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ARTICLE · 24 MARCH 2018

Is a non-circulating security interest really non-circulating? Lessons from Re Amerind

Corrs Chambers Westgarth
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The case has useful implications for secured creditors and insolvency practitioners called upon to adjudicate on claims.

AustraliaInsolvency/Bankruptcy/Re-Structuring
Michael Catchpoole
Michael Catchpoole
Tom Schinckel
Tom Schinckel
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In Australia, secured creditors only enjoy absolute statutory priority over employee and administrator costs over non-circulating secured property.

The introduction of the Personal Properties Securities Act 2009 (Cth) (PPSA) brought significant changes to the regime for the classification of circulating and non-circulating assets, including the creation of a new set of rules in relation to the creation of non-circulating security interests over debtors and inventory.

Various attempts have been made to draft provisions which create non-circulating security interests over inventory and debtors relying on the provisions contained in the PPSA. If a non-circulating security interest is successfully created, then this has the potential to meaningfully change the outcome of an insolvency scenario for secured creditors.

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