Earlier this year, the Commonwealth Attorney General announced that a review of the Personal Property Securities Act (PPSA) would be carried out by Mr Bruce Whittaker. In August, the Department released an interim report on the effect of the PPSA since its introduction (1).
The report is an insightful, if perhaps predictable, analysis of the impact that this milestone piece of legislation has had on the personal property securitisation and lending sectors. The final report is due to be released on 30 January 2015. Submissions on the final phase of the review have been invited and are due by mid-December.
Throughout the review, the primary focus has been on the impact which the PPSA has had on Australian small businesses. As many had predicted from the outset, the potentially harsh operation of the PPSA can hit hardest on small businesses, particularly with respect to those who do not possess the resources, awareness or technical know-how to fully understand how the PPSA could affect them.
It follows that these small businesses are also at the greatest exposure to the possible loss of principal capital, income-producing or trade assets, where compliance with the PPSA is not achieved, and where such assets may be lost to a competing creditor upon a customer’s insolvency. In these instances, the report acknowledges that the PPSA will have a disproportionately large impact.
The interim report assessed submissions from a range of service and industry sectors, from equipment hire businesses to banks and insolvency practitioners. The report outlines various suggestions received from industry bodies in relation to how the PPSA may be modified, improved or reformed. It will be interesting to see which, if any, of these proposed measures will be adopted as recommended changes to the PPSA as part of the final report.
(1) Interim Report, Review of the Personal Property Securities Act 2009, Mr Bruce Whittaker, 31 July 2014