United Kingdom: Charges, Mortgages, Indemnities

The Court of Appeal has partially reversed a High Court decision in a case examining whether a chargee's appointment of administrators was invalid due to improper purpose, specifically where debt acquisition followed a failed takeover bid. The judgment clarifies the boundaries of Braganza-style rationality duties in secured lending enforcement and explores when the equitable 'proper purpose' doctrine may constrain a creditor's right to appoint administrators under Schedule B1 of the Insolvency Act 1986.

In October's GT Alert on non-bank lending, we focussed on whether there was a justification in banks being subject to regulatory capital requirements when non-bank financial institutions (NBFIs) were not.

Disputes regarding the application and purpose of guarantees and indemnities in contractual agreements frequently emerge in English courts