The purpose of a deed of priority is to
- improve a creditors access to a class of asset; and
- to enable realisation of it, if required, that is better than would be the case on a straight ‘first in time’ ranking as would otherwise apply at law.
It is possible to achieve this by simple agreement between the chargeholders.
In most cases, however, the existing chargeholder is under no compunction to agree to this and so these deeds are often negotiated in detail. These documents are important though so that all parties know and agree to the terms of the security ranking from the outset, to avoid any disputes later on.
The deed of priority is an agreement between the chargeholders, but the company usually joins in to it to acknowledge its terms. Additionally, the deed of priority can be used for other matters that it is not possible to agree without the company’s consent (for example, the senior creditor and the junior creditor sharing confidential information relating to the company).
Francis Wilks & Jones have a team with legal expertise on providing advice relating to deed of priority. We are experts in all matters relating to deed of priority and our expertise include drafting and negotiating the deed of priority.