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Author: NIgel Cook
Armstrong Brands Limited entered into a loan agreement to be supported by a debenture which, if properly executed, would be a “qualifying floating charge”. Both the loan agreement and debenture were signed by the then sole Director and the Company Secretary but left undated and undelivered for some months. By the time the debenture was actually delivered the director had resigned and been replaced.
It was established that at the time of delivery there was Board authority for the delivery of the documents and the fact that the Director who signed had resigned by then did not affect the original execution. The presumption under s.46(2) of the Companies Act 2006 that a deed was delivered upon execution could be rebutted if a contrary intention was shown, as here.
The debenture was validly executed and, therefore, gave the debenture holder the power to appoint administrators whose acts would be valid.
This is an another example of the practical approach adopted by the Courts in not disturbing the actions of insolvency practitioners who have acted in good faith in reliance upon documents apparently validly executed, but it does emphasise the importance of supporting Board minutes.