to register, any assets tied to your business may be treated as general property, leaving you with no priority to recover your funds during insolvency. For example, if you finance a vehicle but don’t register your interest, the proceeds from its sale may go to the company’s general creditors rather than back to you. - You Must Register Within 20 Days
Registration must occur within 20 business days of the security agreement. If you miss this window, your security becomes void if the company enters liquidation within six months of registration. - PIMSI (Purchase Money Security Interest) Offers Super Priority
A PIMSI provides priority over general securities, but it comes with strict timing rules. For example, if you finance a car purchase, you must register before delivery or within 15 business days after delivery. - It Pays To Be First
Priority on the PPSR operates on a “first in time, first in line” basis. If another creditor registers their interest before you, they’ll have priority, even if your agreement predates theirs.
Common Mistakes and Their Consequences
Both Liam and Angelina highlighted common errors that lead to catastrophic outcomes, including:
- Forgetting to Register: Many business owners mistakenly believe having a security clause in a contract is enough.
- Incomplete or Inaccurate Registrations: Sloppy or outdated registration templates can render your security invalid.
- Complacency: The small cost and simplicity of registration make it surprising that many still overlook this critical step.
Failing to register can result in devastating losses—not just for small businesses but also for larger entities like banks. One example Angelina shared involved a bank that failed to register in time, losing its priority status and receiving nothing when the company liquidated. For smaller businesses, losses of $50,000 or $100,000 can feel even more catastrophic, leading to a domino effect of financial stress.
How O’Brien Palmer Can Help
At O’Brien Palmer, we’ve seen first-hand the importance of securing your business interests properly. Our team, in collaboration with experts like Angelina, can:
- Review and update your terms and conditions
- Train your team on how to register security interests accurately
- Provide ongoing guidance for staying compliant with PPSR legislation
The most message here, is that the PPSR is a simple, cost-effective tool that can save you and your business from significant financial loss. Protecting your assets isn’t just about good business practice; it’s about safeguarding your future.
If you’d like to learn more about how the PPSR applies to your business, or if you need help securing your position, get in touch with us at O’Brien Palmer, for a no-obligation consultation. Together, we can help you navigate the complexities of PPSR and protect your interests.
Liam Bailey, Managing Partner
O’Brien Palmer
OBP FACT SHEET
Protecting your Business (and Yourself) with the PPSR
WHAT YOU NEED TO KNOW
Understanding the Personal Property Securities Register (PPSR) might seem overwhelming, but it doesn’t have to be. We have prepared a FACT SHEET for you to download to help you navigate this very helpful register.
By registering on the PPSR, creditors and businesses ensure their interests are protected, reducing the risk of financial loss if a debtor becomes insolvent or defaults. It could be the difference for surviving in your business, or being dragged under because you didn’t register and protect your lifelihood.
