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
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
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
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.
News from Walker Morris
News from The Lawyer
Briefings from Walker Morris
The boom, bust and claim cycle could soon be repeated, sparking a rise in surveyors’ negligence cases. What lessons can be learned?
Court will not tolerate opportunistic attempts to capitalise on another’s trivial breach.
Analysis from The Lawyer
Which firms are cutting it in this era of slimline rosters, and who are the GC new brooms making clean sweeps? The Lawyer can reveal all
The law school war shows no signs of ending. But we have, perhaps, reached the end of the beginning.