Enforcement—debentures and floating charges
Enforcement—debentures and floating charges

The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:

  • Enforcement—debentures and floating charges
  • What is a debenture?
  • Enforcement events
  • Options for enforcing the security
  • Administration and qualifying floating charges
  • Receivership
  • Future developments

What is a debenture?

In the context of secured lending, the term 'debenture' means a form of security agreement that grants security interests over a broad range of the security provider's assets as collateral for either the security provider's own obligations or the obligations of a third party.

Debentures typically include:

  1. fixed security over specific assets, ie:

    1. mortgages (including assignments by way of security)

    2. fixed charges, and

  2. a floating charge over all of the other assets of the security provider (ie all the assets that are not covered by the fixed security)

For more information on debentures and their formalities see Practice Note: Key features of debentures.

In the event that a company cannot meet its obligations under a loan agreement or other financial arrangement, lenders will need to consider the options available to them to recoup their losses. One option is to enforce their security.

Subject to the security having been duly registered at Companies House and at any relevant specialist registry, a secured lender can enforce its security in a number of ways depending upon the nature of the security granted and the type of assets secured. This Practice Note considers the options open to holders of debentures and floating charge security. In particular it covers:

  1. enforcement events

  2. options available to lenders following an enforcement event, and

  3. registration of enforcement