Time To Re-Register On PPSR As Expiry Date Looms

Time To Re-Register On PPSR As Expiry Date Looms

27 April, 2007

Suppliers, traders and lessors are being urged to remember to renew their registrations on the Personal Property Securities Register. They otherwise risk losing thousands of dollars if a business they have supplied goods to, or in some cases leased assets to, becomes insolvent.

Michael Arthur, a partner at law firm Chapman Tripp, says the Personal Property Securities Register (PPSR) was established under The Personal Property Securities Act. Businesses are required to register their security interests on the PPSR in order to protect their security over almost all assets other than land.

He says 1 May 2007 marks the five-year anniversary of the PPSR coming into full effect. A security interest registered on the PPSR has an automatic five-year default expiry date.

“We’re therefore expecting a large number of registrations to expire over the coming months and are urging businesses to ensure they renew their registrations to keep their security interests safe. This is a simple on-line process that takes only a few minutes to do, but potentially is capable of saving tens, if not hundreds, of thousands of dollars to businesses. It is important that each registration is renewed before it expires.”

Mr Arthur says the PPSR takes the form of an electronic ‘notice board’ recording details of security interests held in respect of personal property.

“For example, a company leasing a photocopier machine to another company, for a term of more than one year, needs to register this on the PPSR. If this hasn’t been done and the borrower become insolvent, the photocopier would likely be claimed by the receiver, and applied to reduce the bank’s debt.

“In a case a few years ago, Portacom leased portable buildings to the debtor. Portacom did not register on the PPSR and HSBC held a debenture that granted a security interest over ‘all assets’ of the debtor and did register on the PPSR.

“The High Court held that HSBC’s security interest attached to the buildings when the debtor took possession. For want of a small fee and the quick on-line registration process, Portacom lost its buildings.”

Mr Arthur says there is still a considerable lack of awareness among businesses of the PPSR and the importance of registering their security interests.

For more information, or to register on the PPSR, go to: www.ppsr.govt.nz. Registering on the PPSR costs $5.

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