PPSR – Group Structures with Holding & Trading Companies

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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

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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

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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

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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

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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

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