Appropriation and relief from forfeiture

The Financial Collateral Arrangements (No.2) Regulations introduced a new means for a security holder to enforce its security in respect of financial collateral (meaning, very broadly, cash, shares and other financial instruments and credit claims). Provided the parties agree in the security document the remedy of appropriation will be available, the collateral taker may ‘appropriate’ the financial collateral without the need for a court order or foreclosure.

If exercised, the collateral taker must ‘value the financial collateral in accordance with the terms of the arrangement an in any event in a commercially reasonable manner’. Once valued, the collateral taker or provider, as applicable, must account for any difference in value between the secured liabilities and the financial collateral.

‘Appropriation’ is not defined in the regulations. In a Privy Council decision in 2009, Lord Walker described the remedy as ‘much closer to sale than it is to foreclosure’. The effectiveness — or otherwise — of the remedy has not been apparent, although a Privy Council decision from earlier this year suggests the answer may be ‘not very’…

If you are registered and logged in to the site, click on the link below to read the rest of the Walker Morris briefing. If not, please register or sign in with your details below.

Sign in or Register to continue reading this article

Sign in

Register

It's quick, easy and free!

It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.

Register now

Why register to The Lawyer

 

Industry insight

In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.

 

Market intelligence

Identify the major players and business opportunities within a particular region through our series of free, special reports.

 

Email newsletters

Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.

More relevant to you

To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.

Briefings from Walker Morris

  • A warning for vloggers from the Advertising Standards Authority

    The Advertising Standards Authority has warned video bloggers — vloggers — that they need to be clearer when they are accepting payment for promoting products.

  • Food labelling checklist

    This checklist sets out the key considerations for food producers and food service companies to ensure compliance with the new food labelling regime, effective from 13 December 2014. 

View more briefings from Walker Morris

Analysis from The Lawyer

View more analysis from The Lawyer

Overview

Kings Court
12 King Street
Leeds
LS1 2HL
UK
http://www.walkermorris.co.uk

Turnover (£m): 42.50
No. of lawyers: 188