PPSA security interests arising under certain transactions
(1) Subsection 588FL(4) (vesting of security interests in company) does not apply to a PPSA security interest provided for by any of the following transactions, if the interest does not secure the payment or performance of an obligation:
(a) a transfer of an account or chattel paper;
(b) a PPS lease, if paragraph (e) (serial numbered goods) of the definition of PPS lease in subsection 13(1) of the Personal Property Securities Act 2009 applies to the lease, and none of paragraphs (a) to (d) of that definition applies to the lease;
(c) a commercial consignment.
Example: An example of a PPSA security interest mentioned in paragraph (b) is a PPS lease of goods that does not secure the payment or performance of an obligation, if:
(a) the goods leased may or must be described by serial number in accordance with regulations made for the purposes of the Personal Property Securities Act 2009 ; and
(b) the lease is for a term of between 90 days and 1 year; and
(c) paragraphs (c) and (d) of the definition of PPS lease in subsection 13(1) of the Personal Property Securities Act 2009 do not apply to the lease.
PPSA security interests and subordinated debts
(2) Subsection 588FL(4) (vesting of security interests in company) does not apply to a PPSA security interest in an account if all of the following conditions are satisfied:
(a) a person (the obligor ) owes money to another person (the senior creditor );
(b) the obligor also owes money to a third person (the junior creditor );
(c) an agreement between the senior creditor and the junior creditor provides (in substance):
(i) for the postponement or subordination of the obligor's debt to the junior creditor, to the obligor's debt to the senior creditor; and
(ii) in the event of the obligor's debt to the junior creditor being discharged (whether wholly or partly) by the obligor transferring personal property to the junior creditor--for the junior creditor to transfer the property, or proceeds of the property, to the senior creditor to the value of the amount owed by the obligor to the senior creditor; and
(iii) in the event that the property or proceeds are not transferred--for the junior creditor to hold the property or proceeds on trust for the senior creditor to that value; and
(iv) in the event of such a trust arising--for a security interest to be granted by the junior creditor to the senior creditor over the personal property or proceeds securing payment of the obligor's debt to the senior creditor;
(d) the security interest is a security interest granted under the agreement, in the circumstances described in subparagraph (c)(iv).
Transfer of collateral subject to PPSA security interests
(3) Subsection 588FL(4) (vesting of security interests in company) does not apply to a PPSA security interest if:
(a) before the critical time that applies under section 588FL, the company acquired, by transfer, the collateral in which the PPSA security interest is granted; and
(b) the company did not acquire the collateral free of the security interest; and
(c) the security interest became perfected before the critical time; and
(d) the security interest was continuously perfected by registration during a period covered by subsection (4) that begins before the critical time.
(4) The period covered by this subsection:
(a) begins at whichever of the following times is applicable:
(i) in a case in which the secured party consented to the transfer--the end of 5 business days after the day of the transfer;
(ii) in a case in which the secured party otherwise acquires the actual or constructive knowledge required to perfect the secured party's interest by registration (or to re-perfect the interest by an amendment of a registration)--the end of 5 business days after the day the secured party acquires the knowledge; and
(b) ends no earlier than at the critical time that applies under section 588FL.
Note: For what is actual or constructive knowledge, see sections 297 and 298 of the Personal Property Securities Act 2009 .