A debenture is a legal instrument that secures a lender’s interest over a developer’s assets, typically granted by a company to protect the lender’s position in a property development finance transaction. It often includes both fixed and floating charges and is registered at Companies House. Debentures allow lenders to enforce their security over business assets if the borrower defaults. In UK property development finance, a debenture is standard for senior debt lenders, especially when dealing with special purpose vehicles (SPVs). It ensures priority in asset claims during insolvency or enforcement processes.
In practice, a debenture forms a key part of the security package within Securities and Collateral, giving lenders broad protection across both present and future company assets. Unlike a Legal Mortgage, which typically secures a specific property, a debenture can extend to wider business assets such as contracts, receivables and bank accounts, creating a more comprehensive enforcement framework. This is particularly important where development activity is undertaken through an SPV and funding is provided via a Structured Bridge Loan, as lenders often require security that captures both the development asset and the operational assets supporting the project.
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