Security interests must operate as a 'safety
net'
Security law is complex, intricate and technical. Broadly,
though, creditors are generally familiar with the concept that the
registration of security interests is a 'safety
net' to secure and ensure contractual obligations are
ultimately met. The effectiveness of this safety net will be a
paramount consideration for creditors amid COVID-19, as many
corporations and business will almost certainly experience
financial stress (and distress), which will ultimately place safety
nets in the spotlight and test their adequacy to protect
creditors.
Many creditors will have systems in place to initially assess
the adequacy of security, enter into security agreements to secure
their customers' contractual obligations and arrange
registration of those security interests on the Personal
Property Security Register
(PPSR)1. However, once those initial
safety net assessments are conducted, many creditors overlook a
periodic
