An SMSF lender whose security interest in the corporate borrower’s personal property was not registered on the PPSR for five months after being entered into lost the charge upon liquidation.
The lender registered its security interest well after the 20 day requirement. The borrower suffered an insolvency event within six months of registration of the lender’s security interest. Both of these facts brought the security interest within the ambit of s588FL Corporations Act.
The Court noted that “the terms of s 21(1)(b) of the PPSA are unambiguous – attachment and enforceability plus one of the final means set out in s 21(2) of the PPSA (namely registration or possession or control) are necessary requirements for perfection of a security interest.”
The lender’s only means of perfection was by registration and so the security interest was not valid and enforceable against the insolvent borrower.
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