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Personal Properties Security Act (PPSA) and Financing Statements

 

In the Polymers case, a supplier registered a financing statement over a company purchaser. There were three issues with the financing statement. 

The first was that the name was incorrect - "N Z" was included as "NZ" (no space between the letters). This was held not to be material because the PPSR would ignore spaces when searching for "NZ".

However, the second and third errors were fatal.  The purchaser was not designated as an organisation and its incorporation number wasn't included. Had the former been done, the Personal Properties Security Register (PPSR) would have required the incorporation number to be inserted.

The reason why those errors were fatal were because incorporation numbers are a searchable field under the PPSR - anyone wanting to search for financing statement over the purchaser would be entitled to search under just the incorporation number.

Lesson:  there are some very fundamental rules relating to registering financing statements and if as a result of failing to follow them a financing statement could be regarded as being seriously misleading, then when your buyer goes bust, you are likely to lose priority either to other secured parties or possibly to preferential creditors.

 

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