BL-2024-000734 - [2025] EWHC 2166 (Ch)

The Claimants challenge the validity of the assignment of the secured claim to Niven. The essence of this argument is as follows. Clause 2 of the Deed of Assignment stated:

“Subject to the terms of this deed, the Assignor unconditionally, irrevocably and absolutely assigns to the Assignee:

…

2.1.1

all of the Assignor’s rights, title, interest and benefit in and to the Debt, the Facility Agreement and the Security.”

“Security” for this purpose is defined by reference to the Facility Agreement. There “Security is defined as:

“any mortgage, charge (whether fixed or floating, legal or equitable), pledge, lien, assignment by way of security or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.”

The Claimants argue that the effect of this was to assign to Niven only the bare equitable proprietary right in the collateral, and not the other rights which the Guarantee and Debenture created. Thus, they say, the rights to information which were created by Schedule 3 were never in fact transferred to Niven at all.

The basis for this argument is that in order to transfer those other rights, the assignment would have had to be of the “Guarantee and Debenture”, and not of the “Security”. This argument was not entirely clear (it is not possible to transfer a document by assignment), but I think what they mean is that there is a difference between the bare security interest in property which is created by a grant of security, and the bundle of rights in relation to that security interest which the agreement gives the secured creditor, and that by purporting to transfer the security, and not the bundle of rights, the result was that although the security interest was transferred, the bundle of rights against the creditor which the security agreement created was left behind with the transferor.

The Defendants submit that this argument is absurd, and I agree. The clearest indication of its wrongness is that clause 5 of the Deed of Assignment provided that “the parties agree from the Assignment Date the Assignor no longer has any rights in relation to the Debt, the Facility Agreement and/or the Security”. Thus, any rights not transferred to Niven would not have been retained by the transferor, but would simply have been extinguished. I am unable to come up with any plausible scenario in which this could have been considered commercially rational, and I feel confident that I can discard it as a possible interpretation of the words used.

I also think that the basis of the argument is incorrect as a matter of law. Where a security interest is created by agreement, the form of that security will be the form given to it by that agreement. Where the security agreement grants particular rights to the secured party, those rights are inherent in the security interest itself. A grant of security is a grant of an equitable property interest in the assets of another, and the rights associated with that property interest are proprietary, not contractual, such that a transfer of that property interest takes with it those rights which are incidental to it.

The proposition that the benefit of the Information Obligations was not transferred to Niven by the Deed of Assignment does not rise even to the level of arguability. I therefore proceed on the basis that the effect of the Deed of Assignment was that the Information Obligations were owed to Niven after the assignment took effect.