Late Registration of A Charge at Companies House

DWS Legal has expertise in making successful applications to register Legal Charges or Debentures that have been filed at Companies House out of time.

We receive instructions from Law Firms and Financial Institutions from across the country and are well established in this niche area of work. This also includes rectification of a Legal Charge.

If you are reading this article do any of the following circumstances apply:

• You missed the 21 day statutory time limit to register a Legal Charge or Debenture at Companies House due to an error or oversight?
• Form MR01 (Particulars of Charge), was presented to Companies House in time, but it was rejected because it was completed incorrectly, was not signed, or even worse, the security document contained wrong information, and the time to remedy the situation has expired?
• Thoughts of professional negligence, or embarrassment runs through your mind and how to broach the matter with your professional indemnity insurer?
• You are wondering how to break the news to your client and/or the lender, and whether this will damage the commercial relationship that you have fought hard to build?
• You are worried that another lender may register their charge and obtain security ahead of your client’s charge whilst you frantically try to figure out what to do?

If so, you are not alone. The key thing is not to panic.

We appreciate that this happens to all of us from time to time.  The matter can be rectified by an order of the court so long as quick and decisive remedial action is taken.

We can help you with that process, so breathe easy.

 

The Consequences of failure to register a Charge at Companies House

Under the provisions of the Companies Act 2006 a charge or encumbrance against the assets, or a part of the assets of a company must be registered at Companies House within 21 days of its creation.

A fee is payable with the application which is usually made on Form MR01 together with a certified copy of the security document.  The Companies Act lists the charges that require registration.

If the charge is not registered within the prescribed time limit then horrible potential consequences will apply.

The company will remain liable for the repayment of the debt; but in effect the security lender is exposed because the charge is unsecured.

The ramifications are really serious, especially if the company becomes insolvent.

Unless the position is rectified, the charge is unenforceable by the security lender, and is void/unenforceable against a liquidator, administrator or other creditor of the company.

 

Rectifying the Problem: Procedure to apply for an order for registration out of time

If the Charge or Debenture is not registered within the statutory time limit then an application has to be made to the Companies Court (within the Business and Property Courts of the High Court of Justice) for an order to extend the period of time to register the Charge.  

The application is made to the court by the company or an interested person (which is usually the party having the benefit of the charge) by filing with the court:-

1              A claim form under the Civil Procedure Rules which needs to contain details as to the circumstances leading to the failure to register the charge in time.

2              Rigorous detail is required setting out the reasons leading to the default. Our experience is that unless the evidence is prepared carefully with the right emphasis for the court to consider, the application is likely to be adjourned or rejected.

3              A court fee is payable at the time of filing the application at the court.

4              It is necessary to serve a copy of the application and supporting evidence on all known parties that are or may be affected by the application. Affected parties are likely to include other creditors who may have a charge or may have applied to have a charge registered against the company.

5              There are other procedural steps that need to be implemented before the hearing date.

6              Failure to comply with those requirements is likely to lead to the court refusing to deal with the application.

This is not meant to be a definitive guide and advice on the subject matter or the procedure (each case is individual) but only a general guide.

Each set of circumstances are different and needs to be considered on a case by case basis.

You are advised to obtain specialist advice from us before acting on anything mentioned above, to ensure that your particular needs are considered and catered for, and that the application is not rejected.

We appreciate that the stress and anxiety of trying to correct matters can be all consuming and overwhelming.

The good news is that DWS Legal can alleviate that apprehension through efficient case management from start to finish.

Our team of experienced Solicitors have dealt with many of these applications and have a proven track record in this field. We also provide our clients with tailor made solutions and cost effective fixed fee pricing to deal with your case.

We will draft the application, the relevant evidence required by the court, comply with the procedural steps, and arrange for a representative to attend the necessary hearing.

 

Should you require further assistance in this matter please do not hesitate to contact a member of the Dispute Resolution Team on 0116 2999 199 or info@d-w-s.co.uk