Debt Finance

Question 1

Within what time period must a security be registered?

Answer 1

The security document needs to be registered at Companies House within 21 days beginning with the day after the creation of the security

Question 2

What is the effect of failing to register the security?

Answer 2

• The charge is void against a liquidator, administrator and any creditor of the company
• The debt becomes immediately due and payable

In the event of insolvency, the lender would become an unsecured creditor

Question 3

What must a company do if it wishes to sell its asset subject to a fixed charge (e.g., wishes to sell machinery subject to a fixed charge by its bank?)

Answer 3

The company can only sell the asset (machinery) if it does so with the consent of the fixed charge holder (bank) as the charge holder

• fixed charge - need charge holder’s consent