3.05.2018

PPSA Pointer – Update Debtor’s Name Change or Lose Priority

For a secured party to retain the priority of their registration on the Personal Property Securities Register (PPSR), they must keep their financing statement up to date with all the information that they are aware of, including a change of the debtor’s name.

The effectiveness of the Personal Property Securities Act 1999 (“PPSA“) depends upon people being able to search the PPSR to determine whether personal property owned by a particular person or organisation may be subject to a security interest. It is particularly important for a secured party to record any changes of a debtor’s name, given that this is one of the main ways to search on the PPSR.

Accordingly, the PPSA provides that where a secured party with a perfected security interest gains knowledge that the debtor has changed its name (including as a result of a company amalgamation), the secured party has 15 days to act in order to maintain its priority.

If the secured party fails to take possession of the collateral or to register a financing change statement recording the change of the debtor’s name within 15 days after gaining knowledge of the debtor’s name change, the secured party’s interest will be subordinated to:

  • an interest (i.e. any non-security interest such as the interest of a buyer or lessee) in the collateral arising in the period commencing 15 days after the secured party gained the requisite knowledge and concluding when the secured party either files a financing change statement to record the new debtor name or takes possession of the collateral;
  • a perfected security interest in the collateral that is registered or perfected in the period referred to above; and
  • a perfected security interest in the collateral that is registered or perfected in the first 15 days after the secured party gained the requisite knowledge if the secured party does not file a financing change statement to record the new debtor name or take possession of the collateral before the expiration of that 15 day period.

In effect, a secured creditor which obtains knowledge of the change of a debtor’s name has 15 days to act to protect itself and preserve its priority position by either taking possession of the collateral or filing a financing change statement to record the debtor’s new name. Failure to do so will mean that the secured party’s priority will be lost to competing interests.

Practically speaking, if your business becomes aware that a customer has changed its name (i.e. if a customer asks you to change the name that invoices are addressed to), you should have a system in place to ensure that the PPSR registration is also updated within 15 days in order to maintain the priority of your registration.

 

Do you need expert legal advice?
Contact the expert team at Hesketh Henry.
Kerry_100x100 1
Media contact - Kerry Browne
Please contact Kerry with any media enquiries and with any questions related to marketing or sponsorships on +64 9 375 8747 or via email.

Related Articles / Insights & Opinion

Bereavement Leave Confirmed for Miscarriages and Stillbirths 
New Zealand has become the second country in the world to pass legislation that provides bereavement leave for mothers and their partners after a miscarriage or stillbirth.
26.03.2021 Posted in Business Advice & Employment Law
Court of Appeal Overturns Employment Court’s Decision in Tourism Holdings
Tourism Holdings Limited v A Labour Inspector of the Ministry of Business, Innovation and Employment (Tourism Holdings) is the first decision in which the Employment Court considered section 8(2) of the Holidays Act 2003 (Act). The Court of Appeal has recently overturned this decision.
26.03.2021 Posted in Business Advice & Employment Law
Guarantees must be in writing and signed to be enforceable
For a guarantee to be enforceable, the requirements set out in section 27 of the Property Law Act 2007 (Act) must be strictly complied with.  This is what the NZSC held in Brougham v Regan. The key i...
19.03.2021 Posted in Business Advice
UK Supreme Court Delivers Decision on Uber Driver Employment Status
The distinction between employee and independent contractor can be complex, particularly where the nature of the business model blurs the lines of standard employment practices.
16.03.2021 Posted in Business Advice & Employment Law
Holidays Act Overhaul – Taskforce Recommendations
There have been calls for an amendment of the Holidays Act 2003 (Act) for some time.
16.03.2021 Posted in Business Advice & Employment Law
Unwanted Land Covenants and Easements: Seeking a Court Order
The Supreme Court recently considered an application by Synlait Milk to modify a land covenant restricting the burdened land use to farming, grazing and forestry operation to protect the ability of the benefited land owner to develop a quarry.  This article looks at the circumstances in which the courts might give relief to parties in an application to extinguish or modify a covenant or easement.
15.03.2021 Posted in Property Law
New ICC Arbitration Rules 2021 come into force
The revised International Chamber of Commerce (ICC) Arbitration Rules for 2021 (2021 Rules) have now come into force and apply to all ICC arbitrations begun after 1 January 2021.  While the new Rules...
10.03.2021 Posted in Litigation & Dispute Resolution
Send us an enquiry
For expert legal advice, please complete the form below or call us on (09) 375 8700.
  • This field is for validation purposes and should be left unchanged.
-->