If a company sells an asset which is charged against borrowings (eg: property subject to a mortgage or car on HP) and does not advise the lender of the sale what are the implications from:-
1. Accounting view-point - ie presumable the liability will still be a secured creditor
2. Legal stand point - fraudulent, criminal or merely contractual
M T Thorts
Replies (2)
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didn't think can sell
with property, the lenders interest is note on the charges register so when come to sell, the conveyancers will need to ensure that these are observed so can't see how they could sell.
In terms of other stuff, not sure but I would have thought that the lender could recall these assets from whoever they were sold to leaving the innocent buyer high and dry!
No longer a secured liability
As far as the accounts go, this can longer be a secured liability.
If a vehicle on HP has been sold without the knowledge of the Finance Company, then (ignoring the legal title) any security they have relates to an asset that is no longer in possession of the debtor. In the debtor's accounts therefore, the asset is no longer shown so the liability must now be unsecured.