Australian decision highlights need for timely deregistration of security interests

A recent Federal Court decision provides important guidance for insolvency practitioners and secured creditors on the removal of obsolete security interest registrations and the evidentiary burden required when disputing a registration in court proceedings under section 182 of the PPSA.

This decision is also the first time an Australian court has applied a “substance” over “form” analysis in a complex financial dispute under the PPSA – focusing on the real substance of obligations under a financial arrangement, rather than the mere presence of formal documentation with technical liabilities or registrations - when deciding whether a secured obligation has been discharged.

The complex financial arrangement

Liberty Primary Metals Australia Pty Ltd (Liberty) is the sole shareholder of Tahmoor Coal Pty Ltd (Tahmoor) and OneSteel Manufacturing Pty Ltd (OneSteel). In July 2019, Liberty granted Greensill Capital (UK) Limited (Greensill) security interests over its property, including shareholdings in Tahmoor and OneSteel, under a general security deed and subsidiary share security deed. These interests were registered on the PPSR.

The security interests were granted to secure payment of "secured money" under a receivables purchase agreement (RPA), which allowed OneSteel and Tahmoor to raise funding by selling eligible receivables to Greensill.

Greensill funded its purchase of the receivables by selling its rights under the RPA to Hoffman S.à r.l. (Hoffman), a securitisation vehicle set up by Credit Suisse, via a master assignment agreement. Hoffman funded its purchase through the issuance of “Hoffman Seaview Notes” up to the value of USD$200m.

In March 2021, Greensill Capital entered administration, triggering a series of complex financial arrangements aimed at resolving outstanding debts owed by Liberty and its subsidiaries, OneSteel and Tahmoor.

To manage this, the parties entered into several agreements in October 2021: a receivables repayment agreement (RRA), a note purchase and issuance agreement (NPIA), and a loan note instrument (LNI). These agreements allowed Liberty and OneSteel (referred to as the “obligors”), to repay funding that was originally owed to Greensill via the RPA, but was later assigned to Hoffman.

Under the NPIA, OneSteel acquired the right to receive the beneficial rights in the Hoffman Seaview Notes, which effectively represented Greensill’s funding under the RPA, for USD$146 million, funded by issuing new loan notes to the holders of those Hoffman notes.

The NPIA further provided that once Hoffman had received full repayment (around USD$400 million), any further payments would be returned to OneSteel. This amendment marked the effective end of the debt obligation under the Hoffman arrangement.

Evidence before the court showed that the new loan notes were fully repaid by 30 June 2023.

From that point onward, it was Liberty’s position that no money remained owing under the original RPA; the RPA itself terminated on 20 February 2024, meaning no new liabilities could arise under it; and the security interests Greensill had registered on the PPSR were now obsolete.

Since July 2023, Liberty, Tahmoor and OneSteel had been negotiating the collapse of the Hoffman Seaview Notes and the associated security arrangements. Despite the repayment of all secured obligations, the PPSR registrations lodged by Greensill remained in place and continued to present a practical barrier to Liberty’s refinancing efforts.

The urgency of Liberty’s application stemmed from its need to secure new funding for Tahmoor. Prospective lenders required first-ranking security over Liberty’s assets, but the outdated registrations — despite no longer securing any debt — prevented Liberty from offering clean title and a first ranking security interest to an incoming financier. Removing these obsolete entries was critical to unlocking the finance Liberty urgently needed to procure to fund its operations.

Greensill refused to comply with Liberty’s formal amendment demand to remove the PPSR registrations. As a result, Liberty approached the Federal Court of Australia for urgent relief under section 182(4)(a) of the PPSA, seeking orders to compel the removal of the obsolete registrations so it could proceed with its refinancing efforts.

The court’s decision

The court granted the relief sought in Liberty’s application under section 182(4)(a) of the PPSA, which allows a party to seek judicial orders to amend or remove a PPSR registration where the secured party refuses to comply with an amendment demand.

Liberty had issued the amendment demand to Greensill (in external administration) in June 2025, requesting removal of two PPSR registrations. Greensill’s administrators declined to comply with the amendment demand but also failed to provide any justification or evidence to support the continued existence of the security interests.

