Titan Europe 2007-1 (NHP) Limited - Irish Stock Exchange

Certain Matters of English Law
CERTAIN ASPECTS OF THE LIBRA LOAN
The following is an outline of certain aspects of English law and practice relevant to lending on a secured
basis over English real property. This is not a complete summary of currently applicable English law or
practice, and should not be treated as a substitute for professional advice. Prospective Noteholders who are in
any doubt as to any matter described in this Offering Circular should consult their own professional advisers.
Security Under English Law
Mortgages. English law security over real property typically takes the form of fixed legal charges (i.e.
charges by way of legal mortgage). Title to most English property is registered at the Land Registry, but if title
to a particular property is unregistered, the granting of the charge will oblige the property owner to register its
title at the Land Registry. Charges over real property in England and Wales created by English companies must
be registered both at the Land Registry and at Companies House (i.e. with the Registrar of Companies). Failure
to register the charge at the Land Registry will result in the charge being a mere equitable charge over which
subsequent legal charges will take priority. Failure to register at Companies House will result in the charge
being unenforceable against a liquidator, administrator or any creditor of the mortgagor.
Security over Shares. Loans in respect of commercial property in the United Kingdom are often also
secured by a mortgage over the shares in the company that owns the property. Such a mortgage is usually
accompanied by blank share transfer forms, share certificates and directors’ resignation letters, which would
allow the security trustee to complete the formalities of transferring ownership of the shares to it or its nominee
without any further involvement from the mortgagor for the purpose of causing a sale at a later date to a third
party and using the proceeds to satisfy the debt or effecting a foreclosure. Alternatively, the security trustee can
appoint a receiver to sell the shares and use the proceeds to satisfy the debt, in the manner described below
under “—Enforcement of Security—Enforcement of Security Prior to Administration, Insolvency or Bankruptcy
of Charging Entity—Receivership”.
Security over Insurances, Leases and Rent. Typical security for a mortgage loan will include security
assignments of the insurance policies covering the properties. The lender will usually require that the interests
of the security trustee be noted on the insurance policies, although on some loans the security trustee is made a
co-insured party or more rarely sole loss payee.
Similarly, security assignments of any leases of the property and all rents payable thereunder will also
usually be obtained.
Security over Bank Accounts. English law allows a special form of security known as a floating charge to
be taken over particular types of short-term business assets which are acquired and disposed of on a continuous
basis in the course of a business. One of the principal features of the floating charge is that the chargor is free to
use and dispose of the charged assets during the course of its business without the need to obtain the consent of
or otherwise involve the chargee.
Floating charges are subject to certain limitations from a lender’s perspective which are described in more
detail below. Lenders have sought to overcome these limitations by seeking to take fixed charges over such
assets. In a series of cases the English courts have laid down the principle that where the chargor of assets is
entitled to dispose of them free of the chargee’s security without the consent of the chargee, the security in
question will be a floating charge regardless of how the charge is described in the charging document.
While initially the abovementioned principles were designed in the context of assets such as the stock-intrade
of manufacturing companies, over time they were expanded to cover fluctuating credit balances in bank
accounts as these were seen to have similar features from the point of view of taking security.
In order to establish a fixed charge under English law over a bank account, the security trustee creditor must
not only have the right under the terms of the charge to control withdrawals from the account but must also
actually exercise this control in practice on an ongoing basis.
Enforcement of a charge over a bank account would usually occur through the appointment of a receiver to
realise the asset, collect funds from the account, and use them to repay the debt. See “—Enforcement of
Security” below.
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