Vesting (s267)
The rule that an unperfected security interest passes to the grantor when the grantor becomes insolvent.
Section 267 is the sharp end of the PPSA. If a supplier or lessor has not registered by the time an administrator or liquidator is appointed, its interest in the goods vests in the insolvent company and the goods are sold for the benefit of creditors. GE lost turbines worth tens of millions this way in the Forge Group case.
Related terms
- Perfection — The step that makes a security interest effective against third parties and insolvency practitioners, usually registration.
- Section 588FL (20 business days) — The Corporations Act rule that a security interest from a company must be registered within 20 business days of the agreement, or at least six months before insolvency, or it vests in the company.
- PPS lease — A lease or bailment of goods for more than two years, or for an indefinite term, by a lessor regularly engaged in leasing.
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