PPS Lease amendments – Solving one problem but leaving another

WHO SHOULD READ THIS

• Equipment hire businesses and parties to lease or hire arrangements (including intra-group hires).

THINGS YOU NEED TO KNOW

• The recent amendments replace the current one year threshold for deeming a commercial lease or bailment to be a PPS lease to two years.

WHAT YOU NEED TO DO

• Consider whether any equipment and plant hire arrangements could extend beyond two years and if so, take precautions such as registering a super priority interest now.

Recent changes to the Personal Property Securities Act 2009 (Cth) (PPSA) passed by the Federal Parliament on 11 May 2017 have changed the time periods for when a hire or equipment lease arrangement will be considered a PPS lease. The new amendments which are largely considered to be in response to the Power Rental Op Co Australia, LLC v Forge Group Power Pty Ltd (in liquidation) (receivers and managers appointed) [2017] NSWCA 8 case provide additional clarity to leasing arrangements