Borrowing & Security

Receivership Process

All Assets Charges A fixed and floating charge over all of the present and future assets of the company allows for the creation of a security over (and the appointment of a receiver) over most and in some cases, all of the company’s assets, business, and undertaking. … Read the rest

Receivership Effect

Crystallisation I When a floating charge is enforced, it “crystallises” on all the assets within its scope. The wording of the floating charge is typically in very broad terms and charges each class of assets. The borrower is entitled to use and transfer the circulating assets in the course of its business prior the crystallisation.… Read the rest

Receivership Appointment

Overview I The appointment of a receiver is a mechanism for the enforcement of security granted by a company by way of a fixed and/ or floating charge over its assets. The receiver’s powers are set out in the debenture deed.… Read the rest

Receiver’s Powers

General I The receiver is bound and empowered primarily by the terms of his appointment and the debenture/ mortgage under which he is appointed. He is entitled to act in the interests of the charge holder/ mortgagee. … Read the rest

Receiver’s Duties

Personal Liability I A receiver of the assets of a company is personally liable on any contract entered in the performance of his functions. This is the default position, whether the contract is entered in the name of the company or on his own behalf.… Read the rest

Debentures

Debentures provide evidence of debt for company borrowing, encompassing both transferable debt securities and charges secured against a company’s assets. Public companies and DACs issue transferable debentures, akin to tradable loans, while private companies typically offer non-tradable debentures, often secured by fixed and floating charges.… Read the rest

Corporate Finance

Small businesses commonly rely on bank lending and retained funds for financing, with loans ranging from short to long term. Formal legal agreements are crucial for loans, detailing repayments, interest, and profits. Tax implications vary for interest-bearing loans, with considerations for borrower and lender.… Read the rest

Charge Registration

The Companies Act requires registration of most charges made by companies with the Companies Registration Office (CRO) within a specified period. Failure to register renders the charge void against the liquidator and creditors, though still valid between debtor and creditor, undermining its purpose.… Read the rest

All Assets Charge

Fixed and floating charges offer a comprehensive security measure over a company’s assets, allowing lenders substantial control. Unlike individuals, companies can grant such charges over movable assets without strict limitations. These charges, covering present and future assets, can be flexible, combining fixed and floating elements, tailored to the lender’s needs.… Read the rest