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Debenture Agreement


A debenture is a document that acknowledges and contains the terms of a loan, which is typically secured by reference to charges over all or substantially all of the Borrower's property or assets.

The execution provisions of this template are compliant and consistent with the requirements of the Land Registry for prescribed forms deeds introduced from 20th September 2019.

Debentures usually bear interest, and this interest is payable to the Lender before any dividend is paid to the Borrower's shareholders (if any). One of the main advantages of using a debenture agreement is that the interest rate is typically lower than, for example, an overdraft or typical term loan owing to the high degree of security for the Lender.

This Debenture can refer to a secured loan or principal sum, repayable at a fixed date (which will be set by you) and bearing interest until that date. The principal amount can be inserted in the definition of "Secured Liabilities" or the terms of a loan can be referred to in Schedule 2. It comprehensively covers all the relevant legal and commercial aspects of the Lender and Borrower relationship, and clearly sets out the position of both parties.

This Debenture can be modified, if desired, to remove the obligation on the Borrower to pay interest, instead obliging the borrower to grant to the lender other, non-financial, benefits.

This document contains the following clauses:
1. Definitions and Interpretation
2. Execution
3. Covenant to Pay
4. Interest
5. Security
6. Qualifying Floating Charge
7. Negative Pledge
8. Deposit of Documents and Title Deeds
9. Representations and Warranties
10. Undertakings
11. Enforcement
12. Receiver
13. Release and Reassignment
14. Cumulative and Continuing Security
15. Payments and Withholding Taxes
16. Appropriation
17. Set-off
18. Assignment
19. Waiver
20. Severability
21. Communications and Notices
22. Governing Law and Jurisdiction

Schedule 1: Scheduled Property
Schedule 2: Secured Liabilities (optional)

Optional phrases / clauses are enclosed in square brackets. These should be read carefully and selected so as to be compatible with one another. Unused options should be removed from the document.

This Debenture is in open format. Either enter the requisite details in the highlighted fields or adjust the wording to suit your purposes.

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