Commercial And Chancery Bar: A mirage too far
Reflective loss has been described as a 'perplexing and developing area' of insolvency law. Where a bank's insolvency is at stake thanks to the failure of a company it has lent to, shareholders' protection in these circumstances is limited. Anthony Elleray QC reports
September 14, 2005 at 08:03 PM
5 minute read
Banks are careful to secure their lending. Advances to a private company are normally secured by charges on assets and guarantees from the shareholders.
If the company fails, the latter's hope is that the assets will realise enough when sold to pay off the bank – their own solvency may otherwise be at stake.
Shareholders' protection in those circumstances has been limited to the equitable duty of the bank or receiver to take care to obtain the best price reasonably obtainable.
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