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CF > 9. Security > Flashcards

9. Security Flashcards

1
Q

What should you check before accepting mortgage over shares

A

Ds cannot refuse reg + pre-emption rights do not apply

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2
Q

What part of Re Yorkshire did Spectrum focus on

A

B intended to keep trading + control

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3
Q

Method of perfection if fixed charge over cash (other than CH)

A

Give notice to debtor/bank BUT NOT NECESSARY

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4
Q

Method of perfection for EA of IP

A

Reg at IP office

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5
Q

What kind of mortgage over shares will L prefer and why

A

EM to avoid becoming M of company

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6
Q

Method of perfection if LA of insurance C

A

Notice to insurance company (L at least noted on policy, but better is to be ‘xo-insured’)

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7
Q

How is a lien perfected

A

L retains property until an O is met

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8
Q

What phrasing stops security falling away upon even temporary repayments

A

‘By way of continuing security’

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9
Q

What does it mean that most debentures are ‘all monies’ debentures

A

Provide security for all facilities, including future facilities

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10
Q

When is an assignment by way of security legal

A

If s.136 LPA ‘25 met

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11
Q

Three methods of security over future IP/property

A

Fixed charge/EM/EA

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12
Q

Two cases on distinguishing between fixed and floating charges

A

Re Yorkshire and Spectrum

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13
Q

What kind of right does a charge give

A

Equitable right over an asset

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14
Q

How is a pledge perfected

A

L takes actual/constructive delivery

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15
Q

How can you perfect fixed charge over P&M, other than reg at CH

A

Affix notice

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16
Q

Does any security need to be registered at CH to be valid?

A

No

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17
Q

What are 3 tests for floating charge

A

Over present + future class of assets, which in OCoB would change, and B intended to keep trading

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18
Q

Why is it a benefit to L of having QFlC and appointing own A

A

Control of the administration process

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19
Q

Two examples of floating charges

A

Stock and book debts (if insufficient control)

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20
Q

Method of perfection if LA over book debts

A

MUST give notice to debtors to stay LA

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21
Q

If LM of shares, what is the method of perfection

A

Transfer shares, new certificates and reg in M reg

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22
Q

What should C do once secured debt repaid

A

Request release of security on register at CH

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23
Q

Name three assets whose only possible method of reg is at CH (but they do not need to be reg at CH)

A

Goodwill (fixed), stock and cash (floating)

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24
Q

3 things for floating CASE

A

Re Yorkshire

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25
Q

What M is used for future property

A

Equitable M

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26
Q

Two kind of charges

A

Fixed and floating

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27
Q

General rule on priority of security which has not been reg at CH

A

Date of notification

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28
Q

What kind of charge is generally less advantageous for L

A

Floating

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29
Q

If trying to assign benefit of C, what should you check first

A

Doesn’t contain NAC

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30
Q

What is the aim of perfecting security

A

Notifying 3rd parties

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31
Q

When might book debts be fixed charge

A

If truly blocked account (Spectrum)

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32
Q

What is the effect of security on B

A

Lowers borrowing costs + means B who couldn’t get loan otherwise can

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33
Q

Why is a mortgage over shares a weak form of security

A

Rank bottom in priority + unlisted shares less marketable

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34
Q

What is a floating charge

A

Attaches to fluctuating assets, allowing B to continue to deal in OCoB, crystallising on specific event

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35
Q

What is CbwolM usually in addition to

A

Fixed charge over property to

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36
Q

Benefits of grandfathered floating charge

A

Can appoint AR + not subject to prescribed part + tax advantages

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37
Q

What commercial issues might there be w/ giving notice to 3rd parties

A

Making 3rd nervous about B’s financial stability

38
Q

When does reg at CH NOT give constructive notice?

A

Shares, cash and bonds (covered by Financial Collateral Regs) - only actual notice if checked

39
Q

Two downsides of pledge

A

L becomes bailee and B cannot generate income

40
Q

Two kinds of insurance that may be assigned

A

Keyman or buildings insurance

41
Q

If B has CiA against 3rd, what can B do

A

Assign benefit to L

42
Q

Most common form of security for land

A

CbwoLM

43
Q

What other assets might form basis of security, but are not in BS

A

Insurance, IP rights, key contracts, goodwill, TMs/patents

44
Q

Control for floating CASE

A

Spectrum

45
Q

What to do before accepting M over shares of non-English company

A

Local law advice on perfection

46
Q

What is the effect of reg at CH

A

Deem 3rd parties to have constructive notice

47
Q

What is the usual charge over bookdebts

A

Floating

48
Q

Cons of floating charge

A

Vulnerable, not recognised in other Js and if over stock, might be subject to RoTs

