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An introduction to PPS Leases under the Personal Property Securities Act 2009 (Cth)

An introduction to PPS Leases under the Personal Property Securities Act 2009 (Cth). March 2014. Agenda. Security interests. PPS leases defined. Lease or bailment of goods for …. More than one year, including any holding over or renewal 90 days, for serial-numbered goods. OR.

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An introduction to PPS Leases under the Personal Property Securities Act 2009 (Cth)

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  1. An introduction to PPS Leases under the Personal Property Securities Act 2009 (Cth) March 2014

  2. Agenda

  3. Security interests

  4. PPS leases defined Lease or bailment of goods for … • More than one year, including any holding over or renewal • 90 days, for serial-numbered goods OR An indefinite term BUT ONLY IF Lessor/bailor is "regularly engaged in the business of leasing/bailing goods AND Lessee/bailee provides value for the bailment

  5. PPS Lease examples

  6. PPS Leases as purchase money security interests ("PMSIs") Unpaid rentals loan Company PPS Lessor Bank General Security Interest (GSI) Lease of product for two year term (PMSI) Lease (PMSI) attaches to Products GSI attaches to Products Leased Products ROT = retention of title sale PMSI = purchase money security interest Red = priority contest

  7. Four types of PMSIs

  8. Registering PPSLeases

  9. Key classes of collateral for registration General property Intangible property Tangible property Financial property Motor vehicles All present and after-acquired property("Allpap") Accounts Investment instruments (eg shares) Watercraft Intermediated securities (eg ASX-listed shares) General intangibles Aircraft All present and after-acquired propertyexcept ("Allpape") Agriculture Other goods

  10. The danger of unregistered leasesIn re Maiden Civil (P&E) Pty Ltd [2013] NSWSC 852 Esanda/ Westpac Lessor / Bailor(QES) Loan Lease of Caterpillar vehicles Security for loan to QES GSD Fast Financial Lessee / Bailee(Maiden) QES Affiliate Loan GSD = general security deed

  11. Unresolved conceptual issues Leasing structures Does the Lender retain security over the asset, or does it instead only get security over the Lessor's rights under the PPS lease (as proceeds)? Lender Lessor Security If the Lender does retain security over the asset, does it need to re-register against the Lessee? PPS lease Lessee The answer may turn in part on whether the PPS lease constitutes a "transfer" of the asset to the Lessee, at least for PPSA purposes.

  12. This presentation material is intended to provide a summary of the subject matter covered for training purposes only. It does not purport to be comprehensive or to render legal advice. No reader should act on the basis of any matter contained in this presentation without first obtaining specific professional advice. 228783207 221808381

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