The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:
Registration can have an important effect on the priority of competing security interests.
Broadly speaking, there are two different systems for registration of security interests:
registration against the entity providing the security (eg at Companies House), and
registration against the asset which has been secured (eg at HM Land Registry or another specialist registry)
The rules governing priorities generally are discussed in Practice Note: Priority between security interests.
This Practice Note examines the effect that registration has on the priority of competing security interests.
Competing security interests arise when more than one creditor has taken security over the same asset or group of assets. Determining the order of priority between those security interests decides the order in which each of the secured creditors can claim on the secured property in an enforcement or insolvency scenario.
Where the proceeds of the security are not sufficient to pay all of the competing secured creditors in full, questions about priority are particularly critical because one or more of the second creditors may not recover all of the amounts they are owed if the company cannot pay from other assets. In such cases, being a higher-ranking creditor can mean the difference between a full recovery or no recovery at all.
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