Secured Creditor


A secured creditor is a person that lends money to a company in return for a legally enforceable claim against assets of the company. A creditor solicitor can assist with the setting up of such a charge, which, if not properly registered, could mean that the charge is void.

The body lending the money should ensure that the charge is registered with the Companies Registry, failure to do so will mean that the security is void and although the company will still owe the money, there will be no security for the money and the lender will become an unsecured creditor.

If the charge is properly registered, the lender will have a right to repayment of the debt over other creditors if the company becomes insolvent. The charge holder could also take possession and sell the assets which are the subject of the charge in the event that the terms of the loan are not met.

There are two main types of charges companies can give: fixed charges and floating charges. A fixed charge over land, buildings and major items of machinery gives the lender the right to be paid out of the proceeds of sale on the insolvency of the business, before other creditors. The borrower cannot sell the assets subject to a fixed charge without first consulting the charge holder. A floating charge is a charge over all the company's assets or a class of the company's assets that are constantly changing so the company retains the freedom to deal with the assets whilst still giving the lender security for their loan.

If you would like to obtain legal advice on being a Secured Creditor or about what rights a Secured Creditor has, Caven can put you in touch with a local specialist Creditor Solicitor free of charge. So, if you have any questions or would like our help in finding local Creditor Solicitors please call us on 08001 221 2299 or complete the web form above.

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