09 January 2014

Security Law 2012 provides enhanced benefits to creditors

The Security Interests (Jersey) Law 2012 came into force on 2 January 2014. This law established a new regime for the creation and registration of security interests over shares and other intangible movable property situate in Jersey.

Security Law 2012 provides enhanced benefits to creditors

Set out below is a summary of the key advantages to creditors of the 2012 law:

  • Enhanced enforcement powers. Secured parties are afforded much wider powers of enforcement including appropriation of the collateral and step-in rights.
  • 14 day enforcement grace period addressed. There is no delay to enforcement as parties may now contract out of the 14 day statutory notice period.
  • Register of security. An online, real-time, searchable public register of security interests is now available.
  • Greater flexibility in creation of security. Introduced a simple method of creating security by attachment (description) and registration to complement the more traditional methods e.g. by way of having ‘control’ of shares or a bank account.
  • Second ranking security simplified. Advantages for mezzanine finance deals when taking second ranking security.
  • Catch-all security possible. Able to take security over all present and future intangible movable property of the grantor.
  • Third party security. Third party security expressly acknowledged which will simplify documentation and negate the need for limited recourse guarantees in security agreements.
  • Composite agreements are possible. It is not necessary to have a separate agreement for each asset class.

Security granted under the Security Interests (Jersey) Law 1983 remains valid and retains its priority position except in certain circumstances. 

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