In previous IFLR issues, this series of bulletins has covered
parallel debt and pledge administrator as concepts allowing to
secure a multi-facility syndicated structure with Polish
lawgoverned security interests. As previously noted, the pledge
administrator is available in relation to registered pledges, which
may be established over rights and property other than real
property. It is, therefore, time to see whether a relevant concept
is available in respect of the only security interest that may be
established over real property – a mortgage.
As of February 2011, the answer to the question has become
positive. Amendments to the Act of July 6 1982 on the land and
mortgage registry books and mortgage have brought revolution to the
regime by permitting to secure with a single mortgage: more than
one claim of an individual creditor; and several claims of several
Originally, the mortgage was based on the one
claim–one security interest principle, which prevented
any sophisticated structures from being implemented.
Securing of several claims of several creditors with a single
mortgage is, nevertheless, subject to a few conditions. Firstly,
the claims to be secured by the mortgage must serve the purpose of
"financing of the same undertaking (venture)". The
condition has been vastly criticised in legal writings as vague and
imposing unnecessary limitations on the possible use of the
structure. For example, while it appears obvious that financing of
construction of an office building would meet the requirement, the
same could not be equally easily concluded in respect of financing
of an acquisition of shares of a company or refinancing of an
existing indebtedness. Fortunately, authors of the new legislation
followed by scholars and practitioners have opted in favour of an
extensive construction of the condition allowing it to apply to
financing of any "common goal".
Secondly, a mortgage administrator has to be appointed by all
creditors whose claims are to be secured; the appointment is
effected by way of an agreement between the creditors and the
administrator. The administrator may be appointed from among the
creditors or (unlike in the case of a pledge administrator) it may
be a third party. The administrator exercises the rights and
obligations of a mortgagee on its own behalf, but for the account
of the secured creditors.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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