Question

Describe three ways in which priorities set out in the PPSA can be altered where there is more than one significant secured creditor of a debtor?

Answer 1

The priorities set out in the PPSA can be altered in three ways: agreement, court order, and subordination agreement.

Step-by-step explanation:

Under the Personal Property Security Act (PPSA), the priorities set out can be altered in three ways when there are multiple significant secured creditors of a debtor:

1. Agreement: The creditors can come to an agreement to alter the priorities. For example, they can agree to change the order in which they are repaid.
2. Court Order: A court can order a change in priorities based on the circumstances of the case. This typically occurs when there is a dispute between the creditors.
3. Subordination Agreement: The creditors can enter into a subordination agreement, which allows one creditor to subordinate their claim to another creditor's claim. This means the subordinated creditor agrees to be paid after the prioritized creditor.

Answer 2

The priorities set out in the PPSA can be altered in three ways: through intercreditor agreements, subordination agreements, and court orders.

Step-by-step explanation:

Under the Personal Property Security Act (PPSA), the priorities set out for secured creditors can be altered where there is more than one significant secured creditor of a debtor. Here are three ways in which these priorities can be altered:

1. Intercreditor Agreements: Secured creditors can enter into agreements that specify the priority of their claims in relation to each other. These agreements help determine the order in which each secured creditor will have access to the debtor's assets.
2. Subordination Agreements: Secured creditors may also agree to subordinate their claims to the claims of other secured creditors. This means that they agree to have a lower priority in collection, allowing other secured creditors to be paid first.
3. Court Order: In situations where there is a dispute between secured creditors over priorities, a court can intervene and issue an order specifying the priority of their claims. The court's decision will be binding and determine the order in which the secured creditors will be paid.