Appropriation And Valuation Of Jersey Collateral ' Case Law Update

• Published date: 01 May 2023
• Subject Matter: Real Estate and Construction, Strategy, Investment Strategy, Real Estate
• Law Firm: Walkers
• Author: Mr Richard Holden, Nigel Sanders, Marc Seddon, Nigel Weston, Fraser Hern, Julia Keppe, Jon Le Rossignol and Tristan Maultby

Background

Under the Security Interests (Jersey) Law 2012 (the "Security Law"), one method of security enforcement is for the secured party to appropriate the collateral.

Under this method of security enforcement, the secured party becomes the owner of the collateral without the need for a court order.

The value of the collateral is determined by the secured party. If the value of the collateral is less than the secured liabilities, the grantor remains liable for the shortfall (unless otherwise agreed). If the value of the collateral is greater than the secured liabilities, the secured party has to account to the grantor for the surplus value.

The secured party owes a number of duties under the Security Law. One of the duties is "to take all commercially reasonable steps to determine the fair market value of the collateral, as at the time of the appropriation."

It is therefore an important aspect of appropriation that appropriate steps are taken to determine the fair market value of the collateral.

ABT Auto Investments Limited

There is no Jersey case law which has considered this duty in detail.

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