Debenture Holder's Priority in Liquidation
Customs and Excise Comrs v Royal Bank of Scotland plc
[2006] EWHC 2813 (Ch)
Ch D
7 November 2006
Daily Law Notes Summary
S 196 of the Companies Act 1985, which determined the priority of
payments made by a company before its liquidation, should not be
construed to mean that every time a company paid a debenture
holder and used, as a source of that payment, assets which were
subject to a charge, the debenture holder “took possession” of
those assets. A line had to be drawn between acts which were, in
substance, acts by which the debenture holder realised the
security and acts which were, in substance, no more than the
ordinary discharge of the debtor’s liability.