§ 407.—(1) Where a charge becomes void to any extent by virtue of this Part, the whole of the sum secured by the charge is payable forthwith on demand; and this applies notwithstanding that the sum secured by the charge is also the subject of other security.
§ (2) Where the charge is to secure the repayment of money, the references in subsection (1) to the sum secured include any interest payable.".'.—[Mr. Forth.]
§ Brought up, and read the First time.
§ Mr. ForthI beg to move, That the clause be read a Second time.
This new clause inserts new provisions restricting the effect of avoidance. It is designed principally to ensure that the sanctions of avoidance and partial avoidance should not have unduly adverse effects on those dealing with charges. If we do not limit the effect of avoidance in the ways proposed in the new clause, people might be less willing to deal with charges or the property subject to them. As a consequence, creditors might become reluctant to offer secured finance to companies in certain circumstances. The objective of much in the new clause is, therefore, to disapply the effect of avoidance either where it is unnecessary or where the disadvantages flowing from it would outweigh the benefits.
§ Question put and agreed to.
§ Clause read a Second time, and added to the Bill.