Mortgage charge on a business

BarmyBubba

Hi, can anyone tell me what a mortgage charge on a company/business is?

The company is in a voluntary arrangment and has had 4 charges against it but 1 is still outstanding.

Any info on what they are would be excellent.

UK007BullDog

It seems that the company either bought property in their name as a company or owns a building where they borrowed on the equity multiple times.

silvercar

charges are applied to the assets of the business. If the assets are sold the money has to be used to repay the charges before other debts are considered. Effectively the charge becomes a priority debt, payable before other debts.

Can be a bit of a legal minefield, as charges can be (mis-) used to give some debts priority over others. eg company A owes money to companies X, Y & Z, say £30k each. Company A gets into difficulties, company X offers to lend company A another £10k provided its debt of £40k is secured on the company's assets. Company A then becomes insolvent, its assets are sold off releasing £60k. Company X gets its £40k leaving £20k. Company A goes into liquidation and the £20k of remaining equity is shared between companies Y & Z who get £10k each and so have lost £20k each, whereas company A has had all its money returned!
Clever, until someone spots some collusion between A and X, or the revenue feels that someone has abused the system to get paid out before tax owing is collected.

BarmyBubba

Its on the company record of a football club I support. the details are below. Is it anything to worry about???

Number of Charges: 4 (1 outstanding / 0 part satisfied / 3 satisfied)

Outstanding charge details:
Description: MORTGAGE

Person(s) Entitled:


Mr A
Mrs A
Mr B
Amount Secured:


STERLING POUNDS 1499




Acquisition Date:


Created: 21/12/1951 Form Type: Unavailable Registered: 31/12/1951




Short Particulars:


An Address (deleted to keep confidentiality)

silvercar

I'm never any good at reading which way round these things are.

Either Mr A, Mrs A and Mr B borrowed money from the club which is secured on the property at the address given. £1499 is secured on the property, which would have been the original loan amount, but interest may have accrued since which is not secured.

Or Mr A, Mrs A and Mr B lent money to the club that is secured on the club's assets. Again £1499 would have been the original loan amount.

There may be separate documents that talk about repayment schedules.

Given the date shown, finding the people may be your first problem.

could be that land was given for the club initially with the charge for the land to be repayed if the land was ever sold????

BarmyBubba

OK thanks for that. Given the date and amount it is probably nothing to worry about anyway.