Key features of debentures

Published by a ��Ƶ Banking & Finance expert

Practice notes

Key features of debentures

Published by a ��Ƶ Banking & Finance expert

Practice notes

debentures are used in many types of financing where it is desirable to take security over all of the assets of a particular entity. They are a form of umbrella document, incorporating many types of security over a broad range of assets.

What is a debenture and when do you use one?

What is a debenture?

In the context of secured lending, the term 'debenture' means a form of security agreement that grants security interests over a broad range of the security provider's assets as collateral for either the security provider's own obligations or the obligations of a third party.

The term 'debenture' can also refer to a document that either creates or acknowledges a debt.

This Practice Note deals with debentures as a form of security in the context of secured lending. In particular, it considers:

•
the formalities required for a debenture
•
the legal principles to be considered
•
the fixed security normally secured in a debenture
•
the floating security under a debenture
•
perfecting the security, and
•
enforcing debentures and floating charges

When

Jurisdiction(s):

United Kingdom

Key definition:

Debenture definition

What does Debenture mean?

In the UK this is a bond secured by a prior claim on the assets of the issuer or, in some circumstances, by specific assets of the issuer. A debenture holder is entitled to appoint a receiver if necessary.

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