Practical difficulties resulting from the introduction of PPSR
Prior to the introduction of the Personal Property Securities Act 2009 (PPSA) a typical assets protecting arrangement included a corporate structure where the actual business was run by a 'trading company' and the assets of the business were held by a 'holding company'. This structure minimised a company's direct asset exposure. However, with the introduction of the Personal Property Register (PPSR) on 30 January 2012 traditional forms of asset protection may no longer secure the personal property assets. The PPSA now requires business owners to register their assets on the PPSR to ensure the security of personal assets.
To ensure the protection of assets of holding companies from liquidators, company must register their assets on the PPSR prior to the insolvency. Where a holding company fails to register their assets on the PPSR, and the trading entity becomes insolvent, the assets will be liable to be claimed a liquidator. It is imperative that holding company's register their assets on the PPSR correctly that they remove any risk of losing their asset in a situation where the trading company falls into liquidation. Business owners trading under an outdated asset protecting structure should review existing arrangements to ensure that secured interests are protected by the PPSR.
Need further help to ensure protection under the PPSR?
To ensure that all secured interests are protected under the PPSA business owners should look to reviewing their current arrangements. If your business needs verification that all secured interests are protected please call Dooley & Associates for further details.Back