Glossary

A · B · C · D · E · F · G · I · L · M · N · O · P · Q · R · S · U · W

A

Administrative receiver

A receiver of a company's whole business, acting for the floating-charge holder alone. No lender may appoint one under a floating charge created since September 2003 (section 72A of the Insolvency Act), and clause 9.3 repeats the bar. The Bank's routes are an administrator or an LPA receiver. Debenture §9.3 · Chapter 3 · Chapter 9

Administrator

An insolvency practitioner who takes over a company from its directors, to rescue it or get the best result for its creditors. The Bank can appoint one without going to court, because clause 3.5 makes its floating charge a qualifying one. Its expenses come out of the floating-charge assets first. Debenture §3.5 · Debenture §9.3 · Chapter 3 · Chapter 9

Assignment by way of security

A transfer of a right to the lender, to be transferred back when the debt is paid. Clause 3.3 assigns the Company's insurance policy to the Bank, and clause 14.1(b) reassigns it at the end. It binds the insurer only once the insurer has notice. Debenture §3.3 · Definition: Insurances · Schedule 4 · Chapter 1 · Chapter 5

B

Blocked account

A bank account the customer may draw on only with the bank's consent, given withdrawal by withdrawal. Under the waiver, the Collection Account became one from 16 March 2028. The Bank then treated its charge over the book debts as fixed, though whether practice alone can do that is unsettled. Debenture §8.3 · Chapter 8

Book Debts

The money customers owe the Company on unpaid invoices, and what is paid on them: about £2,600,000 at any time. Clause 3.2(d) calls the charge over them fixed, and clause 8.3 sends every payment into the Collection Account. Whether the charge is really fixed depends on who controls that account. Definition: Book Debts · Debenture §3.2 · Debenture §8.3 · Chapter 2 · Chapter 3 · Chapter 5

C

Certificate of registration

The certificate Companies House issues once a charge is registered. It is conclusive evidence that the documents arrived in time (section 859I of the Companies Act 2006), so nobody can go behind it. The file must hold the certificate, not just the filing receipt. Chapter 6 · Chapter 10

Charge

Security that leaves the asset with its owner but lets the lender have it sold and be paid first from the price. A fixed charge sits on a named asset, and a floating charge on a changing pool. The Debenture uses both, with a legal mortgage and an assignment. Debenture §3 · Chapter 1 · Chapter 3

Clawback

A rule that lets an administrator or liquidator undo something a company did before it failed. Section 245 of the Insolvency Act strikes down a recent floating charge except for new money. Sections 238 and 239 catch a gift at an undervalue and a preference. Debenture §14.2 · Chapter 9 · see New money

Collection Account

The Company's account at the Bank that receives every payment on the book debts. Clause 8.3 lets money leave it only “except as the Bank permits”, and it needs no notice because the Bank holds it. The Company drew on it freely until it was blocked in March 2028. Definition: Collection Account · Debenture §3.2 · Debenture §8.3 · Chapter 5 · Chapter 8

Conditions precedent

The documents the Bank must hold before it lends: the signed Facility Agreement and Debenture, board minutes, the valuation, the searches, the old lender's payoff letter, the deeds and share papers, and a legal opinion. The junior keeps the checklist. Chapter 10

Continuing security

Security for whatever is owed from time to time, not for a fixed sum. Under clause 15.1 an instalment paid, a waiver or a change to the Facility Agreement releases nothing. The security comes off only on a release at the end. Debenture §15.1 · Chapter 8 · Chapter 10

Corporate benefit

The reason a company needs before it helps another company, because its directors owe their duty to it (section 172 of the Companies Act 2006). Tooling gets none of the loan, so its board minuted how guaranteeing its parent helps Tooling. Its shareholder approved the guarantee in writing. Definition: Guarantor · Chapter 7 · see Upstream guarantee

Covenant

A promise made in a deed. Clause 2.1 is the Company's covenant to pay, and clause 5.1 its covenant to do what registration needs. A covenant from a failing company is worth little, so the Bank's solicitors make the filing themselves. Debenture §2.1 · Debenture §5.1 · Chapter 1 · Chapter 6 · see Financial covenants

Crystallisation

The moment a floating charge fixes onto the assets in the pool. Under clause 4 it happens by notice, or automatically on three events: other security, a sale outside ordinary trade, or a winding-up petition or administration application. Fixing stops the Company dealing, but the Bank still cannot sell. Debenture §4 · Chapter 1 · Chapter 3

