The lost security risk
Corporate eBulletin - 31 July 2012
The Personal Property Securities Register was launched on 30 January 2012. As part of this process, over 4.7 million security interests recorded on 23 Commonwealth, state and territory registers were migrated across to the new register.
A number of issues with the migration process were later identified and, at present, searching the PPS register will not necessarily return all information associated with a security interest.
To address this issue, the Attorney General has developed a "find and claim" process. In this eBulletin we discuss this process and let you know steps you need to take to find and claim your security interests.
- The solution: a "find and claim"
- How to "find and claim" – the three steps
- Further information
On 30 January 2012 the Personal Property Securities Act 2009 (PPSA) commenced full operation. Over 4.7 million security interests recorded on 23 Commonwealth, state and territory registers were transferred to the Personal Property Securities Register (PPS Register).
A number of issues with the migration process were later identified in that 6,000 security interests were not transferred, around 900,000 registrations were transferred by reference to ABN (as opposed to ACN, where the grantor had an ABN and an ACN) and some 27,000 registrations with multiple secured parties were transferred with only one secured party.
Accordingly, searches on the PPS Register may return different results, sometimes showing security interests known to exist sometimes not.
The effect is that others may not have notice (by searching the PPS Register) of your security interests. Not surprisingly, this may later lead to disputes over which party has priority.
To address this major concern the find and claim process has been developed by the Attorney General to respond to issues both predating and arising out of the migration of existing charges and other registered security interests (and their associated data) to the PPS register.
Every organisation with security interests which were registered on a state, territory or federal register before 30 June 2012 (and particularly the ASIC register of charges) which was migrated1 should carry out a "find and claim" to ensure that their security interest is valid and able to be located by searching the PPS Register.
The "find and claim" process is the only way to confirm that an interest has been properly migrated, as well as ensuring that the interest is allocated to the correct secured party, or parties, with the correct details. Additionally, without completing the "find and claim" process, a secured party will not obtain the token for the registration and, therefore, will be unable to vary or discharge the registration as may be required by any relevant dealing.
The "find and claim" process is intended to ensure that all persons searching the PPS Register will have notice of your prior security interest.
Migrated security interests are bundled under a "Secured Party Group" (SPG). The number of SPGs for each secured party will vary depending on the number of names a secured party has had in the past, including any acquisitions, as well as the number of registers it has recorded an interest on. Accordingly, the migration process may lead to a secured party inheriting a number of SPGs on the PPS Register.
To "find and claim" your security interests you will need to complete the following three steps.
- As a secured party, you need to register on the PPS Register to obtain a SPG number. This will be your target SPG.
- You will then need to apply to the Insolvency and Trustee Service Australia National Service Centre, either by email or over the telephone, to have the "F&C – Access post-RCT Find & Claim catalogue" tab or page assigned to your account.
- Once this has been assigned, you (as a secured party) will be able to search the catalogue to identify the migrated security interests that belong to you. You can do this by searching according to secured party details, identifying the relevant SPG and then claiming it by transferring it to your target SPG.
Laila Hamzi | Lawyer, Corporate
Peter Willcocks | Special Counsel, Corporate
1. CTH Registers: ASIC - Register of Company, Australian Register of Ships , Fisheries Register; NSW Registers: Register of Encumbered Vehicles , Security Interest of Goods Register, Register of Co-operative Charges; QLD Registers: Register of Encumbered Vehicles, Bills of Sale Register, Register of Co-operative Charges; SA Registers: Vehicle Securities Register, Bills of Sale Register, Stock Mortgages and Wool Liens Register, Liens on Fruit Register, Register of Co-operative Charges; TAS Registers: Register of Vehicle Security Interests, Register of Bills of Sale; VIC Registers: Vehicle Securities Register; Register of Liens on Wool and Stock Mortgages; Register of Co-operative Charges ; WA Registers: Register of Encumbered Vehicles; Bills of Sale Register; ACT Registers: Register of Encumbered Vehicles, General Register of Deeds and instruments, Register of Co-operative Charges; NT Registers: Register of Interests in Motor Vehicles and Other Goods, Lands Titles Registration and General Registry Office.
All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.