PPSR: The Essential Guide to Becoming a Secured Creditor in New Zealand (Or How Not to Become Poor in Liquidations)
Welcome to the not-so-glamorous side of business ownership. Where invoices don’t always get paid, customers sometimes vanish, and the phrase “we’re just waiting on finance” becomes all too much of a reality.
If your business sells on credit or lets customers pay after the work is done… then you are a lender. And if you’re a lender without security, you can easily become a volunteer.
Here at Debt Free, we deal with one thing every day: businesses who didn’t think they needed protection… until they desperately did.
If you’ve ever:
- lost money from a liquidation,
- been told “you’re unsecured” (as if that’s normal), or
- stared at a liquidator’s email with mild nausea…
Then this article is for you.
What Is the PPSA and Why Should You Care?
The Personal Property Securities Act 1999 (PPSA) changed the game in New Zealand.
Before it existed, if a debtor went under, you were:
- in a messy line,
- with everyone else,
- holding an invoice as your only weapon.
Now?
The law gives you a way to stake your claim.
The PPSA governs the creation, prioritisation, and enforcement of security interests over personal property. That personal property includes things you probably care about, like security over materials and money.
The Act also created the PPSR, the Personal Property Securities Register, to make those security interests visible and enforceable.
Think of the PPSR as a public noticeboard that tells the world: “That money or asset is mine if things go wrong.”
The PPSR is an online government register. It lets you:
- record your interest in goods
- protect your position
- outrank other creditors
and avoid becoming an afterthought when insolvency hits.
If it’s not registered… You don’t exist.
If it is registered… You’re playing in the real league.
The PPSR decides:
- who gets paid
- in what order
- and who walks away empty-handed.
Spoiler: unsecured creditors don’t usually win.
No agreement = no protection.
No registration = no priority.
The Liquidator’s Letter You Never Want to Receive.
And here’s the kicker…
Being unsecured doesn’t just mean you might not get paid.
It can mean you have to give money back.
Most business owners are shocked when they discover this:
If your customer pays you…
…and then later goes into liquidation…
…the liquidator may demand the money back.
Why?
Because the law allows liquidators to claw back payments paid to unsecured creditors within:
- 6 months prior to liquidation,
- or up to 2 years in some cases.
That’s called a voidable transaction.
You get paid.
You celebrate.
Months later…
You’re told to return the money.
Why?
Because you were unsecured.
And unsecured creditors don’t often “get lucky” in insolvency.
This rule exists to stop fraud, favouritism and manipulation.
But it hits innocent businesses hardest… unless you secured your position.
How the PPSR Makes You Bulletproof
If you’re registered correctly on the PPSR:
- Your position becomes secure
- Your risk is reduced
- Your payments are protected
- Your exposure to clawback decreases
- Your leverage improves immediately
In liquidation…
Security wins.
Why Debt Free Does This Differently
We don’t just register interests.
We build:
- PPSR strategy
- documentation systems
- Early insolvency Alert systems
- compliance structures
- client education
Because registering is not enough.
Managing it properly is what keeps you paid.
Final Thought
The PPSR didn’t create risk…
It exposed it.
And it gave business owners the power to eliminate it.
Before the PPSR, you had no choice.
Now you do.
You can:
- trade blind
- remain unsecured
- hope nothing goes wrong…
Or you can:
- secure your position
- eliminate clawbacks
- out-rank other creditors
- recover faster
- sleep better
The PPSR doesn’t favour the biggest business.
It favours the smartest one.
And the smartest ones register.
Mark Mclachlan
