Potential PPSA Changes in Saskatchewan & What You Should Know
At the end of 2015, Ontario enacted the 2006 Amendments to its PPSA and, as predicted, other provinces are slowly following suit. At the end of 2018, the Saskatchewan legislature introduced a new bill which provides for several amendments to Saskatchewan’s PPSA.
A Look at Saskatchewan PPSA Proposed Amendments
Before we review a few of the proposed amendments, please understand these are proposed – these amendments are under Bill 151 which had its first reading in November 2018.
(As an aside, one of the major recommended changes relates to jurisdiction. I won’t get into jurisdiction today because it deserves a dedicated blog post – stay tuned!)
Recognition of Electronic Chattel
Under the current PPSA, chattel paper is “one or more writings that evidence both a monetary obligation and a secure interest in, or lease of, specific goods; or a security interest in, or lease of, specific goods and accessions.”
The current definition does not account for the increase in electronic transactions. Under Bill 151, the proposed language is “electronical chattel paper means chattel paper created, recorded, transmitted or stored in digital or other intangible form by electronic, magnetic or optical means.”
The amendment would also include “electronic chattel” under various sections of the PPSA – acknowledging its inclusion in collateral.
Notice of Enforcement
Currently, if a secured party intends to dispose of collateral, the secured party must notify the creditors with a subordinate security interest. Bill 151 would change this notification to include all secured parties, regardless of their place in line.
Lapses or Unauthorized Discharge – Priority Remains If…
Currently, if a secured party fails to renew its filing by the expiration date or if that filing is discharged without authorization, the secured party will maintain its priority status if it registers the filing within 30 days from the lapse or discharge date.
Bill 151 proposes a secured party’s priority would remain the same, even if the debtor files for bankruptcy protection after the lapse/discharge and before the re-registration of the filing.
A Few Other Notable Suggestions
Bill 151 is approximately 20 pages and some amendments are seemingly minor word changes, while others, such as the section governing jurisdiction, are substantial and confusing. Lawyers with Miller Thomson, recently authored PPSA Amendments are Coming to Saskatchewan, an article explaining some of the pertinent recommendations.
In the article, authors David G. Gerecke, Q.C., and Fraiba Jalal, review several amendments, in addition to the items above, including:
– Security interests in licences
“The definition of “licence” is amended to further clarify that statutory licences are included as personal property and can be the subject of PPSA security.”
– Impact on priority of a security interest that becomes unperfected after another party commences enforcement
“The amendments in the Bill introduce a provision stating that the priority status of a security interest will not be affected by another secured party’s enforcement measures.”
– Transferees of goods or intangibles that are subject to unperfected security interests – removed of the knowledge rule
“The PPSA contains an odd anomaly where in some circumstances a transferee of goods would take the goods free of a perfected security interest even if the transferee is aware of the interest (i.e., a purchaser for value in the ordinary course of business), but currently that same transferee would not take the goods free of an unperfected security interest if they had knowledge of it. Bill 151 introduces language that clearly subordinates an unperfected secured creditor (in addition to a perfected secured creditor) to a buyer or lessee who acquires an interest in the collateral for value.”
Coming Soon – we’ll talk jurisdiction!
The construction credit world is chock full of industry-specific terms and definitions; sometimes it’s tough to keep them straight. “Bond” is one of those terms. Is it a payment bond, performance bond, bid bond, contractor’s bond, prevention bond, discharge bond? And, who is a party to a bond?
Check out Which Bond is Which?
Upcoming Webinars & Events
- February 12: The UCC – A Powerful Underused Collection Tool in Construction Lending
- February 19: An Advanced Look at the Lien & Bond Claim Process
- March 5: Implementing a UCC Program – Overcoming Obstacles
- March 19: Implementing a Lien/Bond Claim Program – Overcoming Obstacles
March 18-March 20 we will be at the CRF 2019 March Forum in Tucson, AZ
Don’t forget to bookmark our Events Page!