In this post we discuss how and why you may want to do a PPSA Registration. We are assuming that you, the reader, are a holder of a “security interest” in property.
Very simply, a security interest is one legal expression describing your economic right to the value in someone else’s property. If someone borrows money from your company to purchase a car, you may get a security interest in, and file a lien on the vehicle. If your company invests in another company using convertible debt, in the agreement you sign, that company may grant your company a right to the economic value in its intellectual property through a security agreement.
In the examples above, if you are able to secure your interests properly using the Personal Property Security Act (the “PPSA”), if the debtor can’t repay you, your claim against the secured assets (the car, the Intellectual Property) will get preference over other claimants that do not have such a registration. The PPSA provides a framework for the registration, recognition and enforcement of these secured interests and provides rules for a pecking order between the different registered secured interests. Each Canadian province has its own PPSA rules and regulations which are broadly similar.