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PPSA Reform – Where to from here?

On 22 September 2023, the Attorney-General announced the Australian Government’s response to the Final Report of the 2015 statutory review of the Personal Property Securities Act 2009 (the Whittaker Review). The Whittaker Review made 394 recommendations with the overarching objective of simplifying the personal property securities (PPS) framework. The proposed changes include the adoption of 345 of the review’s recommendations and a number of additional changes.


Public consultation in relation to the government’s response, and the proposed changes, opened on 22 September 2023 and recently closed on 17 November 2023.


Given the raft of recommendations and the proposed changes, reviewing, considering, and forming a view on these was not a small task in such a short time frame.


I was fortunate enough to participate in the submission processes for both the Australian Institute of Credit Management (AICM) and the Australian Credit Forum (ACF) and there was a lot of robust discussion surrounding the proposed changes.


Whilst there isn’t time to work through all 394 recommendations in this article, there were a number of recurring themes that became apparent during the above-mentioned submission process, namely that the simplification of the PPSR could have a number of adverse effects on those stakeholders who interact with the regime on a day-to-day basis.


Those adverse effects may include:


  1. Loss of clarity and security in circumstances where definitions are being amended;

  2. Increased uncertainty – the regime has been in place since 2009, and whilst it is imperfect and widely acknowledged that there is need for change, the sheer number of proposed changes will likely lead to some further uncertainty at least in the short term; and

  3. Increased compliance costs and complexity. For example, the proposal to remove the option of 25-year term registrations ignores that there are a significant number of facilities for individuals that are longer than 7-years and it is likely that the 7-year terms for creditors will increase the frequency they must renew registrations, meaning additional costs and the risk that renewals could be missed.

Another area of focus of both the AICM and ACF during the submission process was on obtaining further clarity around the obligations of an insolvency practitioner with respect to secured goods that may be subject to a formal appointment. In the participants experience, different practitioners took varying approaches to securing those assets and providing details such as stock takes, in particular to Purchase Money Security Interest (PMSI) holders, in a timely fashion and engaging with those security holders within the process.


From an insolvency practitioner’s perspective, whilst the Personal Property Securities Register is imperfect, the information included within it does assist in understanding the priority position of the relevant creditors in the event of a formal appointment which helps frame the options available to directors and stakeholders.


It will be interesting to see what effect the submissions made may have on the government’s final position and its likely we will see those sometime in the middle of 2024.

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