The importance of careful drafting of security documentation—Solicitors Journal
In an article in Solicitors Journal, partner Simon Jerrum takes a deep dive into two High Court decisions on fixed vs. floating charges, explaining what the rulings mean for security documentation.
He writes that the decisions in both Avanti Communications and UKCloud, which centred on the question of whether security granted by a company over certain assets amounted to a fixed charge or floating charge, have potential consequences for multiple parties.
He suggests that those involved in the drafting of such documentation should take note that the court will scrutinise the terms of security documentation, adding that lenders, borrowers and insolvency practitioners considering the scope of security granted over assets should carefully analyse whether that security amounts to a fixed or floating charge.
While the judgments give helpful summaries of the current state of the law, it is likely that there will be further developments in this area over the coming years. This will provide an opportunity for parties looking to challenge the security purportedly granted under a debenture, and give pause for thought to those drafting or reviewing security documentation.
The full article is available to view at Solicitors Journal, by subscription only.
Simon Jerrum heads up Russell-Cooke's restructuring and insolvency practice, advising insolvency practitioners, directors, charity trustees, companies, investors and high net worth individuals on a wide variety of insolvency matters.
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