Debentures

A debenture is an ‘umbrella’ security document that incorporates many types of security over a broad range of company assets. Debentures are often used by lenders who are making loans with large principal amounts and who require reassurance that they will be able to recover monies owed.

Yes, it is possible for a company to provide security to one or more lender by way of multiple debentures. These may be against different specific assets, multiple floating debentures, or a mixture of both. Usually, when the initial lender places a debenture over a company, the lender will seek to prevent any further lenders from adding another debenture over that same company without specific consent. Where there are multiple lenders with debentures over the same assets, the lenders may agree on priority of payments between themselves. This is usually documented in an agreement called a deed of priority.

Secured charges are against a company that will be registered at Companies House and this includes debentures. Failure to register a charge with Companies House may render the charge unenforceable and so it is imperative that the documents are registered properly so if. Charges are filed at Companies House using form MR01 and the deadline for registration is 21 days from the date of the security document (except in some limited circumstances where the period for filing may be longer). If you miss the deadline, you will need to apply to the court to have the charge registered which takes time and money.