So you've changed your company's legal name. If you haven't
advised your secured creditors, you may have unwittingly brought
your company into breach of the terms of trade or other security
agreement that the secured creditor supplies or advances money
On the other hand, if you are a secured creditor and you become
aware that your debtor has changed its name, if you don't update
your financing statement on the Personal Property Securities
Register, then you may lose priority to other creditors.
Why is it so important to secured creditors to be
advised of a client company's name change?
A secured creditor will usually "perfect" its security agreement
on the Personal Property Securities Register by registering a
financing statement against its debtor and the collateral. The law
underpinning the PPSR requires accuracy of the information inputted
into the PPSR so that searchers of it can rely on the
If a secured creditor becomes aware that a debtor changes its
name, a secured party then has 15 days to change its financing
statement to reflect the debtor's name change. If the secured
creditor does not do this, then the financing statement may be
subordinated to the security interest of another secured creditor
that registers on the PPSR before the original secured creditor
registered the change of name.
If your company changes its name, then if you don't notify your
secured creditors, it its most likely a breach of your company's
terms of trade or other security agreement. Most security
agreements will contain a provision requiring a client company to
advise of a name change in advance of the such name change being
Accuracy is essential
In general, accuracy of information when registering a financing
statement is essential otherwise the financing statement could be
found to be invalid. If you are dealing with a registered company,
then you must insert the legally registered company name and its
If you are dealing with an individual, then you must verify the
person's legal name and date of birth by checking their passport,
driver licence or birth certificate. Do not register financing
statements or enter into contracts with a business trading name.
The legal name of the debtor must always be used to avoid legal
complications if you need to enforce against the debtor.