In re Colonial Trusts Corporation: CA 13 Dec 1880

A company formed for the purchase and management of land, and which was empowered by articles to borrow money for the purposes of the company provided that the amount borrowed should not at any time exceed the amount of the unpaid subscribed capital, had issued debentures whereby they bound ‘themselves and their successors and their real and personal estate’ for payment of the sums advanced, with a proviso that the holders of the debentures should be entitled to be paid the principal and interest secured to them respectively pari passu. The company was in liquidation, a provisional liquidator having been appointed on the petition of the company, and a resolution having been subsequently passed for a voluntary winding-up, which was continued under supervision. On a claim by debenture holders to be entitled to a primary charge on the company’s property, including the uncalled capital.
Held: The debentures were a charge on the real and personal estate of the company as it existed at the commencement of the winding-up, but not including the then uncalled capital.
Held: Also, that the debenture holders, so far as they might be unable to obtain payment in full out of the property comprised in their charge, were at liberty to prove with the other creditors against the general assets.
Held: Also, that the winding-up must be taken to have commenced at the date of the appointment of the provisional liquidator.
Jessel MR used first the term ‘floating security.’
Jessel MR
(1880) 15 Ch D 465, [1880] UKLawRpCh 308
England and Wales
Cited by:
CitedNational Westminster Bank plc v Spectrum Plus Limited and others HL 30-Jun-2005
Former HL decision in Siebe Gorman overruled
The company had become insolvent. The bank had a debenture and claimed that its charge over the book debts had become a fixed charge. The preferential creditors said that the charge was a floating charge and that they took priority.
Held: The . .

Lists of cited by and citing cases may be incomplete.
Updated: 07 September 2021; Ref: scu.228301