PPSR – Secured Parties Enforcing Security Interests

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This was a webinar presentation presented on 22 November 2016.

The slides for this presentation are as follows:

Overview of Enforcement provisions in Chapter 4 of PPSA

  • What is excluded?
  • Application of rights to seize and sell goods
  • Entering locked premises
  • The Secured Party’s obligations to the Grantor during and after enforcement

Security Interests excluded from application of Chapter 4 of PPSA

S 109 Security interests excluded

  • Security interests that are deemed security interests for the purpose of the PPSA and do not secure the payment or performance of an obligation for example:
    • PPS leases
    • Commercial Consignments
  • Goods outside Australia
  • Security Interests in Investment Instruments perfected by control and possesion
  • Security Interests in Intermediated Securities
    • Only s110, s111, s113 and s140 apply
  • Consumer property / household goods – Grantor use goods predominantly for personal, domestic or household purposes. The following sections of the PPSA finds no application:
    • s117 & s118 (relationship with land laws)
    • s120 (enforcement of security interest in liquid assets)
    • s126 (apparent possession of collateral – stays in possession of Grantor)
    • s128 (2)(b) & (c) (disposal of collateral by lease or licence)s128(2) (c) (
    • s129 (disposal by Secured Party purchasing collateral)
    • s134 (disposal by Secured Party’s retention of collateral)

Seizing collateral – s 123

  • Secured party may use any method permitted by law to seize collateral when the debtor is in default under the security agreement – s123
  • Intangible property – seizure by notice
  • Seizure does not constitute perfection
  • Apparent possession – s126
  • Rights of higher priority parties to take over possesion, provided debtor is in default pursuant to security agreement with higher priority party –s 127

Rights to sell collateral s 128

  • Private or public auction sale (auction /closed tender)
  • Lease only if provided for in security agreement
  • Intellectual property – license
  • Secured Party may purchase collateral – public sale only (does not apply to household / consumer goods)
  • Notice requirements (form requirements s 130(2) ) and rights to object s137

Right to Retain collateral s 134

  • Secured Party may retain collateral subject to notice requirements
  • Title in collateral will pass to Secured Party
  • Notice requirements & rights to object
  • Does not apply to household / consumer goods

Rules applying after enforcement – Part 4.4

  • Distribution of proceeds – priority & expenses
  • What if the Grantor pays the debt? Security Agreement may be reinstated if Grantor pays any amounts in arrears and the amount of any expenses
  • Waiving notice requirements – s 144

Problems with accessing the collateral

  • Trespass laws – QLD – s 11 of Summary Offences Act 2005
  • Residential property – Application of National Consumer Protection Act 2009
    • Require Court Order authorising entry or
    • Express written consent of occupier (beware, consent may be withdrawn at any time)
  • Commercial premises
    • Court Order authorising entry, or
    • Express consent of occupier (may be withdrawn, even if in breach of security agreement)

Obligation to act “honestly” and in “commercially reasonable manner” s 111

  • What does acting “honestly” mean in context of PPSA? Terms are not defined and have not been considered in the Courts in the context of PPSA.
  • When will you be acting in a commercially reasonably manner ?
  • Objective test to be applied.

Need to know about enforcing security interests as a secured party? Contact us

Call our Business Development Team on (07) 3252 0011 for an appointment with one of our Brisbane PPSA/PPSR Lawyers today.