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"Don't be blindsided by old PPSR registrations
Most businesses will have various security interests registered on the PPSR against their operating entities by secured parties such as financiers, stock suppliers, equipment suppliers, etc. The PPSR is a register to let people know if personal property or company assets have security interests against them.
Financiers will register security interests as part of the security for any collateral under financing arrangements. Stock suppliers will often register security interests to protect their rights under the retention of title arrangements until the stock has been paid for in full. Businesses that lease out equipment or provide equipment at no cost (e.g., a coffee supplier providing a coffee machine at no charge, as long as the business purchases their coffee beans) will also register a security interest.
When the arrangement no longer applies, these registrations are not automatically removed from the PPSR. The secured party needs to register a release, and if they don't, then the interest will remain in place. Often these are forgotten about at the end of an agreement, and only come to attention when a company is selling its assets or re-financing. Whilst most secured parties are fairly prompt to release interests that are no longer current, some can be slow, and other issues can arise if the secured party has changed its name or is no longer in business.
As a matter of good housekeeping, business owners should regularly search the PPSR to check for registrations against their companies.
Our banking and finance team recently had a matter where a settlement was put at risk because a company had an old interest registered in favour of a financier that had been de-registered for some time – see our article about this.
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