LATE REGISTRATION OF LEGAL CHARGE AT COMPANIES HOUSE - WHAT YOU NEED TO KNOW

Are you a Property Solicitor, Licenced Conveyancer, Accountant, or other professional who has responsibility for registering a Legal Charge or Debenture at Companies House?

If so, what do you do if you MISS the deadline?

The main thing is don’t do anything drastic like meddling with the date of the charge to make it appear you are still within the deadline.

HOW DOES THE PROBLEM OCCUR?

Picture the scenario. You have just completed the purchase of a property on behalf of your company client with the assistance of commercial finance from a lender who you also represent.

Post completion steps are now required to secure the lender’s money which includes completing Form MR01 (Particulars of the Legal Charge), filing that at Companies House, together with the application fee, and a copy of the Legal Charge. So far, so good.

THE NOT SO GOOD

To your horror you discover that:

• The Legal Charge hasn’t been submitted to Companies House, or:
• Companies House reject the application because it wasn’t completely properly, or the security document contained a mistake and:
• The deadline to fix things has now expired!

PANIC!

Sheer panic descends and drags you down like a lead-weight - because you don’t know how to resolve the situation or break the news to your client and the lender. Does this resonate with you? If so, you are not alone.

However, breathe easy as I help practitioners who have missed the deadline to make a successful application to the court to rectify the problem.

ADVERSE CONSEQUENCES

A Legal Charge needs to be registered at Companies House within 21 days, which starts with the day after the charge was created.

Unless immediate steps are taken to make an application to the court this can lead to adverse consequences such as:

• The lender is exposed and at risk because the charge is unsecured.
• The lender may recall the loan.
• Another lender may acquire priority rights if they manage to register their charge ahead of yours.
• The charge is likely to be void/unenforceable against a Liquidator, Administrator, or other creditor of the company.

THE IMPACT - DAMAGE

 The impact of this can be catastrophic to your firm and lead to:

• You being sued by the lender or your client for professional negligence.
• Potential suspension or termination of your lender panel membership.
• Reputational damage.

That is what many professionals do not realise, and why you should not delay in making an application to the court.

THE SOLUTION – THE RIGHT APPLICATION

To limit your exposure, you need to be proactive to ensure that you do not miss out on obtaining a court order that extends the time limit to register the charge at Companies House. A word of caution, however.

If you are unfamiliar with the court procedure or make the wrong application and provide the wrong information, the application is likely to fail or be adjourned.

This will expose the lender and your client to even further risk whilst the charge remains unsecured - not to mention additional costs (thrown away) attempting to sort out matters. Can you afford to take that risk?

HOW I CAN HELP YOU

Mistakes can happen. So if you are:

• Worried about what to do to put things right or:
• Worried about how this could affect you and your firm;

the good news is that my team and I can take all that stress and anxiety off your plate.

Using our experience, and know how, we will make the right application, in the right way, and obtain the right result so that you can concentrate on what is important – such as generating fee income and running your business without fear of a claim against you or reputational damage.

NEXT STEPS

Don’t delay, contact me straight away (quoting LI/LRCC) by sending a private message; or email me at: austin.ogbata@d-w-s.co.uk to discuss your circumstances and how I can help you to make a successful application to register a Legal Charge or Debenture out of time.