The court referred to the analysis applied in in Wickham Hill Investment Pty Ltd v Ding [2019] NSWSC 631, to confirm that the legal burden lies with the party seeking removal - in this case, Liberty - to show that no security interest exists. However, once Liberty provided substantial evidence of the repayment of the secured indebtedness and that the securities were obsolete, the evidentiary burden shifted to Greensill to justify the continued registrations. Greensill failed to provide sufficient evidence to justify the registrations and did not oppose the relief sought by Liberty at the final hearing. 

The court was satisfied that all obligations secured under the relevant deeds had been repaid by 30 June 2023; the RPA had terminated, meaning no new liabilities could arise; and there was no remaining or contingent “secured money” to which the security interests could attach.

On that basis, the court declared that Greensill no longer held any security interest over Liberty’s property. This declaration was critical, not just for removing the PPSR registrations, but for clarifying Liberty’s legal position in its dealings with third parties, particularly prospective incoming financiers. It reinforced the principle that PPSR registrations must reflect actual, enforceable interests, and cannot be maintained without a valid legal basis.

The court also granted injunctive relief restraining Greensill, and its administrators, from lodging any further financing statements over Liberty’s property. Greensill’s administrators’ refusal to comply with the amendment demand, combined with its lack of engagement in the proceedings commenced by Liberty, raised legitimate concerns about the future conduct by Greensill’s administrators. The court found that further registrations would obstruct Liberty’s ability to raise finance and that an injunction was justified.

Finally, the court ordered Greensill to deliver up any share certificates it may still hold in respect of Tahmoor or OneSteel. These certificates may have been obtained under the original share security deeds, and their continued possession by Greensill raised a specific concern under the PPSA.

Under section 21(2)(c) of the PPSA, a security interest in investment instruments, such as shares, can be perfected by control, which can override perfection by registration. The security provided to Greensill contemplated Greensill obtaining control over the shares by holding the share certificates. As a result, even if the PPSR registrations were removed, Greensill could potentially argue that its security interest remained perfected by control if it retained possession of the certificates. To eliminate this risk and ensure Liberty’s assets were entirely free of any perfected security interest, the court granted a mandatory injunction requiring Greensill to deliver up any such certificates, including any later discovered by its administrators.

Practical implications

This decision offers several practical takeaways for secured parties, grantors, and legal practitioners navigating the PPSA framework.

Registrations must reflect reality

The judgment reinforces that PPSR registrations cannot be maintained on a “just in case” basis. If the underlying security interest has been extinguished, the PPSR registration must be removed. Failure to do so can expose the secured party to court orders and potential injunctive relief, and risk costs consequences for the secured party erroneously maintaining security interests.

Strategic use of section 182 

The PPSA provides a robust mechanism for removing obsolete registrations, but practitioners must be prepared to meet the evidentiary burden and consider ancillary relief where appropriate.

Burden of proof dynamics

The legal burden of proof rests with the party seeking removal of the PPSR registration, however, the evidentiary burden can shift quickly. Secured parties should be prepared to substantiate the ongoing validity of their security interests if challenged.

Perfection by control remains potent

The case highlights that even if a PPSR registration is removed, a security interest may still be perfected by control, particularly in relation to investment instruments like shares. Practitioners should be alert to this risk and consider whether physical possession of certificates or other control mechanisms could sustain a security interest post-registration or amendment of the PPSR.

Mandatory injunctions as clean-up tools

The court’s willingness to order delivery up of share certificates underscores the importance of eliminating all residual avenues for a secured party to assert control. This is especially relevant in refinancing contexts, where clean title is a mandatory pre-requisite for an incoming financier. 

Substance over form 

The reasoning in the judgment reflects a “substance over form” approach, focusing on the actual existence of enforceable obligations of a substantive nature, rather than the mere presence of formal documentation with technical liabilities or registrations. The decision reinforces that the court is prepared to look beyond the PPS register to assess the true legal characterisation of the security interest.

Co-written by Jim Hunwick of Pinsent Masons.