Rouse Lawyers successfully represented 123 Sweden AB, a foreign Swedish corporation in its Supreme Court (NSW) application under s 588FM of the Corporations Act 2001 (Cth) for an order fixing a later date for registering and perfecting 123 Sweden’s security interest on the Personal Property Securities Register (PPSR).
In Justice Brereton's judgment, his Honour provides greater certainty for secured creditors as to the relevant factors for consideration and the circumstances in which a s 588FM order ought to be granted.
The judgment also provides increased protection for secured creditors and offers secured creditors who have not registered their security interests against a company within the required 20 business days a second chance to perfect their security interest.
Registering Security Interests
Pursuant to s 588FL of the Corporations Act, the relevant time for registering and perfecting a security interest against a company on the PPSR for the purposes of the Personal Property Securities Act 2009 (Cth) (PPSA) is 20 business days after the security agreement granting the interest comes into force.
In circumstances where a secured creditor fails to register its security interest within the required 20 business days, the secured creditor’s security interest will not be perfected.
Failure to Register and Perfect a Security Interest
The consequences for a secured creditor failing to perfect its security interest can be fatal to the creditor’s interest.
For example, without notice of any security interests, third party creditors may enter into further security agreements or arrangements with the grantor in relation to the same security.
In that circumstance, if the third party creditor successfully registers its security interests, although acquired later in time, the third party’s security interest may have priority over any ...