Question 1

What is the PPSA and how does it affect security interests?

Accepted Answer

The Personal Property Securities Act 2009 (Cth) establishes a single national register for security interests in personal property. It affects any transaction where a party takes a security interest in personal property, including chattel mortgages, retention of title arrangements, and finance leases. Proper registration on the PPS Register is essential to ensure the priority and enforceability of security interests. Failure to register can result in the loss of the secured party's interest on the grantor's insolvency.

Question 2

What is the difference between a general security agreement and a specific security interest?

Accepted Answer

A general security agreement (GSA) grants the secured party a security interest over all of the grantor's present and after-acquired personal property. A specific security interest, by contrast, is granted over particular identified assets such as a piece of equipment, shares in a company, or a specific bank account. Both types of security interest must be registered on the PPS Register to be effective against third parties.

Question 3

What happens when a borrower defaults on a loan?

Accepted Answer

When a borrower defaults, the lender's remedies depend on the terms of the facility agreement and the nature of the security held. Common remedies include demanding repayment of the full amount outstanding, appointing a receiver to the borrower's assets, exercising a power of sale over secured property, and in some cases, seeking a court-ordered winding up of the borrower. The lender must comply with applicable notice requirements and any statutory protections for guarantors.

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