D

Debenture

The deed by which a company gives a lender security over its assets, usually all of them. The Company's has sixteen clauses and five schedules: a legal mortgage, fixed charges, an assignment of the insurance and a floating charge over the rest. Two directors signed it as a deed. The Debenture · Execution · Chapter 1

Deed of priority

A deed between two secured lenders and the borrower that fixes which lender ranks first. It has three parts: ranking, a standstill on the second lender enforcing, and turnover of anything it receives. No second lender came, so the Bank never needed one. Chapter 7 · Chapter 10

Deed of release

A short deed by which a lender gives up its security and confirms it is owed nothing more. Kite, the Company's earlier lender, gave one at the moment it was paid off from the Bank's loan. The Bank gives its own at the end of the loan (clause 14.1). Debenture §14.1 · Chapter 2 · Chapter 10

E

EBITDA

Earnings before interest, tax, depreciation and amortisation: the profit the trade makes before the cost of borrowing. The interest cover test compares it with the interest paid. The Company's EBITDA for 2027 was £3,600,000. Chapter 8 · see Interest cover

Enforcement Event

A default that is still continuing, plus the Bank's written notice that the security is enforceable. Only then may the Bank sell, appoint a receiver or an administrator, or take the dividends and votes (clause 9.1). The Bank never sent the notice. Definition: Enforcement Event · Debenture §9.1 · Chapter 3 · Chapter 8

Event of Default

A breach the Facility Agreement lists as a default. It lets the Bank cancel the loan and demand it all back at once, but it does not by itself let the Bank enforce its security. The Company's interest cover breach in 2027 was one. Definition: Event of Default · Chapter 8

F

Facility Agreement

The loan agreement between the Bank, the Company as borrower and Tooling as guarantor. It provides a term loan of £12,000,000 over five years and a revolving facility of £3,000,000, which can be drawn, repaid and drawn again. Each drawing is called a Utilisation. Definition: Facility Agreement · Recital (A) · Chapter 1

Financial assistance

Help a company gives, such as a guarantee, so that someone can buy its shares or its parent's shares. The Companies Act 2006 forbids it only where a public company is involved. Both companies here are private and the loan buys no shares, so it does not arise. Chapter 7

Financial covenants

Tests of the borrower's figures in the Facility Agreement, checked every quarter over the twelve months just ended. Here there are two: interest cover of at least four times, and leverage. Failing one is an Event of Default, even when every payment is on time. Chapter 8 · see Interest cover, EBITDA

Fixed charge

Security over a named asset, which the Company may not sell or deal with without the Bank's consent (clause 6.2). When it is sold, the Bank is paid after the costs of sale, and nobody stands in between. The label alone does not make a charge fixed: control does. Debenture §3.2 · Definition: Fixed Charge Assets · Schedule 2 · Chapter 1 · Chapter 3

Floating charge

Security over a changing pool of assets, such as stock, which the Company may sell in its ordinary trade until the charge fixes. On an insolvency, three claims are paid from it before the Bank. Clause 3.4 also catches any asset whose fixed charge fails. Debenture §3.4 · Definition: Floating Charge Assets · Chapter 1 · Chapter 3

G

Guarantee

A promise to pay another person's debt if that person does not. Tooling guarantees the Company's loan, but if Tooling failed the Bank would rank equally with Tooling's other unsecured creditors. The family refused personal guarantees, and the Bank accepted. Definition: Guarantor · Chapter 1 · Chapter 7

I

Interest cover

A financial covenant comparing profit (EBITDA) with the interest paid on the loan. The Facility Agreement requires profit of at least four times the interest. In 2027 EBITDA of £3,600,000 against interest of £1,200,000 gave three times, and that was the breach. Chapter 8 · see Financial covenants

Invoice discounter

A financier that lends against a company's unpaid invoices and is repaid as customers pay. Kite was the Company's, and held security over its book debts. The Bank's loan paid Kite off, and Kite released its security at the same moment. Chapter 2 · see Payoff letter, Deed of release

L

Legal mortgage

The strongest security over land. Clause 3.1 charges the factory by way of legal mortgage, which gives the Bank a mortgagee's powers, above all the power to sell. It takes effect at law only once HM Land Registry enters it on the title. Debenture §3.1 · Schedule 1 · Definition: Property · Chapter 1 · Chapter 4

