Replacing the Default Priority Rule For Secured Creditors-Some Reservations

摘要

This article discusses whether priority rules for secured creditors need to be overhauled in the United Kingdom. The Law Commission has produced a report favouring such reform. Current priority rules for secured creditors are often regarded as piecemeal and complex. Thus, the Law Commission recommends a simple priority rule for secured creditors based on time of notice-filing. However, it will be argued that current priority rules for secured creditors are based largely on a default principle of "security strength". "Security strength" means that certain types of security interests are superior to others based on the criteria of specificity, publicity and enforcement ease. This short article argues that the current rules may achieve greater fairness among creditors than the proposed rule.