Fatal flaws? Errors in security documentation and the consequences for enforcement

CRI_2016_V09_Iss1_Feb_cover_lowIn this article, Simon Passfield a specialist insolvency barrister practising from Guildhall Chambers looks at Errors in security documentation and the consequences for enforcement. The key points arising from the article are as follows:

  • ––The courts have drawn a distinction between invalid appointments and irregular appointments. An invalid appointment is a nullity and the acts of the purported administrator will be prima facie invalid. An irregular appointment is valid provided that the defect does not cause substantial injustice or any injustice is capable of remedy by the court.
  • ––If a debenture does not validly confer on the holder a power to appoint an administrator, any purported appointment will be invalid. If a power to appoint is exercised when the floating charge is unenforceable, the purported appointment is irregular.
  • ––It may be possible to remedy an invalid appointment by making a retrospective administration order. However, the jurisdiction to make such order is doubtful and will only apply in prescribed circumstances.

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Filed Under: CRI

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