49
Q

What will L want if EM over future property

A

‘Further assurance’ claus + PoA to be able to take security when new rights acquired

50
Q

859A gives what

A

Reg at CH within 21 days from day after creation of charge

51
Q

What case confirmed Re Yorkshire

A

Spectrum

52
Q

When is a floating charge qualifying

A

Over substantially all the assets + doc states para 14 Schedule B1 applies

53
Q

What is the CL rule on priority between LAs

A

Date notice given to debtor (Dearle v Hall)

54
Q

What is a fixed charge

A

Attaches to specific asset if chargeholder has sufficient control

55
Q

Why are floating charges vulnerable

A

To fixed charges, preferential creditors, A’s costs, and higher chance of avoidance

56
Q

What kind of M has to be registered to maintain priority against BFP

A

EM

57
Q

What is the key criteria that distinguishes LA from EA

A

Notifying original debtor/counterparty

58
Q

What is a ‘catch all’ floating charge called and what is it’s purpose

A

Sweep up floating charge, ensures that charge will = qualifying floating charge

59
Q

Two situations in which B will not be able to give security

A

Negative pledge or unlawful FA

60
Q

If no notice is given to counterparts when assigning benefit of C, what happens (x3)

A

Only EA, counterparty can set off amounts B owes it, and can pay B directly

61
Q

What is the criteria in s.136 LPA ‘25

A

Absolute assignment, in writing, signed by assignor and NOTIFIED to original debtor/counterparty

62
Q

What administrative issues might there be w/ giving notice to 3rd parties

A

Too many to give notice to

63
Q

4 examples of fixed charges

A

Goodwill, property, book debts, IP, P&M, uncalled capital

64
Q

Spectrum key

A

Control for floating

65
Q

If Ds can refuse reg or pre-emption rights do apply, what should you do before M over shares

A

Amend AoA

66
Q

What is the effect of failure to reg security at CH

A

Void against L/A/other creditors + debt becomes immediately repayable

67
Q

What is a grandfathered floating charge

A

Over substantially all assets + pre 15/09/2003

68
Q

How to reg at CH

A

Form MR01 + certified copy of debenture + reg fee, within 21 days from day after creation of charge

69
Q

General rule on priority at CH

A

By order of creation, subject to proper reg

70
Q

Priority for CbwoLM

A

Ranks according to date of reg, not creation (48(1) LRA ‘02)

71
Q

Two options of security over insurance Cs

A

Fixed or assignment

72
Q

What changes the CL rule on priority between LAs

A

Reg at CH gives constructive/deemed notice, so first reg = priority

73
Q

859H states what

A

Consequences of failing to reg security

74
Q

Procedure for requesting release of security on CH reg

A

Deed of Release + either MR04 or MR05

75
Q

Two ways of security through physical possession

A

Pledge and lien

76
Q

What is the best protection of security

A

Reg at CH

77
Q

Why must you reg EM and EA

A

BFP for value w/o notice takes free

78
Q

What documents are required for EM over shares

A

STF signed but undated, blank share certificates + PoA in favour of bank

79
Q

What three assets (if they have security over them) do not need to be reg at CH bc covered by Financial Collateral Regulations

A

Cash, shares and bonds

80
Q

When must security over future IP/property be reg at LR/IP office

A

Once acquired

81
Q

What did Spectrum define a fixed charge as

A

Asset only released from charge on active occurrence of L, e.g. prior written consent

82
Q

When is an assignment equitable

A

If 136 LPA ‘25 criteria not met

83
Q

Three advantages of floating charge for L

A

B can keep trading, grandfathered FlC has benefits, and QFlC can appoint own A

84
Q

Method of perfection of reg land

A

Reg at LR

85
Q

When must you consider the value of the security

A

At time of potential enforcement

86
Q

Re Yorkshire key

A

3 things for floating

87
Q

When is it more likely a book debt will have a fixed charge over it

A

One-off loan, e.g. inter-group loan

88
Q

What did Spectrum define floating charge as

A

Assets not appropriate until a later date

89
Q

What five subjects of security do not need notice to be given to any third party to perfect

A

Shares, cash, bonds, goodwill, stock

90
Q

For what security over cash is there no need to give notice to a bank, even as a matter of good practice

A

Floating charge - only if fixed charge

CF (11 decks)

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