Q&As

Is it possible to have multiple first fixed charges over shares held by a company (for example a holding company) in another company (one of its subsidiaries)? Also, what would happen in an insolvency situation, which first fixed charge would be enforceable?

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Produced in partnership with Brian Cain
Published on LexisPSL on 14/09/2018

The following Restructuring & Insolvency Q&A produced in partnership with Brian Cain provides comprehensive and up to date legal information covering:

  • Is it possible to have multiple first fixed charges over shares held by a company (for example a holding company) in another company (one of its subsidiaries)? Also, what would happen in an insolvency situation, which first fixed charge would be enforceable?

Is it possible to have multiple first fixed charges over shares held by a company (for example a holding company) in another company (one of its subsidiaries)? Also, what would happen in an insolvency situation, which first fixed charge would be enforceable?

You may find the following Practice Notes helpful:

  1. Taking security over shares

  2. Priority between security interests

  3. Enforcing share security

It is not possible to have multiple first fixed charges over shares. Assuming all share charges are in the same form and have been perfected appropriately, one of the charges will be first in time and all things being equal would be the ‘first’ fixed charge. The basic principles of priority of security under English law—together with a limited set of exceptions—are explained in the Practice Notes referred to above. That ‘first’ fixed charge would have the priority right to enforcement and sale proceeds—once its first in time status was established on the evidence, which may be problematic in practice. There may be issues arising as to the validity of the later fixed charges if the ‘first’ fixed charge contained a negative pledge covenant of which the later security holders were aware. See

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