ACCA F4 - Corp and Business Law (ENG)

Part E Capital and the financing of companies  16: Loan capital 253

4.4 Register of charges

As you already know, every company is under an obligation to keep a copy of documents creating

charges, and a register of charges, at its registered office or single alternative inspection location.

5 Debentureholders' remedies

5.1 Rights of unsecured debentureholders

A debentureholder without security has the same rights as any other creditor.

Any debentureholder is a creditor of the company with the normal remedies of an unsecured creditor. They

could:

 Sue the company for debt and seize its property if their judgement for debt is unsatisfied

 Present a petition to the court for the compulsory liquidation of the company

 Apply to the court for an administration order, that is, a temporary reprieve to try and rescue a

company

5.2 Rights of secured debentureholders

A secured debentureholder may enforce the security if the company defaults on payment of interest or

repayment of capital. They may take possession of the asset subject to the charge and sell it or apply to

the court for its transfer to their ownership by a foreclosure order. They may also appoint a receiver or

administrator of it. A floating charge holder may place the company into administration.

A secured debentureholder (or the trustee of a debenture trust deed) may enforce the security. They may:

 Take possession of the asset subject to the charge if they have a fixed charge (if they have a

floating charge they may only take possession if the contract allows)

 Sell it (provided the debenture is executed as a deed)

 Apply to the court for its transfer to their ownership by foreclosure order (rarely used and only

available to a legal chargee)

 Appoint a receiver of it, provided an administration order is not in effect or (in the case of floating

charge holders), appoint an administrator without needing to apply to the court.

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