This was a webinar presentation presented on 13 October 2016.
The slides for this presentation are as follows:
Overview
- Holding companies’ business transactions with related trading entities
- Leases
- Loans
- Bailments for value
- Bailments for no value
- When the Holding Company/Subsidiary Company needs to register a PMSI and when it does not
- Impact on lending arrangements with principal external lenders
Recap – PPSR Essentials
- Secured Party
- Grantor
- Collateral
- Security Interest
- PPS Lease
- Purchase Money Security Interest
Recap – PPSR Essentials
Application of PPSA – Scenario 1
Identifying the Security Interests?
- Prosper Holdings – PMSI over equipment
- If no PMSI is registered – Prosper Holdings has only an unsecured loan
- Prosper Equipment – equipment lease for an indefinite period – PPS Lease / PMSI
- Both PMSIs will have priority over Bank’s ALPAP
Application of PPSA – Scenario 2
Identifying the Security Interests?
- Prosper Holdings – PMSI over equipment if registered in time, but it may not be enforceable against third parties
- S 20 Requirements for enforcement against third parties – Written Security Agreements are vital
- If no PMSI is registered – Prosper Holdings has only an unsecured loan
PPS Lease Exclusions
A PPS Lease does not include:
•a lease by a lessor who is not regularly engaged in the business of leasing goods; or
•a bailment by a bailor who is not regularly engaged in the business of bailing goods; or
•a lease of consumer property as part of a lease of land where its use is incidental to the use and enjoyment of the land; or
•a bailment for which the bailee (in possession) provides no value S 13(2) – (3) PPSA
What does it mean to be regularly engaged in the business of bailing / leasing goods?
•What about a one-off transaction?
•NZ Court of Appeal – Rabobank New Zealand v Mcanulty & Others [2011] NZCA 212
PPS Lease Exclusions
PPS Lease Exclusions – Cases
What does it mean to be regularly engaged in the business of bailing / leasing goods?
•NZ Court of Appeal – Rabobank New Zealand v Mcanulty & Others [2011] NZCA 212
-words “in the business of leasing goods” = profit
-excludes gratuitous bailments
-word “regularly” not an isolated, single transaction
-course of business transactions involving a series of leases
-a single transaction that was a one-off, cannot be said to be “regular”
What does it mean to be regularly engaged in the business of bailing / leasing goods?
•Re Arcabi Pty Ltd (Receivers & Managers Appointed)(in liquidation) [2014] WASC 310
-Bailment did not amount to a security interest which secures payment or performance of an obligation
-No PPS Lease, because owners not in business of bailing goods
-Two possible interpretations for s 13(3) noted
What does it mean to be regularly engaged in the business of bailing / leasing goods?
•Forge Group Power Pty Ltd (in liquidation) v General Electric [2016] NSWSC 52
-“regular” two possible meanings
-periodic or a recurrence at fixed intervals
-normal, that is not abnormal in context of lessors business
