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Refusal to release assets from all assets debenture

Tuesday, July 21st, 2009

XL Business Finance was recently approached to look at a substantial refinancing deal for a large outside catering business. The equipment to be refinanced was mainly commercial vehicles converted into specialist catering units. Therefore the assets were not every finance company’s cup of tea.

However not wishing to give up we secured a finance facility with one of our asset based finance companies. You might think job done but oh no. As part of the documentation process a debenture waiver must be obtained from any funders holding a debenture. This would normally be the bank if there is an overdraft or loan in place or it can be from their existing invoice discounting company. Or it can be both.

Any funder having an all assets debenture has an automatic legal title over any assets in the business so the asset refinancing company must get the equipment released from the debenture via a debenture waiver. More often than not it is the banks which can cause issues but imagine our surprise when the non bank owned invoice discounting company would not release the assts from the debenture.

They refused not because the kit was needed as part of their security but because they were reluctant from a dubious legal point of view. This particular invoice discounting company must have racked a large legal bill of several thousand pounds not to mention the legal costs from the customer’s point of view. In our opinion it was totally unnecessary.

The result was the refinance was delayed by a number of months and we are now in the process of switching the customer to a new and more flexible invoice discounting company. Any refinance of existing equipment should be straight forward at documentation stage and if you have had any similar problems we are here to help.

 
 
 

XL Business Finance Ltd is a privately owned and independent business financing company with established links to many of the UK's leading finance houses. XL Business Finance provides a viable alternative to high street banks that lack the flexibility and imagination to provide a solution to most business users requirements. XL Business Finance can provide a full range of business financing solutions and we ensure a high level of customer service and pride ourselves on quick decisions. Our independent status will ensure any offer of funding and asset finance leasing is best suited to our customer’s needs.

XL Business Finance, Eaton Place Business Centre, 114 Washway Road, Sale, Cheshire M33 7RF UK.

 

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