Lien

A right to keep someone else's goods until a debt is paid, which arises by law rather than by agreement. A repairer may keep a machine until its bill is paid. The words “permit to subsist” in clause 6.1 catch a lien too. Debenture §6.1 · Chapter 7

Liquidator

The person appointed to wind up a failed company: to sell its assets and pay its creditors in the order the law sets. A charge not filed at Companies House within 21 days is void against a liquidator (section 859H), and the Bank would be an unsecured creditor. Chapter 1 · Chapter 6

Loss payee

The person an insurer must pay when it meets a claim. Clause 8.2 makes the Bank loss payee on the buildings and plant sections of the Company's policy, but not on business interruption. The Bank decides whether the money rebuilds or repays the loan. Debenture §8.2 · Schedule 5 · Chapter 4 · Chapter 5

M

Moratorium

The protection a company gets once it is in administration. While it lasts, nobody may enforce security or sue the company without the administrator's consent or the court's permission. It binds the Bank too, even though the Bank appointed the administrator. Chapter 9

Mortgage, mortgagee and mortgagor

A mortgage is security over an asset, usually land, with a power for the lender to sell it. The mortgagee is the lender and the mortgagor the borrower. The Bank's powers exist from signing (clause 9.2), but it may use them only after an Enforcement Event. Debenture §9.2 · Chapter 4

N

Negative pledge

The Company's promise in clause 6.1 to give nobody else security over its assets, except Permitted Security. Form MR01 shows the promise on the public register. A breach fixes the floating charge over that asset automatically (clause 4.2(a)). Debenture §6.1 · Debenture §4.2 · Chapter 7

New money

Cash, goods or services given to a company when or after it creates a floating charge. Section 245 of the Insolvency Act strikes down a recent floating charge except to the extent of new money. The Bank lent the whole term loan six days after signing, so its charge stands. Chapter 9

Notice of assignment and acknowledgement

A notice tells the person who owes a claim, such as an insurer, that the claim is now held by the lender. Until told, it may pay its creditor and treat the debt as settled. The acknowledgement is its written promise to act on the notice. Debenture §5.3 · Schedule 5 · Chapter 5 · Chapter 6

O

Official search with priority (form OS1)

A search of a title at HM Land Registry that opens a priority period of 30 working days. An application the searcher lodges inside that period ranks ahead of anything lodged in between. The Bank's search was made on 20 April 2026, and its application went in on day 25. Debenture §5.1 · Chapter 4

P

Payoff letter

A letter from an outgoing lender stating the exact sum which, paid on a stated day, clears everything it is owed. Kite's put the figure at £1,900,000, including a £40,000 fee for ending early. Payment and Kite's release then happened at the same moment. Chapter 2

Perfection

The steps after signing that make security good against people outside the deal, such as a liquidator. Every charge must be filed at Companies House within 21 days. Some assets need one step more: a land registration, the share papers, control of an account or a notice to the insurer. Debenture §5 · Chapter 1 · Chapter 5 · Chapter 6

Permitted Security

The one kind of security the Company may give elsewhere without asking. It covers a newly bought asset, goes only to whoever financed it, secures only its price and finance cost, and all of it together never exceeds £750,000 at any time. Definition: Permitted Security · Debenture §6.1 · Chapter 7

Preferential creditors

Creditors the law pays from floating-charge assets before the floating charge. Their claims, the preferential debts, are staff pay for the last four months up to £800 each with holiday pay, and taxes the company collected but did not pay over. They never touch fixed-charge assets. Chapter 3 · Chapter 9

Prescribed part

A share of the floating-charge money kept for unsecured creditors, worked on what is left after expenses and preferential debts. It is 50% of the first £10,000 and 20% of the rest, up to £800,000. The Bank cannot share in it for its shortfall. Chapter 3 · Chapter 9

Priority

The order in which lenders with security over the same asset are paid from it. For registered land, charges rank in the order they are entered on the register (section 48 of the Land Registration Act 2002). For other assets, a deed of priority can settle the order by agreement. Chapter 4 · Chapter 10

Purchase-money security

Security given to whoever finances the purchase of an asset, over that asset only. The Debenture leaves room for it as Permitted Security, up to £750,000. The financier's money brought the asset in, so letting it rank first takes nothing from the Bank. Definition: Permitted Security · Chapter 7

Q

Qualifying floating charge

A floating charge over all or nearly all of a company's property that says paragraph 14 of Schedule B1 to the Insolvency Act 1986 applies to it. Its holder may appoint an administrator without going to court. Clause 3.5 is that one sentence. Debenture §3.5 · Chapter 3 · Chapter 9

