Part 2 of this book, which comprises Chapter 5 (The PPS Framework - A Recap) to Chapter 14 (Following Collateral and Value), provides an overview of the new secured transactions system for personal property established under the PPSA, following the nine steps in the PPS framework.
The nine steps, which will be discussed in greater details, are:
- security interest
- personal property
- attachment
- Australian connection
- classes of collateral
- enforceability against third parties
- perfection
- priority
- following collateral and value
To recap, the threshold questions to determine whether the PPSA applies to a secured transaction are the four “SPAA” questions, namely:
(a) security interest: are you dealing with a transaction that is regulated as a security interest under the PPSA?
(b) personal property: is the security interest granted in personal property?
(c) attachment: has the security interest attached to the personal property?
(d) Australian connection: does the transaction have an Australian connection?
If the answer is "yes" to each of these four threshold questions, then the secured transaction is regulated by the PPSA, and the treatment of the transaction under the PPSA should be considered.
Once it is determined that the transaction under consideration is regulated by the PPSA, consider the five “CEPP-F” questions to solve PPSA issues, and determine the strength and value of the security interest in question.
The five CEPP-F questions are:
(a) class of collateral: consider the consequences of the class(es) of collateral covered by security interests under the PPSA
(b) enforceability against third parties: is the security interest enforceable against third parties (adequately evidenced in writing)?
(c) perfection: has the security interest been properly perfected against both original collateral and any proceeds?
(d) priority: what is the priority of perfected security interests?
(e) following collateral: is there scope to follow original collateral when it is transferred, or to claim proceeds to which security interests have attached?
Each of the SPAA issues are discussed in more detail in turn in the following chapters, followed by the CEPP-F issues.
