Getting ready to enforce security
Getting ready to enforce security

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

  • Getting ready to enforce security
  • Summary
  • Other enforcement resources
  • Would enforcement maximise recovery?
  • Alternatives to enforcement of security
  • Validity and scope of the security
  • Syndicates and intercreditor issues
  • Demands and other notices
  • Future developments

Summary

A secured creditor has a variety of remedies available to it to realise value from the security. However, it is prudent for any secured creditor to check a number of issues before exercising those rights. Inevitably, a secured creditor will be motivated by a desire to maximise the chances that it will be repaid in full. It will want to ensure that enforcement of security is the best way to achieve that objective. .

If a decision to enforce security is made then the security holder will need to assess which method of enforcement will provide the most effective and efficient means of achieving the overall objective. This Practice Note outlines the major issues which a secured creditor will need to consider before a decision is taken to enforce its security.

The issues covered in this note are:

  1. is there a viable alternative to taking enforcement action eg a consensual restructuring of the debt or voluntary programme of disposals to reduce the debt

  2. is the security valid in all respects and comprehensive in scope so a remedy of choice can be exercised eg the appointment of an administrator out of court

  3. does any action need to be taken to improve the security eg upgrading an equitable right to a legal right

  4. do members of any syndicates of lenders or