When a bank or other lender advances money, it wants more than a borrower's promise to repay — it wants assets it can fall back on if things go wrong. Security and credit support are how that protection is built. As a solicitor in a finance or corporate team, you will draft, perfect, register, rank and enforce these arrangements, and advise on what survives a borrower's insolvency. Getting the structure right is what turns a hopeful claim into a recoverable one.
This lesson works through the subject in a logical order:
- Security and Types of Proprietary Security — what security is and the four principal interests: mortgage, charge, pledge and lien.
- Fixed and Floating Charges — how the two differ, what marks a charge as floating, and what crystallisation does.
- Mortgages and Registration of Charges — legal versus equitable mortgages, the equity of redemption, and the registration deadline that keeps a charge alive.
- Priority Between Charges — how competing charges rank and the effect of negative pledge clauses.
- Enforcement — the power of sale, the duties owed, the proceeds waterfall and out-of-court appointment of an administrator.
- Insolvency Distribution and Avoidance — the floating charge waterfall, the prescribed part, and when a charge can be set aside.
- Retention of Title and Assignment of Debts — reserving ownership of goods and validly assigning debts.
- Guarantees and Indemnities — the crucial difference and the formalities each needs.
- Discharge and Rights of a Guarantor — how guarantors are released, their recourse, and undue influence.
- Financial Assistance — the statutory ban on helping someone buy a company's own shares.