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When a borrower has a problem in servicing or re-paying a loan it is obviously preferable for a solution to be worked out that doesn’t involve the lender taking action to enforce his security. In the current market much more time is devoted to what have come to be known as “workouts” than enforcement. Although it’s preferable to negotiate both the lender and borrower should be aware of the different methods of enforcement and whether there are any obstacles in the lender’s path which would delay or prevent enforcement. The positions of creditors with competing interests, eg landlords, also need to be taken into account.

Situations where the enforcement of securities is an issue can range from the administration of a large retailer, eg Woolworths, to mortgage possession proceedings of someone’s home. Common methods of enforcement of securities include the appointment of administrators and receivers, and the possession and sale of a secured property.

A lender who suffers a shortfall between the amount of the debt and the amount realised for the secured property will often consider whether he has any collateral claims, including professional negligence claims against the valuers and solicitors who were engaged in relation to taking the security.

We are able to advise lenders (and other creditors) and borrowers on breaches, remedies, workouts and restructuring.