Debt and security enforcement: advising your client (Sponsored)

Feb 05, 2020


When advising clients, understanding legal practise and procedure can be as important as understanding contractual rights and obligations. Leman Financial Services Disputes Team work very closely with our accountancy colleagues in providing that advice. Although each engagement is unique, our role on the disputes team is to identify the legal and commercial position of our colleagues’ clients, in terms of debt or security enforcement. With this knowledge, they can have informed restructuring negotiations.

During the last decade, Leman Solicitors has acquired a large amount of relevant knowledge and there are some important principles that readers should consider when initially advising clients facing debt or enforcement action.

What you should know

The first and most important consideration when a client is facing debt or enforcement action is what your client trying to achieve. Once you understand this, you can assess opposing rights and obligations in context. Often, what a client wants is aspirational. For example, they might want a significant debt reduction or even a write-off.

Leaving aside all the respective rights and obligations that parties to a lending and security agreement may have, the fundamental question that a court will ask is: was money borrowed? Then, if money was borrowed, was it repaid? No amount of legal sorcery is going to change the evidence or the almost inevitable consequential decision of the court.

However, the client’s position cannot be considered in isolation. So, the second and equally important consideration must be the lender's position. Even an ostensibly watertight debt instrument or charge cannot, in very many cases, be turned into cash immediately. A legal process must be followed, for example, by the appointment of a receiver or the issuing of judgment proceedings. So, now the question as to when the court will even be able to decide becomes pertinent, especially for loan acquiring funds.  

The reality is that if the debtor chooses, those processes can be lengthy and costly, even when there is no obvious defence. However, when there is a stateable defence, which usually arises on the enforcement of security rather than an application for summary judgment, then the lender can have a difficult commercial decision to make. That decision centres on the value achievable now verses the value achievable in one, two or even three years from now after a significant cost has been incurred in a legal battle.

The commercial reality, and where consensus can be achieved, falls between these opposing positions. Our role then is to advise on what a lender can do, by when, for how much and what their position will be at the end of it all.

We’ve done it more than 100 times now. And we still really enjoy doing it.

For more information, go to or contact Ronan McGoldrick, Partner in Leman Solicitors Dispute Resolution and head of the Financial Services Disputes Team.

(This article is sponsored by Leman Solicitors.)