Debentures — a ‘new’ meaning? Fons Hf v Corporal Ltd and another
A familiar requirement of secured credit is for the customer to provide a debenture, which is commonly understood as meaning security over the customer’s business and assets. However, a recent decision — Fons Hf v Corporal Ltd and another  EWCA 304 — highlighted an older and wider meaning of debenture: any document that creates or acknowledges a debt (and not just one creating security). A somewhat unusual twist was given to this wider meaning by the Court of Appeal in the case in question.
A company (Topco) had granted a charge over the shares in its subsidiary (Subco) in favour of Topco’s bank. The charge defined the ‘shares’ charged as including ‘…all shares, debentures… and other securities owned by Topco in Subco… or in which it has an interest’. As a shareholder in Subco, Topco made certain loans to Subco, although the bank was not initially aware of them. When the bank came to take legal action, the repayment rights of Topco under these loans were worth more than the charged shares in Subco…
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
If a name is included on the form and the individual does not have a genuine conflict of interest the decision could be unenforceable.
Tracksuits on, as judge grants review of status that could see bridge organisation reclaim VAT on entry fees.
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.