PPSR: What is it and should I use it?

KEY TAKE OUTS

• Government programs such as JobKeeper are ending, increasing the financial strain on many businesses.
• Creditors and suppliers of businesses may be more vulnerable due to the possibility of insolvency of many businesses still struggling post-COVID-19.
• The Personal Property Security Register (PPSR) is a way for creditors to register their security interests in personal property to protect their rights over assets.

Many government programs provided significant financial support during the COVID-19 pandemic. Programs such as JobKeeper allowed employees to remain at work whilst receiving the whole or a portion of their pay from government funding. This made it much easier for businesses to stay afloat and alleviated some of the financial stress during 2020.

These programs are due to end on 28 March 2021, after already being extended to January this year. This causes a real difficulty for businesses which are still struggling with the financial effects of the pandemic as they will again be required to pay all employee salaries and other business expenditures.

This poses a further issue for suppliers and creditors as some businesses may not be able to cope with the increased financial pressures once these government programs come to a halt. If the entity operating the business then becomes insolvent, suppliers and creditors may lose their goods or finances if they are unsecured investors.

The PPSR is one possible solution. The PPSR is an online government register where creditors can register their security interests in personal property. As it is open to the public, this is intended as an announcement to your claim over a security interest over personal property. This property can include vehicles, intellectual property and company assets, but not land or fixtures on land.

Now is an important time to register your interests on the PPSR, because several government plans which were in place to support businesses have already ended. One such relief was the limitation placed on debtors to issue statutory demands. As a result of COVID-19, the normal statutory minimum of $2,000 for claims was increased to $20,000, and the statutory period to respond to demands was increased from 21 days to six months. Now that these have been reverted, it means businesses may have debtors seeking payment with a shorter timeframe to respond. If business entities are unable to pay these debts, they may be forced into insolvency. This will be an issue for creditors with unsecured assets, and the PPSR provides a means for these creditors to register their security interests in personal property.

The PPSR is facilitated by the Personal Properties Securities Act 2009 (Cth) and is managed by the Register of Personal Property Securities, who is currently Hamish McCormick. The Registrar has the responsibility of managing the register and ensuring that it contains accurate information.

The PPSR is currently available online to search and register. For assistance or advice on using the PPSR, or if you have any other enquiries regarding the security of your assets, please feel free to contact us.