The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:
Debentures are used in many types of financing where it is desirable to take security over all of the assets of a particular entity. They are a form of umbrella document, incorporating many types of security over a broad range of assets.
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.
The term 'debenture' can also refer to a document that either creates or acknowledges a debt.
This Practice Note deals with debentures as a form of security in the context of secured lending. In particular, it considers:
the formalities required for a debenture
the legal principles to be considered
the fixed security normally secured in a debenture
the floating security under a debenture
perfecting the security, and
enforcing debentures and floating charges
Debentures are used where the lender wants to take security over all of the assets of a particular entity. It is possible to exclude certain assets from a debenture but this can result in loss of the right to appoint an administrator out of court pursuant
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