Control
- Confusion in her eyes, it says it all
- She’s lost control again
- —Ian Curtis, She’s Lost Control
A reader writes in:
- “Dear Mr. Contrarian
- I have taken a fixed charge over collateral delivered by my counterparty to a custodian - say a triparty agent — subject to a security interest. My counterparty, however, is entitled to substitute that collateral with something else more or less automatically, provided it maintains a minimum required collateral value.
- Is my fixed charge good?
- Yours, in a spirit of joyful contrarianism
- Perennially Confused,
- Wolverhampton”
Herewith a disquisition on the modern law of security. This will canvass fixed and floating charges, the Financial Collateral Regulations, the priority of creditors on insolvency, the unguarded thoughts of the judiciary expressed during Re Spectrum Plus and Re Lehman Brothers International — the famous “extended liens” case, and a few unsolicited and mostly uninformed home truths from yours truly.
Strap yourselves in, friends.