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ARTICLE · 20 DECEMBER 2004

Fixed Charges on Book Debts: the Saga Continues

L'Estrange & Brett
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In an English case reported earlier this year (<I>Re Spectrum Plus Limited</I>) the Vice-Chancellor delivered the latest instalment in the long running debate on what is required to establish a fixed charge on book debts. It is the first reported decision in England and Northern Ireland since the judgment of the Privy Council in the New Zealand <I>Brumark</I> case, which is, strictly speaking, only of persuasive authority to the courts here.

United KingdomInsolvency/Bankruptcy/Re-Structuring

Richard Gray discusses the latest instalment on the issue of fixed charges on book debts.

In an English case reported earlier this year (Re Spectrum Plus Limited) the Vice-Chancellor delivered the latest instalment in the long running debate on what is required to establish a fixed charge on book debts. It is the first reported decision in England and Northern Ireland since the judgment of the Privy Council in the New Zealand Brumark case, which is, strictly speaking, only of persuasive authority to the courts here.

Control

In Brumark, the Privy Council decided that it was possible to have a fixed charge on book debts provided there was sufficient evidence of the parties' intention to give the lender adequate control over the proceeds of those debts. In practical terms in order to demonstrate that intention, as well as the usual restrictions on dealing with book debts (such as a prohibition on assignment or charging) it is necessary for the security to require the book debts to

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