The subject of collateral security has long been of interest as it is thought to play an important role in decisions to lend and there is a belief that a modern system of collateral security based on corporate assets will facilitate lending, thus stimulating economic growth. The focus on this issue has led to the introduction in Italian law of (i) a special security interest in movables not entered in the public register of title as collateral for medium and long-term bank loans to firms, and (ii) a revolving lien on dematerialised financial instruments. Both can be classified within the broad category of general non-possessory collateral security against the company’s assets, the most significant example of which is the British floating charge on all the assets of a company.
The paper examines this institution and the associated one of administrative receivership, an informal proceeding used in cases of insolvency, highlighting the many problems of enforcement – in English law and in international private law – and reviewing the related case law. The subject is also considered from a historical perspective, which is important for an understanding of the institutions of custom-based legal systems, and some comparisons are made with US law, with the law of Commonwealth countries, as well as with Italian law and other continental legal systems.
The requirements of globalisation pressing upon the business world are not easily reconciled with the specific features of individual legal systems in areas of commercial law (such as security and insolvency proceedings) that have always been resistant to harmonisation. The scenario depicted in the paper is marked by constant tensions between these two opposing forces, with the business community tending to use informal institutions such as administrative receivership that do not have to be recognised by the authorities of national systems because hierarchical mechanisms (parent company above subsidiary) or corporate control (parent company over investee company) allow them to cross national borders.
