Q&As

What is the position of a security holder if the company that created the security is dissolved?

Copyright © 2025 LexisNexis

Published by a LexisNexis Banking & Finance expert

Published on: 01 August 2017

This Q&A focuses on the impact the dissolution of a security provider can have on the ability of a security holder to effectively enforce its security. It also considers the position of a receiver appointed by the security holder prior to the dissolution of the relevant company.

Summary

If a security provider is dissolved as a matter of English law it is normally still possible for the security holder to enforce the security it holds by exercising the mortgagee’s power of sale. There may be circumstances in any particular case that make an application to restore the dissolved company to the register desirable to protect the security holder’s position.

Circumstances where this issue commonly arises

The problems associated with a security provider being dissolved while security is in force occur most often in real estate finance and other asset finance transactions. Typically, these issues arise where a special purpose vehicle (SPV) or a series of SPVs are used to hold particular assets which

Powered by Lexis+^®

Jurisdiction(s):

United Kingdom

Key definition:

Dissolved definition

What does Dissolved mean?

In relation to a company, where that company ceases to exist as a legal entity at companies house.

Popular documents

Amending security documents

Amending security documentsReasons for amending security documents and key risksReasons for amending a security documentThere are situations where parties may consider amending security documents. Common examples include:•the parties want to make changes to the obligations being secured•the chargee

Do you need a deed of release as well as a DS1 to release a legal charge over land?

Do you need a deed of release as well as a DS1 to release a legal charge over land?Generally speaking, a deed of release is not necessary in addition to a form DS1 in order to release a charge registered at HM Land Registry.In the case of a legal mortgage of unregistered land, or a mortgage under

Fixed and floating charges

Fixed and floating chargesThere are four main types of security available under English law:•Mortgage•charge•Pledge, and•LienThis Practice Note explains:•the nature of a charge (compared with other security interests)•the nature of a fixed charge compared to a floating charge•the types of assets

Priority between loss reliefs in loss making companies

Priority between loss reliefs in loss making companiesWhy does it matter?A company that is a member of a group and has incurred any of the types of losses available for surrender by way of group relief may, without any further rules, have more than one way in which to use the loss. There are a