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A
debenture is just a written agreement between lender and borrower.
That
agreement to be valid must be lodged with the registrar of
companies within set time scales and must also satisfy certain
other basic requirements.
In
essence, however, it is a written agreement between lender
and borrower. A debenture does not always include a clause
that the lender can appoint a receiver but more often that
not such a clause is included in the agreement. For debentures
created after 15th September 2003 the lender is only empowered
to appoint an Administrator rather than an Administrative
receiver.
A
debenture gives the holder of that document priority rights
for repayment should the borrower become insolvent.
The
repayment priority is not absolute as against other creditors.
On the insolvency of a company the monies that become available
for creditors are distributed in a set order. That repayment
order is as follows:
- Firstly
to secured creditors. Secured creditors hold either a
legal mortgage, a legal charge or a fixed charge.
- Secondly
to preferential creditors. Preferential creditors in the
main are amounts due to employees for arrears of wages.
- Thirdly
to creditors who hold a debenture which grants a "floating
charge".
- Fourthly
to creditors who do not fall into any of the above categories.
These remaing creditors are called "unsecured creditors".
From
the above notes you will see that there is tremendous value
in holding a debenture. If you wish to obtain a debenture
over one of your customers or over a company to which you
have lent money then please speak to us.
If
you are owed money from your own company on a directors
loan account you can better secure your position by obtaining
a debenture.
Purnells
have a fixed price package to enable you to obtain such
a debenture.
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