The Use of PPSR in Protecting Business Interests

By Jaye Mankelow

‍

The Personal Property Securities Register (PPSR) is a vital tool for business owners to protect their interests in assets and safeguard against potential losses.

By registering security interests on the PPSR, businesses can secure their claims over valuable assets, establish priority rights, and mitigate risks from insolvency or disputes with other creditors. This article explores how businesses can use the PPSR to secure their assets effectively.

What is the PPSR, and Why is it Important?

The PPSR is a national online register where businesses can record security interests over personal property, such as vehicles, equipment, inventory, and intellectual property. By registering an interest on the PPSR, a business formally establishes its claim to an asset, ensuring protection if the other party defaults or becomes insolvent.

• Purpose of PPSR: The PPSR serves as a notice to third parties of a business’s security interest in an asset, providing a legal framework for protecting these interests in case of disputes.
• Who Should Register: Any business that leases, lends, or sells goods on credit, or that provides assets to another party, should consider registering these interests to prevent losing valuable assets.

Example: A company that leases industrial equipment to a subcontractor can register its interest in the equipment on the PPSR, ensuring the equipment remains secure if the subcontractor faces financial difficulties.

Registering Security Interests: The Process and Benefits

Registering security interests on the PPSR is straightforward and cost-effective, and it provides substantial protection for business assets. Here are some benefits:

• Establishing Priority Rights: Registering an interest on the PPSR gives a business priority over unregistered parties, ensuring that its interest in an asset is safeguarded. This priority means that, in the event of insolvency, the registered party has the first claim to the asset.
• Clear Ownership Claims: For businesses that supply goods on consignment or lease out assets, PPSR registration provides a clear record of ownership and mitigates risk if the other party becomes insolvent or attempts to sell the asset.
• Simple Registration Process: Registration can be completed online, and costs are minimal compared to the protection provided, making it accessible for businesses of all sizes.

Example: A supplier that provides stock on consignment to retail stores can register its interest on the PPSR. If a store faces financial trouble, the supplier’s registered interest ensures they have priority over unregistered creditors in recovering their goods.

Risk Management Through PPSR Registration

Using the PPSR as part of a risk management strategy can help businesses protect their assets and reduce exposure to financial losses.

• Reducing Insolvency Risks: For businesses that provide goods or services on credit, registering a security interest can protect against losses if a debtor defaults or declares bankruptcy.
• Avoiding Disputes and Legal Costs: Registering interests provides clear documentation of a business’s claim to an asset, reducing the likelihood of legal disputes and associated costs.
• Protecting Against Competing Claims: If multiple parties claim an interest in an asset, the PPSR’s first-to-register principle determines priority, reducing uncertainty and protecting businesses with timely registrations.

Example: A business supplying vehicles to another company under a lease agreement can use PPSR registration to maintain a priority claim over the vehicles. This safeguards the supplier’s interest if the leasing company encounters financial difficulties.

Seek Legal Advice

Navigating the PPSR and understanding security interests can be complex. Business owners should seek legal advice to ensure that their registrations are correctly set up and enforceable, and that their business interests are fully protected in any contractual arrangement. A legal professional can help interpret PPSR obligations, ensure compliance, and minimise the risk of potential legal disputes.

The PPSR is a powerful tool that allows businesses to secure their interests and protect valuable assets from financial risks. By registering security interests, businesses can establish clear ownership claims, obtain priority rights in insolvency situations, and manage risks associated with lending, leasing, or selling on credit.

Aspira’s advisors can help businesses navigate PPSR registration and ensure their assets are secured effectively. If you’re looking to safeguard your interests, reach out to explore how PPSR registration can form a key component of your business’s risk management strategy

‍

Return to Business Insights Hub