Legal Services

Banking & Finance

What we do

Trusted advice for lending,
finance and investment.

We provide strategic, commercially focused legal advice to banks, building societies, alternative lenders, financial institutions and corporate borrowers across Northern Ireland and beyond. Our banking and finance team advises on a broad range of domestic and cross-border financing transactions, delivering tailored lending, security and intercreditor documentation that reflects the commercial objectives of our clients.

We support clients on all aspects of banking regulation, governance and compliance, including consumer finance, conduct requirements and evolving regulatory obligations. Our solicitors also advise lenders on restructuring, recovery and enforcement strategies, with particular expertise in social and affordable housing finance, the hospitality sector and distressed lending.

Working closely with legal advisers in other jurisdictions, we regularly assist on multi-jurisdictional transactions and international funding arrangements, providing coordinated and practical advice throughout the lifecycle of international financing transactions.

We have particular expertise in lending in the hospitality, social housing and mezzanine funding sectors.

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Common questions

What are the main considerations when taking security?

Security is often taken by lenders/creditors over assets of a borrower/debtor, or a third party who has agreed to provide security for another’s debt. It will be important for a lender/creditor to consider the following when taking security:

Identify the type of security:

They must identify the most appropriate form of security to be taken, having regard to the assets over which security is to be granted and the nature of the rights the lender is expecting to have over the assets.

Security can be created over a wide variety of assets including land, shares, cash deposits in bank accounts, contractual rights, receivables, intellectual property rights, goods and insurance policies.

The nature of the rights conferred by a security interest will depend on the type of security taken, i.e. a mortgage, charge, pledge or lien. Each type of security has different characteristics and grants different types of rights to creditors, for example the right to sell the asset and apply the proceeds towards their debt.

Draft the security documents:

Once the secured party has decided on the appropriate form of security to take, the security document(s) will need to be drafted. Security can be over all the assets of a company, in which case it will normally be documented by a debenture, or over specific assets, in which case it will be documented in a separate security document suitable for that specific asset.

It will also be important to ensure that each security document has been properly executed.

What is the difference between fixed and floating charges?

A charge can be fixed or floating, although only companies can create floating charges.

A fixed charge is a security interest over a specific, permanent asset such as land and the charge immediately attaches to the assets. The chargor will only be permitted to deal with these assets in accordance with the terms of the charge deed and any disposal of the assets will normally require the consent of the chargee/lender.

A floating charge is a security interest over a changing pool of assets, including future assets. The company can continue to deal with these assets in the ordinary course of business until an event occurs causing the floating charge to crystallise. Upon crystallisation, the floating charge attaches to all existing assets that are within the scope of the charge and becomes fixed. The main consequence of crystallisation is that the chargor’s authority to dispose of or to deal with those assets without the consent of the chargee comes to an end.

There are advantages to both types of charge. Fixed charges generally provide better recovery on enforcement. However, a qualifying floating charge will provide a lender with the ability to appoint an administrator out of court and enables it to take security over a larger pool of assets.

In practice, it is common for lenders to take fixed charges over permanent assets and, in respect of companies, a floating charge over any remaining assets.

What should a lender consider when enforcing its security?

If a borrower is in default under the terms of its loan or credit arrangement with a secured lender, the lender should be entitled to enforce its security. However, in some circumstances the lender will not want to enforce its security because by doing so it could run the risk of reducing the amount it recovers. Instead, the lender should consider whether there is a viable alternative to taking enforcement action, for example agreeing a restructuring of the debt.

If there is no viable alternative to enforcement, before taking steps to enforce, a lender should carry out a review of its security to ensure that it is valid and binding and it should conduct searches to determine whether an insolvency process has already been initiated in respect of the security provider. It will also be important to check the steps required under the finance documents to ensure that the enforcement is valid. This will include checking the requirements for acceleration of the debt, demand, and enforceability. A review of any relevant intercreditor agreement will also be a key step pre-enforcement of security.

If a decision to enforce security is made, the security holder will need to assess which method of enforcement will provide the most effective and efficient means of achieving the overall objective. There will be a variety of remedies available to a secured lender depending upon the nature of the security granted and the type of assets secured. These can include the power to:

appoint an administrator;
appoint a receiver;
sell the assets without a court order; and/or
take possession of the assets.

In practice, the first two remedies are often more attractive to lenders as they are generally quicker and less expensive. There are also potential liabilities for a lender in choosing to enforce as mortgagee in possession and deal with the assets directly.

Specialist team