R

Receiver (LPA receiver)

A person the Bank appoints to take particular assets, such as the factory, and sell them. The power comes from the Law of Property Act, hence “LPA”. The receiver acts as the Company's agent (clause 10.3), so the Company answers for what the receiver does and pays the fees. Definition: Receiver · Debenture §9.2 · Debenture §10 · Chapter 4 · Chapter 9

Registration at Companies House (forms MR01 and MR04)

Form MR01 and a certified copy of the deed must reach Companies House within 21 days, counting from the day after it is created. Filed late, the charge is void against a liquidator, an administrator and creditors. Form MR04 clears a repaid charge, but nobody has to file it. Debenture §5.1 · Chapter 2 · Chapter 6

Release

The lender giving up its security once everything is paid and nothing more can be drawn. Under clause 14.1 the Bank must act, at the Company's request and cost, in four places: Companies House, HM Land Registry, the insurer and the deeds. A payment later undone revives the security. Debenture §14.1 · Debenture §14.2 · Chapter 10

Reservation of rights letter

A lender's letter after a breach saying it knows of the default, does not waive it, is not acting on it for now, and keeps every right. It stops the lender's normal conduct being read as a waiver. It names the breach but demands nothing. Chapter 8

S

Secured Liabilities

Everything the Company owes the Bank, now or later, under the Facility Agreement or the Debenture, with interest, fees and costs. A charge secures only the debt its own document names, and this definition names it. Clause 2.1 is the promise to pay it. Definition: Secured Liabilities · Debenture §2.1 · Chapter 1

Security

A claim on a particular asset, which a lender can have sold if it is not repaid. A secured lender is paid from the price before the other creditors. An unsecured lender holds only a promise and shares what is left. Definition: Security Assets · Chapter 1

Security Period

How long the security lasts: until everything owed is paid and no facility can still be drawn. The second condition matters because a revolving facility repaid one day can be drawn again the next. At the end of the loan both conditions are met together. Definition: Security Period · Chapter 5 · Chapter 10

Security review

A check, after a default, that every piece of the lender's security is still in place and what it would fetch on enforcement. Your firm carried one out as a term of the waiver. Its enforcement page put the cost of the freely used account at £400,000. Chapter 8 · Chapter 9 · Chapter 10

Shares and the stock transfer form

The Shares are the 100 shares in Tooling, charged by fixed charge (clause 3.2(c)). A stock transfer form moves shares to a new owner. The Bank holds the certificate and a signed form with the buyer and date left blank, so it can sell Tooling without the Company's help. Definition: Shares · Schedule 3 · Debenture §5.2 · Debenture §8.4 · Chapter 2 · Chapter 5

Solicitors' undertaking

A promise a solicitor gives in the firm's name to do a specific thing, which a court can enforce. Your firm undertook to the Bank to file the charge within 21 days. If it failed, the Bank's claim would lie against an insured law firm, not a borrower in trouble. Debenture §5.1 · Chapter 6

Structural subordination

The position of a lender to a parent company, which stands behind the subsidiary's own creditors. If Tooling failed, its landlord, suppliers and staff would be paid from its assets first. Only what is left would reach the Company, and so the Bank. Chapter 7

U

Unsecured creditor

A creditor with a promise and no claim on any particular asset. On an insolvency it shares what is left after the secured and preferential creditors, usually a small part of its debt. The prescribed part is kept for unsecured creditors such as trade suppliers. Chapter 1 · Chapter 6 · Chapter 9

Upstream guarantee

A guarantee a subsidiary gives for its parent's debt. Tooling gives one for the Company's loan, so Tooling's directors must record why it benefits Tooling itself, and its shareholder approves it. Chapter 7 · see Corporate benefit, Guarantee

W

Waiver

Giving up a right, by words or by conduct. The Bank waived the 2027 interest cover breach, and only that, for a fee of £25,000, a higher margin, a blocked account, monthly accounts and a security review. The waiver changed the loan, not the security (clause 15.1). Debenture §15.1 · Chapter 8

Waterfall

The order in which money from the assets is paid out, each claim in full before the next. From a fixed-charge asset, the costs of sale come first, then the Bank. From the floating-charge assets, three claims come first: expenses, preferential debts and the prescribed part. Debenture §11.1 · Chapter 9