PPS Leases and Grantor Insolvency

There are a number of practical issues which arise in respect of the PPS leases and their registration requirements. In relation to inventory the definition of the same extends beyond it ordinary common law meaning which results in certain types of assets that may be thought of as capital in nature in fact be deemed to be inventory and therefore any security interest is required to be registered at the time possession is handover. If PPS leases are not properly registered it can lead to difficulties when the grantor is placed into voluntary administration or liquidation as a result of consequences that may follow if the PPS security interest is not properly registered within time.

Liquidators and Voluntary administrators should be aware of these definitional differences as it can result in certain assets which were thought to be subject to a security interest having their proceeds available for distribution to creditors