Get your priorities right — Black Ant Co Ltd (in administration)  EWHC 1161
Priority of security is important where a borrower becomes insolvent and its assets are insufficient to discharge all its liabilities. Many funders will require a priority deed or intercreditor agreement to be entered into where there are two or more secured creditors — this will set out the order of repayment and entitlement to proceeds following enforcement of the security. In the absence of such a document, the general rule is that registered charges rank by the order in which they are entered on the register.
A lender who is first in time will want its security to keep its priority in respect of all advances, whether made at the outset or subsequently. ‘Tacking’ is the ability of a funder to secure (tack) further advances under its security so that they rank ahead of sums advanced by (and secured in favour of) another funder. However, the priority given by the general rule is limited to further advances, which the funder is obliged to make at the time of the charge.
In a recent High Court decision — Black Ant Co Ltd (in administration)  EWHC 1161 — the main focus was on what was meant by ‘further advances’. X and Y held a first and a second legal charge respectively over properties owned by two companies. After Y’s charge had been registered, the borrower signed new facility letters with X in respect of the existing loans — no new money was lent and there was no loan repayment. The companies went into administration…
Click on the link below to read the rest of the Gateley briefing.
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 Gateley
News from The Lawyer
Briefings from Gateley
In property transactions a deposit is usually paid by the buyer. In the event that the buyer does not complete its purchase the seller is usually able to keep the deposit and any interest accrued on it.
Encourage shareholders to surrender their shares to avoid costly court payments.
Analysis from The Lawyer
The Law Society recently published guidance to assist solicitors draw up Shariah-compliant wills, causing outrage in some quarters. Gateley’s Haroon Rashid explains the facts.