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PPSR search traps

We’ve previously discussed the Personal Property Securities Act (and the related Personal Property Securities Register “PPSR”) on our website, but we came across something recently that we thought was worth mentioning.

We recently acted for a client who was entering into a transaction with a company. Let’s call the company Borrower P/L ACN 123 456 789.

As part of the process of securing the transaction, we conducted PPSR searches of Borrower P/L to see whether anyone else had security interests over the company’s assets. We conducted two searches:

  • one for the name Borrower P/L; and
  • one for the ACN 123 456 789.

The first search returned no results, suggesting that Borrower P/L was not encumbered and it was safe to deal to them. However, the second search returned nine security interests. Those security interests raised real issues about how our client would recover its money if Borrower P/L defaulted on the deal.

How we dealt with those issues is a story for another day. The issue we wanted to raise here is this: if we had only searched for the company name, we would have been completely unaware of the security interests registered against the company’s ACN. That’s one of the vagaries of the PPSR: interests recorded against a name or against an ACN aren’t automatically registered against the other as well.

It’s up to the person conducting the searches to cover all bases.

FWO handles legal matters of all types involving loans and securities, including the Personal Property Securities Register. If you have any questions, please feel free to contact FWO’s loans and security solicitor Jay Clowes on (02) 6650 7016.

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